Micron Technology(US:MU)2025-12-18 00:00Financial Data and Key Metrics Changes - The company reported a 20% growth in bit shipments for fiscal 2026, driven by efficiencies in existing fabs and node transitions [6][20] - Gross margin reached 68%, with expectations for gradual increases in the future due to strong demand and supply constraints [23][24] Business Line Data and Key Metrics Changes - DRAM pricing increased by 20% sequentially, while NAND pricing also saw significant growth [12][24] - The attach rate for high-capacity SSDs in AI servers is growing, with the company leading in QLC workloads [17][20] Market Data and Key Metrics Changes - Demand for both DRAM and NAND is substantially higher than supply, creating challenges in meeting customer needs across all segments [13][14] - The company is experiencing a significant mismatch between supply and demand, particularly in the data center market [14][30] Company Strategy and Development Direction - The company is focusing on diversifying its business across segments while prioritizing strategic customers for long-term deals [14][15] - Future growth is expected to tilt more towards the data center segment, with ongoing investments in technology and capacity [15][50] Management Comments on Operating Environment and Future Outlook - Management highlighted the ongoing structural supply constraints and the positive long-term demand driven by AI technology [24][25] - The company is optimistic about sustaining or expanding margins due to strong market conditions and effective cost management [25][26] Other Important Information - The company plans to double construction CapEx from fiscal 2025 to 2026, indicating a strong commitment to expanding capacity [41][45] - Free cash flow margin was near 30% in the first quarter, with plans to continue paying down debt and potentially increasing dividends [46][62] Q&A Session Summary Question: DRAM and NAND bit shipments growth - The company confirmed a slight sequential increase in DRAM bit shipments and expects more growth in the second quarter, primarily driven by pricing [5][7] Question: DRAM pricing and capacity allocation - Management noted that the aggregate demand for DRAM and NAND is significantly higher than supply, complicating capacity allocation decisions [12][13] Question: Future gross margin expectations - Management indicated that while gross margins are at record levels, they expect gradual increases moving forward, influenced by strong demand and supply constraints [23][24][26] Question: HBM production and flexibility - The company stated that it is sold out for HBM based on current agreements, with significant unmet demand remaining [29][30] Question: CapEx breakdown and trends - Management did not provide specific breakdowns for 2027 but indicated that total CapEx will increase compared to 2026, with a focus on construction and equipment [40][41] Question: Allocation decisions for different markets - The company emphasized the difficulty in balancing allocation across various markets, ensuring support for strategic customers while optimizing for gross margin [57][59] Question: Cash generation priorities - The company plans to prioritize reinvestment in the business, maintaining technology leadership, and managing the balance sheet effectively [60][62]