Micron Technology(US:MU)2023-05-31 15:25Micron Technology, Inc. Conference Call Summary Company Overview - Company: Micron Technology, Inc. (NASDAQ: MU) - Event: Goldman Sachs Global Semiconductor Conference - Date: May 31, 2023 - Participants: Mark Murphy (CFO), Toshiya Hari (Goldman Sachs) Key Industry Insights Demand Trends - Demand for DRAM and NAND has been consistent with previous expectations, with bit and byte growth anticipated [3][4] - Customer inventories are trending down, indicating a potential recovery in supply-demand balance [4][5] - The market is believed to be bottoming out, with expectations of stronger growth in the second half of the year [4][7] Impact of Chinese Regulations - The Cybersecurity Administration of China (CAC) has advised critical information infrastructure operators not to use Micron products, potentially impacting revenue by high single-digit percentages [5][6][9] - The impact is primarily expected in networking and server segments [10][53] Inventory Dynamics - Industry-wide inventory levels are unprecedented, but the situation is seen as manageable compared to previous downturns [13][46] - PC and smartphone inventories are healthier due to earlier downturns, while data center inventories remain elevated [15][14] Pricing and Product Transition DRAM Pricing - Price stability is being observed in certain areas, with DDR5 showing more resilience than DDR4 [5][16] - The transition to DDR5 is expected to reach about 30% of volumes by the end of the year, up from 20% [17] NAND Pricing - NAND pricing has decreased over 50% year-over-year, with higher inventory levels than DRAM [30][31] - Long-term growth for NAND is projected at a low 20% CAGR, but current demand elasticity is uncertain [32][31] Technological Advancements Product Development - Micron is optimistic about its 1-beta technology for DDR5, which offers significant improvements in bit density and power efficiency [17] - The company is also preparing to launch HBM products, which are expected to benefit from the growing AI market [19][20] AI Market Potential - AI is currently a small but rapidly growing segment of Micron's business, with expectations for significant growth in memory demand due to AI applications [21][22] - AI servers are projected to require significantly more memory compared to traditional servers, indicating a strong future demand for DRAM and NAND [25][26] Supply Chain and Production Strategy CapEx and Production Cuts - Micron has cut production by 25% in both DRAM and NAND, with WFE down over 50% year-over-year [33][35] - Future production increases will depend on inventory levels decreasing and clearer demand visibility [36][38] Competitive Landscape - The company believes that all industry participants are taking appropriate steps to manage supply and demand, with a focus on sustainable pricing [40][41] Global Manufacturing Footprint Expansion Plans - Micron is expanding its manufacturing footprint in the U.S. with projects in Boise and Upstate New York, driven by government incentives [58][59] - The company plans to align capacity additions with industry growth rates while considering geographic competitiveness [61] Conclusion - Micron Technology is navigating a challenging semiconductor market with strategic production cuts, a focus on technological advancements, and a proactive approach to emerging opportunities in AI and data centers. The company remains committed to long-term growth despite short-term uncertainties related to regulatory impacts and inventory levels.