Release Date: March 20, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Micron Technology Inc (MU, Financial) achieved record revenues in data center DRAM, with HBM revenue growing more than 50% sequentially to over $1 billion.
- The company remains the only one globally to ship low-power DRAM into the data center in high volume, showcasing its pioneering innovation.
- Micron's 1-beta DRAM technology leads the industry, and the launch of the 1-gamma node has shown significant improvements in power, performance, and bit-density.
- The company is making disciplined investments to capitalize on AI-driven growth opportunities, including expanding HBM capacity and constructing new facilities.
- Micron's HBM3E delivers a 30% power reduction compared to competitors, and the company has begun volume production of HBM3E 12 high, focusing on ramping capacity and yield.
Negative Points
- Fiscal Q2 revenue was down 8% sequentially, and the gross margin decreased due to pricing in consumer-oriented segments, especially in NAND.
- NAND revenue decreased 17% sequentially, with prices decreasing in the high-teens percentage range.
- The company faces challenges with NAND underutilization, which continues to weigh on gross margins.
- Operating expenses are projected to increase by over 10% in fiscal 2025 to support high-value products, impacting profitability.
- Micron's inventory days increased to 158 days, up from the prior quarter, indicating potential inefficiencies in inventory management.
Q & A Highlights
Q: Should we expect gross margin improvements starting in fiscal Q4 and potentially beyond?
A: Mark Murphy, CFO, explained that while Q3 margins are down due to a higher mix of consumer-oriented volumes and lower pricing, conditions have improved. He anticipates gross margins to rise somewhat in Q4, driven by improved market conditions and growth in high-value products like HBM, despite ongoing NAND underutilization challenges.
Q: What is driving the increased industry bit demand outlook for DRAM in calendar 2025?
A: Sanjay Mehrotra, CEO, noted that improved customer inventory levels, increased AI implementation in smartphones and PCs, and strong data center demand, particularly for HBM and high-density DIMMs, are contributing to the higher bit demand outlook.
Q: Can you provide details on the fiscal Q3 guidance, specifically the revenue growth from DRAM versus NAND?
A: Mark Murphy stated that while both DRAM and NAND are expected to see bit growth, the revenue growth bias is towards DRAM due to HBM and data center exposure.
Q: How sustainable are the current industry pricing dynamics, and are recent memory price improvements driven by true demand?
A: Sanjay Mehrotra highlighted that improved demand trends in smartphones and PCs, driven by AI adoption, along with tight leading-edge DRAM supply and supply actions in NAND, are creating a favorable demand/supply environment. This supports sustainable pricing improvements.
Q: How will the transition from HBM3E 8-high to 12-high impact gross margins?
A: Sanjay Mehrotra explained that while HBM3E 12-high is more complex, it carries a premium over 8-high and is expected to be accretive to DRAM margins. The company is focused on ramping 12-high capacity and yield, with the majority of shipments shifting to 12-high in the second half of the calendar year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
