Kipp A. Bedard - Vice President of Investor Relations Ronald C. Foster - Chief Financial Officer, Principal Accounting Officer and Vice President of Finance Steven R. Appleton - Chairman and Chief Executive Officer Mark W. Adams - Vice President of Worldwide Sales

Vijay R. Rakesh - Sterne Agee & Leach Inc., Research Division Sidney Ho - Nomura Securities Co. Ltd., Research Division Daniel A. Berenbaum - MKM Partners LLC, Research Division Steven Chin - UBS Investment Bank, Research Division John Pitzer - Crédit Suisse AG, Research Division Glen Yeung - Citigroup Inc, Research Division Unknown Analyst David M. Wong - Wells Fargo Securities, LLC, Research Division Kevin Cassidy - Stifel, Nicolaus & Co., Inc., Research Division James Schneider - Goldman Sachs Group Inc., Research Division Betsy Van Hees - Wedbush Securities Inc., Research Division Ryan Goodman - CLSA Asia-Pacific Markets, Research Division Shawn R. Webster - Macquarie Research Bobby Gujavarty - Deutsche Bank AG, Research Division Brian C. Peterson - Raymond James & Associates, Inc., Research Division Doug Freedman - RBC Capital Markets, LLC, Research Division

Good afternoon. My name is Matthew, and I will be your conference facilitator today. At this time, I would like to welcome everyone to the Micron Technology First Quarter 2012 Financial Release Conference Call. [Operator Instructions] Thank you. It is now my pleasure to turn the floor over to your host, Kipp Bedard. Sir, you may begin your conference.

Thank you very much and welcome to Micron Technology's First Quarter 2012 Financial Release Conference Call. Of course, on the call today is Steve Appleton, Chairman and CEO; Mark Durcan, President and Chief Operating Officer; Ron Foster, Chief Financial Officer and Vice President of Finance; and Mark Adams, Vice President of Worldwide Sales. As usual, this conference call, including audio and slides, is also available on Micron's website at micron.com. If you have not had an opportunity to review the first quarter 2012 financial press release, it is also available on our website at micron.com. Our call will be approximately 60 minutes in length. There will be a audio replay of this call, accessed by dialing (404) 537-3406. Confirmation code, 37217947. This replay will run through Wednesday, December 28, 2011, at 5:30 p.m. mountain time. A webcast replay will be available on the company's website until December of 2012. We encourage you to monitor our website at micron.com throughout the quarter for the most current information on the company, including information on various financial conferences that we will be attending. We would also like to invite you to attend Micron's Winter Conference hosted this February 9 and 10 in Scottsdale, Arizona. Additional information can be found on the Micron IR website. Please note the following Safe Harbor statement. During the course of this meeting, we may make projections or other forward-looking statements regarding future events or the future financial performance of the company and the industry. We wish to caution you that such statements are predictions and that actual events or results may differ materially. We refer you to the documents the company files on a consolidated basis from time to time with the Securities and Exchange Commission, specifically, the company's most recent Form 10-K and Form 10-Q. These documents contain and identify important factors that could cause the actual results for the company on a consolidated basis to differ materially from those contained in our projections or forward-looking statements. These certain factors can be found on the Investor Relations section of Micron's website. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. We are under no duty to update any of the forward-looking statements after the date of the presentation to conform these statements to actual results. And with that, I'd like to turn the call over to Steve Appleton. Steve?

Thanks, Kipp. I'm going to make a few comments around operations technology and on a couple of activities in the business units, and then I'm going to turn it over to Ron to cover on financials and then we'll open it up for questions. So starting out around the technology, we're going to make a few highlights about some of the things we achieved in the quarter. We were able to introduce the world's first 128-gigabit Marvell-ethic [ph] NAND device, which uses Micron's 20-nanometer NAND process. And if you remember, I commented on it last quarter. And on a related note, we are now in mass production of 64-gigabit product using this process as well. So I think the team has done a great job on getting that into production and getting the product out. We also started production our first 45-nanometer NOR products for the embedded applications. And as I'll comment later in ESG, that's also going well. I wanted to point out that we've had a lot of success in working with customers. And if you've seen it from some of the more recent media, we've introduced the Hybrid Memory Cube. And obviously, we're working in concert with Intel on bringing that to a lot of applications out in the space. And just also probably know, this device can improve bandwidth really by more than 15X and needs about 7% less power than you'd get from today's DDR3 modules. So it really does bring a lot of performance to the marketplace. On the operations side, IMFS continues to ramp and perform well. As we had mentioned the last quarter, I think within a month, we should be at full wafer starts. It's all going really according to plan, better than planned. And as Ron will comment on more…

Thanks, Steve. The company's first quarter of fiscal 2012 ended on December 1. As usual, we provide a schedule containing certain key results for the quarter, as well as certain guidance for the next quarter. That material is presented on a few slides that follow, as well as on our website. Total sales for the first quarter were relatively flat compared to the prior quarter, with NAND growth being offset by a decline in wireless NOR sales. Similar to the prior quarter, the first quarter resulted in a net loss primarily as a result of weakness in the DRAM markets, particularly for PC DRAM products as Steve mentioned. Although average selling prices declined for both DRAM and NAND, we continue to leverage our broad product portfolio to achieve selling prices at a premium to the industry average. This is primarily a result of our mix of products sold in the premium server specialty DRAM, SLC and SSD applications, as Steve referred to. In the first quarter, NAND revenue increased 6% and continued to outgrow DRAM sales, which were flat compared to the prior quarter. On the P&L, the equity and income loss from equity method investees primarily reflects our share of Inotera's net loss for the period. To help facilitate Inotera's investments required to transition to our 30-nanometer process technology, subsequent to the first quarter, we lent Inotera $133 million in a short-term 90-day note. Inotera plans to replace this note with a longer-term financing with one or more partners in the March timeframe. Our Singapore IM Flash fab continues to make outstanding progress on its production ramp, which is several months ahead of the original schedule. In fact, at the end of the quarter, wafer output from the Singapore fab reached the target level for its original ramp. Product…

Thanks, Ron. We would like now to take questions from callers. [Operator Instructions]. And with that, please open the line.

[Operator Instructions] Our first question comes from James Schneider of Goldman Sachs.

First of all, in the DRAM side, I was wondering if you can give us any kind of sense at all, ballpark, what would DRAM prices have to do from here for DRAM Solutions Group to turn profitable on an operating basis?

I think we're going to defer from answering that kind of a question that gets too close to gross margins, and I don't know any DRAM company that gives those out.

Okay, fair enough. Could you maybe give us an update then on what you expect your bit growth in both DRAM and NAND to be in 2012?

Well, as we look sort of quarter-to-quarter, I think you can expect DRAM bit growth will be averaging, yes, mid to high teens in the short term and then down from there later in the year.

Do you still expect to be able to basically be above 40% for 2012 on a year-over-year basis?

Yes, I think that's a good number.

Our next question comes from John Pitzer of Crédit Suisse. John Pitzer - Crédit Suisse AG, Research Division: A couple of questions. First on the CapEx, can you talk a little bit about why you came in a little bit light this quarter and then you're still sticking to the $2 billion for the fiscal year. I was kind of curious as sometimes how we should think about when you already throughout the fiscal year [ph] quarters?

It's really just timing. John Pitzer - Crédit Suisse AG, Research Division: And then when you already kept it, you basically just amortize the [indiscernible] in the 3 quarters? Or is there going to be some lumpiness within those quarters?

I think that the simplest way to characterize it is, we had a lot of equipment that we had to finish paying for in IMFS. And that kind of carries through our Q1 and our Q2. It gotten -- some of it got pushed out from Q1 to Q2. So Q2 is going to be a little bit higher than maybe we thought it would be, because Q1 is a little bit lower, but in Q3 and Q4 is about the same. I mean, basically, if you think about it, we just say we did $750 million. I don't know what the number is exactly for Q2, but it's probably going to be somewhere in the $500 million range and then you can split the $800 million between the last 2 quarters. John Pitzer - Crédit Suisse AG, Research Division: Ron, in the DRAM business, you talked a little bit about how -- whether or not you've been successful moving mix towards server DRAMs, specifically in Inotera, maybe help us understand what percent of the DRAM business now is going to servers and what about my guests?

Today, if you look at our specialty business defined as servers, networking and storage, that number is roughly 30% of those DRAM bits are going into those segments. And to your point, I think the growth there, we have continued upside for us going forward. John Pitzer - Crédit Suisse AG, Research Division: And I think my last question, Steve. I think a lot of investors I've talked to are wondering whether or not there's the consolidation events coming down the pipeline. I wonder if you could just speak a little bit in the sort of year-over-year on consolidation, kind of what looks sort of attractive as you think longer term and I guess importantly the biggest issue with consolidation is comprised with some buyer and seller agree and kind of curious on your view around valuations?

Yes. Well, obviously we wouldn't comment on anything we're thinking about or engaging in. But I will say that the DRAM market, the industry in general has been under a lot of pressure. You can look at the financial results of the number of these companies. In fact, if you look at our last quarter compared to the close of a couple of our competitors. I think LP lost about $500 million, $600 million; [indiscernible] lost about $500 million. And obviously, we're not happy to be losing any money, but it's certainly not better than what their financials look like. And I think that a number of those companies continue to weaken. As they do continue to weaken, they're going to have to figure out what they're going to do. And so I think that will drive some further consolidation. I think that's inevitable. And so we're just going to continue to look at whatever opportunities might exist out there.

Our next question comes from Monica [ph] with Pacific Crest.

I had a question regarding the equity line item. So that loss was about $74 million for this quarter higher than the previous quarter of $40 million, whereas your DRAM business was essentially unchanged. So trying to understand why the Inotera loss was much bigger number for this quarter?

This is Ron. That line is for situations where we make equity investments that's noncontrolling investments. In other companies, the largest part of the equity loss there is related to Inotera, about $74 million in the quarter. And there are other equity investments that also had some net loss effective and majority of that total was Inotera. We do actually report that on a 2-month lag basis based upon their financial reports. So as you track their financial reports, we own about 30% of Inotera. And that 30% of our net loss flows through our statements for the 2-month lag.

Just one more question here. Could you give us or provide some idea on the contract pricing in the DRAM market right now? Like how is it trending compared to what market? Is it below, higher or in line?

Yes, sure. The contract pricing is above the spot market today and has been for the past few months. I think consistent with Steve just referenced in terms of the health of the industry. I think OEMs have to be a little careful on how hard they push given the supply from some of the more challenged competitors ability to consistently supply in the future. So I think contracts will stay that way as best as we can see in the short term. Having said that, the spot market pricing within the last couple of weeks had a mild uptick. And when I say mild, I mean, in a given week, it was up from a low down step about 15% and then settle down a little bit. But it's still above where we were at the end of the quarter. And so we think the OEM contract pricing will stay above that and again, the spot market has bounced little bit incrementally higher, but not to a place where we need to get to.

Okay. Just last one. Is it possible to provide [ph] an idea how much is 30-nanometer makes for DRAM?

Yes, it's still less than 10% of our volume.

Our next question comes from Shawn Webster of Macquarie.

So you shared with us some of the bit shipment that you had in fiscal Q1. You just reported a quarter. I was wondering if you could share with us what your bit production was for both DRAM and NAND?

Sure, Shawn. In Q1, DRAM was up in the 20% plus range on production and trade NAND was up high single-digits.

Okay. And then on the consolidation question. I was wondering was there anything that prevents Nanya from partnering with another DRAM supplier in terms of the relationship that Micron has with them?

We have you pretty close and injured relationship with Nanya that involves joint development. And obviously, there are things that both partners are allowed to do and not allowed to do relative to where they take that technology. So that would be clearly an impediment to them partnering with somebody else in DRAM area.

Okay. And then maybe one last one. Can you give us some color on inventories, where there look lean, where they look light, maybe how many weeks that you're seeing that channel on the DRAM on the NAND side?

Sure. On the DRAM side, I think there are some correction and healthy correction that's going on in the channel. I think what Steve alluded to earlier around the hard drive situation out of Thailand, I think most of the channel and the OEMs are pretty aggressive in tracking inventories for their year end. So we still think there's some DRAM in the channel, but not too much. I think it's in a healthy place. On the NAND side, I think NAND, if anything, is below a healthy level. And I think that's driven by a lot of the reaction around the need for SSDs. Our inventories and our channel partner inventories are pretty light there. So I would say that DRAM still has some room to be managed downward into a 3- to 4-week. I think it's probably more in the 4- to 5-week area today. But I think, overall, I don't think it's out of hand. I think it's well under control. I think people manage around the Thailand issue and I think there to a pretty good place.

Next question comes from Daniel Berenbaum from MKM partners.

I wanted to follow up on the prior question of consolidation, realizing that you don't want to comment specifically. But maybe can you help us understand circumstances under which it might be appealing to you to be an acquirer as you have been in the past? When would it be beneficial for you to try to take out either a major competitor or one of the production partners of a major competitor? Or are you simply more interested in focusing on lowering your own cost base, your competitors continue to burn cash?

That's pretty all-inclusive question you had there, Daniel.

I tried to capture it all in one.

Yes, I think that, first and foremost, if you look at what we've been in the past, we like to think that we've been fairly intelligent around the economics of our prior activities here. When we did the Numonyx, we -- I think it's very good for us, the cash generated in the short term was high, and we basically got a payback in a short period of time. When we did things like all the way back to the particular [ph] stage. We look at the ability of the assets to produce, you look at the replacement cost of those assets. And then we look at what our ability is in terms of productivity of those assets, and we obviously economic on that and to determine what the appropriate value is. So I do think you should expect us to do anything different than that. I think that we really have been the only catalysts and consolidators in the main memory arena that's been successful at M&A in terms of, in other words, not only acquiring, but also being able to integrate and then make those assets productive. And so we'll continue to look at our ability to do that. There are some cases where that just wasn't possible and we've seen a company or 2 either exit the business or in [indiscernible] case, they were bankrupt. And there was just really no economic model that made sense for us. And so I think that, that's how we're going to evaluate it. And if there's something that it make sense, whether that look. And if we can get it in a form that we think is, I think, appreciative in terms of how we view assets and the cost of assets or how we view our ability to produce cash flow, we weren't going to do something. But if we think we can, were going to take a hard look.

Okay. And then just to follow up on the funding in Inotera. The past, you've been very reluctant to do this. I recognize this is only a 90-day note. But is there something that has change there, is there something we need to be more concerned about there?

No. The money going in is really just to make sure that Inotera has the wherewithal to execute on the 30-nanometer DRAM ramp we talked about. And we think that this money allows them to move forward with order and the tools they need to begin with that ramp. And our financing that was referenced that will go on in the spring is what will be necessary in order to put that entity financial putting to move through the rest of the fiscal year.

Next question we'll hear is from Glen Yeung of Citi.

This is the first question. It's a clarification. Did you say you actually saw an uptick in SSD demands because of their hard drive shortage?

Yes. We absolutely did. I think if I were to separate out the consumer side of that versus the corporate side of that, consumer is very strong. And I think the corporate side was a little bit more conservative in their growth, but still grew some as well. But absolutely, I think the PC guys did as much as they could. Remember, this happened during a very -- what was normally a strong seasonal demand period for them right in the middle of shipping into the channel for the holidays. And obviously, the end of year budget in the commercial environment. So we saw a pretty strong uptick, more attracted to the consumer side of the business. I think the corporate environment had the ability to put off additional spend per unit if they had to. But overall, it was a very positive impact on the SSD demands.

Okay. So I have 2 questions associated with that, then. So why is as we move into the first half of 2012 and the hard drive issue starts to lessen, do you think that you will see an uptick in PC DRAM demand even though we're in a seasonally soft period. In other words, is there not pent up demand to overcome seasonal softness? And then secondly related to that is, if the SSD increase that you saw to go backwards, just one of the things that people go back to using SSDs as they become more available?

So I think the way we're looking at it is that on the DRAM side, it should be fair, but we're hearing the same things that you're hearing, that it's not the fall which is the first data points that we're getting from the channel. It's more likely early spring kind of a recovery on the hard drive, worse case. So if that's the case, where we see DRAM demand from that sector stabilizing and being more attractive. I think the second question around SSD, I think it's interesting. As I said, the consumer side, once people go over it, is not easy to go back and I think as long as they could hit the right price points to match the consumers' appetite, I think you'll see that has proven to be kind of an unforecasted catalyst for SSD adoption. But I don't think that means that hard drives aren't going back in some of the configuration. I think hard drives will recover in the back end. I think it's just that actually on SSDs alone a very opportunistic way to get more of that product demand for customers.

Last question is just on the enterprise side. Just your senses, I know you guys have a little bit of viewpoint here, but just your sense on the relative strength of enterprise-related demand?

Is that specific to SSD or just in general?

No, just in general.

Actually, if you -- it's pretty favorable. If you look at our technology that we sell into those markets, the enterprise segments are performing fairly well and the demand relatively strong. And we talked about the server performance, and I think that continues to be pretty good for us. The networking segments been pretty good for us. So -- and storage, of course, is now, is becoming more and more of a place where we could fill our products and draw our portfolio to sort of -- we're fairly positive on enterprise in general and our exposure continues to grow in the good way.

The next question comes from Stephen Cassidy of Stifel, Nicolaus. Kevin Cassidy - Stifel, Nicolaus & Co., Inc., Research Division: It's Kevin Cassidy. But I was just wondering how you see the changes in the market with Apple buying Anobit?

Well, I mean it's certainly something that we've talked about on prior calls that beyond the NAND, there's a lot of investment going on in terms of controller development. And even on top of that, software and firmware enhancements of the application and performance requirements needed. So certainly, I think Apple obviously has the largest product consumer of NAND capacity for their products. It makes a lot of sense for them to go out and invest in these types of areas to enhance their products and enhance the performance of their products. Obviously, they still need NAND supply at the core technology level to be able to enable their products. And I think they're trying to balance out their portfolio to be able to optimize that NAND to drive the requirements of their products and the features going forward. Kevin Cassidy - Stifel, Nicolaus & Co., Inc., Research Division: right. So your sale to Apple, you don't see a lot of changes happening?

We don't anticipate the demand from Apple to change at all. Kevin Cassidy - Stifel, Nicolaus & Co., Inc., Research Division: Okay. And how about for your own Controller strategy? I know you use a wide range of controllers. Are you making any changes there?

Well, I think that we continue to evaluate the technology around controllers and any of the capabilities around the NAND, because what this stands -- in the market today, there's a lot of startup technology that companies that are working on projects around surrounding the NAND. And as this happens, and the venture community continues to invest in these types of companies, picking the winners and losers is not so easy. We've looked in a bunch of companies and over time, we've seen companies who started fast and didn't materialize as well in terms of getting technology to the market. So we continue to evaluate who are the right partners. Having said that, we're not announcing anything material in terms of partnerships that we haven't already commented on in the press. Kevin Cassidy - Stifel, Nicolaus & Co., Inc., Research Division: Okay. Maybe just one other question about, how do you view increasing capacity again? Wafer out for NAND Flash?

Well, really, our CapEx plan, as we commented on, is pretty much set for fiscal 2012. That has us plateau-ing for NAND at this roughly 65,000 wafer per month level at IMFS. And anything we did incrementally in the short term would be in terms of our own existing operations as opposed to incremental wafers in the short term. When we get near the end of 2012, that'll be a good time to look at what the right next step, obviously, on an IMFS operation.

Kevin, were you also asking about the industry or just Micron? Kevin Cassidy - Stifel, Nicolaus & Co., Inc., Research Division: No, just Micron was viewing us. Maybe you can comment on the industry, that'd be interesting also.

Well, it's probably, I don't think the industry has much of a different approach from us. We had these incremental capacity announced that we put on the roadmap. And most seem be kind of stopping where they're at and see how the market looks when I go beyond it.

The next question comes from Sidney Ho of Nomura Securities.

For Inotera, there are some chatters that they will come back on production. And at the Analyst Day, I think you guys are talking about running at 120, 130K wafers per month through 2012. Can you talk about the production plan now maybe. It doesn't sound like it's going down based on what to give in terms of guidance earlier?

I think we're going to let Inotera speak for Inotera and that's for the total volume for the 2 partners. Micron doesn't have any plans to cut any output relative to share currently.

Okay, great. And then secondly, you guys talked about a 20-nanometer NAND part using high-k/metal gate. I have to assume the cost is higher, given the material and maybe more R&D. So 2 questions here: First, relative to the cost of a light-colored pure die shrink without the new material, do you have any data to compare the cost and performance? And second longer term, does it give you better performance on maybe extend the life of plain floating gate and beyond, say, 50 nanometers?

Sorry, I missed the very beginning of your question, which was an announcement by whom?

Oh, you guys talk about -- you guys talked about 20 nanometers NAND components using high-k/metal gate.

Yes, so anytime we introduce a new technology, there's new capital investment and there's lower utilization as you ramp production. So initial cost tend to be a little higher on the new technology node on the wafer -- at the wafer level and then those come down in the line overtime as equipment gets fully utilized. There's nothing significant about the high-k/metal gate as a new technology node that puts it completely out of proportion for what you would typically see moving from one technology node to another to the other neither NAND -- not an abnormal increment relatively for cost incurred that way. So then the second piece of the question is, well, what about performance. Performance in NAND is a tricky thing, as these flowing gates keep scaling down more and more. We're obviously challenged to make sure that we have both good retention as well as good cycling characteristics. And what you've seen is that those Windows have narrowed as technology nodes have continued to shrink. And what the trick is to use advanced technology and new materials to try and continue to slow the rate of decrease in performance as you continue to scale devices and be able to build higher density and deliver better value for the dollar. So yes, we think this is the right answer. That's why we're doing it. Do we see any long-term issues associated with the reliability of the device? Absolutely not. We think that this is the right way to scale from 25 nanometers to 20 nanometers. And we probably got few tricks up our sleeves to move on beyond that.

The next question comes from David Wong of Wells Fargo.

Clarification of your earlier part. You were talking about hard disk drive supply issues. Have you seen any pickup in DRAM bit demand as we've seen this drive production come online in Thailand over the last few weeks?

The timing isn't fantastic given that the holiday purchasing and manufacturing is pretty much done. Having said that the only data point we do have that could speak to that would be the large uptick in the channel or spot market. We had about -- last week, we had about a 15% increase in spot pricing. It's settled down a little bit, but it came back down 5% of that uptick. And that's about the only index I could say that suggests the DRAM NAND is normalizing around what would have been the typical holiday demand without Thailand. And then, by the way, that's speaks to my inventory comment earlier, which that as hard drives came back in, it's not like there's a bunch of DRAM in the channel that we're concerned about. I mean, it might be modestly above norm, but not -- some of it's out of control. We think that the OEMs that reacted pretty strongly, and that hurt demand in Q1 for us. And I think the channel as well reacted fairly well and quickly on it.

Great. And my other question is, when you're seeing solid-state drives used in consumer PCs today, what's the range of capacity of solid-state drives that are typically manufactured or putting into these PCs and what is the cost of these SSDs to manufacturers?

I'll let someone else talk at the cost data. But on the density, typical density is about 128 to 256. There's different manufacturers who had different numbers that they're using for densities. But somewhere in that range, you may see some entry-level SSD around 64-gig. But primarily, on average, the industry average is about 150. But the [indiscernible] range is between 128 and 256.

The next question comes from Vijay Rakesh with Stern Agee. Vijay R. Rakesh - Sterne Agee & Leach Inc., Research Division: Just with the NAND side, I know you mentioned pricing was down with the mix. What is the SLC and MLC mix in the quarter and where do you see it going?

So SLC is mid-teens, and it'll probably stay in that range here, as we move through the rest of the year. Vijay R. Rakesh - Sterne Agee & Leach Inc., Research Division: Right. And you mentioned SSD is now about 30% of the trade NAND. I'll give that probably about 10% of your overall revenues then. Just wondering what's the mix of enterprise and consumer in that SSD and what are you seeing there between [indiscernible]?

Today, it's primarily a client with a little adoption on the enterprise side. I think that most analysts are forecasting that while the dollars will be relatively close, the units will be somewhere in the 80% range for client and 20% enterprise. And again, the dollar forecast is much closer to an even split. I don't know that it will get to even. But I think they're suggesting that the enterprise dollars will be 45% or 50% of the overall SSD dollar share and clients will be similar.

All right. And last question here, when you look at the, just CapEx for the industrial, where do you see CapEx going for DRAM and NAND in 2012 for the industry?

Well, I don't think there's any question that CapEx is going to come down for DRAM in particular. It's likely that it will also be offloaded for NAND. It's always hard to say. We're still in 2011. I don't know if it's, it tends to adapt realtime, compared to the market conditions are. So I think given the current market conditions and I think it's inevitable we'll come down. It's hard to tell right now.

The next question is from Hans Mosesmann of Raymond James. Brian C. Peterson - Raymond James & Associates, Inc., Research Division: This is Brian Peterson filling in for Hans. Just a question on your Embedded Solutions Group. Your revenue there has been pretty stable over the last 4 or 5 quarters, but margins have continued to come down. Can you just talk to some of the drivers there?

Sure. I lost the last part of the question. Can you restate that? Brian C. Peterson - Raymond James & Associates, Inc., Research Division: Yes, just looking for some of the drivers of the margin erosion in the Embedded Solutions Group.

Well, I think that the some of that has to do with the types of products that are going to embedded. We don't think it's going to be a material margin impact. Some of it has to do, as I said, with more DRAM being sold into that market share. And actually, we think that's a positive long term as we sell the whole portfolio to that segment. As a matter of fact, I think quarter-over-quarter, the number is 42% growth in of DRAM into the embedded customer base. And that better margin that we would normally have gotten in the commodity space. So if the portfolio started playing out a little bit, and bringing down the ESG margin somewhat, but again, positive overall to our performance. Brian C. Peterson - Raymond James & Associates, Inc., Research Division: Okay, fair enough. And just to follow up on Inotera. I know that's a short-term financing to get them through to 30 nanometers. But how would you handle a situation potentially if they could not finance or put that out to another third party?

It's pretty hard to respond to hypotheticals, so I think we'll pass on that one.

Our next question will come from Ryan Goodman with CLSA.

I had a question on comment you made early on the call about several OEM wins on the client side of SSDs. Just looking for some color and then maybe you could share the split between the client business there between channel and OEM exactly?

Sure, sure. I think to that point on prior calls, I've talked about the channel opportunity in SSDs relative to OEMs. And as we continue to grow, we're expecting equal growth, really. It's about split down the middle between our channel drive under the crucial brands as well as our OEM design on the Micron brand of products. And today, that's about a 50-50 split. And so off of the last quarter numbers, we've been growing share in OEM as part of our mix. And they're both categories growing very nicely for us.

And just follow up to that, when can we start seeing some ultra books out there with Micron driving them?

I hesitate to give you an exact date, but we think in the back half of the year, you'll see that.

And if I could put one more quick, just on the SSD roadmap. Can you give us an update on -- I know the PCI is sampling -- the MLC enterprise I think just went to production in the insider. Can you give us just timing on those 3 SKUs?

So I think all of which are quite of different answers to where we are in the qualification process of our customers and that volume should be. Probably I would leave it with that.

Our next question is from Bobby Gujavarty of Deutsche Bank.

I was just curious on the NAND side between -- did you see strength in both kind of the OEM and the retail? I mean, there have some mixed data points on retail sales. Just curious what you think throughout [ph] those -- sort of throughout that markets did in the November quarter?

I think that we saw a fairly good retail numbers coming out of the holidays, meaning out of the holiday selling period. And even up till now, Black Friday, flash memory sales were pretty strong. And they've done fairly well above our plan. But we still see more demand growth coming out of the SSD kind of channel integrated of our business and then the client side. So what we've been pleasantly surprised at was the retail piece as we thought maybe that might be challenged, given overall retail and consumer appetite. But both have performed well. The growth of percentages would lead one to look at the SSD as a higher growth story. But overall, they both have done fairly well.

Great. Just maybe a quick follow up on that. NAND is traditionally a pretty seasonal business in terms of going ahead again for the calendar 1Q. But you have several offsets here obviously with SSDs. And then also just that you haven't had the same kind of retail balance in the back half of the year as you have traditionally in the end markets. Kind of what do you think about seasonalities as we head into the calendar 1Q. You're feeling better about NAND, about neutral or worse, just kind of curious?

I agree with where you're going. I think that NAND, if you look back 3 to 5 years ago, NAND was primarily driven in consumer products and MP3 players, USB drives, photography cards. If you get tied to cameras, that were bought in season. So I think there was a shift going on away from the seasonality factor around NAND. And SSDs and the fact that it's a new technology and being adopted and enterprises starting to get going. So I think you'll see a lot seasonality around NAND than we have in the past.

Our next question comes from Uche Orji from UBS.

This is Steven calling in behalf of Uche. The first question I have was on the specialty memory business. In terms of the actually going to the server, as well as the mobile space, how was the pricing trends for that business, first of all, in fiscal Q1? And what does that so far in fiscal Q2 quarter-to-date?

So we don't normally break out the segment pricing at that level. Just a general comment for your modeling is that the commodity pricing tends to go in a direction and the other market segments on a proportional basis trail that trend. So it kind of maps out in the same direction, but not at the same rate.

I guess with some of your peers having increased capacity into a target for the specialty market, I was just wondering if there's, if you've seen any acceleration in price declines for the overall specialty business in the past several quarters or is that sort of containing of fairly steady decline rate?

Yes, on a relative basis, we see that. We haven't seen any impact from additional competitive capacity that we would isolate as a cause for anything abnormal.

Okay, got it. And then for the 30-nanometer customer in DRAM, what kind of mix do you think that can achieve overall for fiscal 2012?

We're probably going to target around 30% conversion somewhere in the summer timeframe.

Got it. And then lastly, on the NAND business, for solid-state drives, is that a business that you think of doubling again in terms of revenues or sort of for full fiscal year? And if so, what kind of implications does it have on your IMFS expansion plans sort of towards the back half of the year?

I'll take the first part of that question. I think absolutely, we feel that has the opportunity to double. And as I mentioned, the OEM's success we think will continue to expand and grow, not just in the client space, but we think enterprise will be material to us, as well as, again sounding like I'm repeating myself here but the channel storage business is a pretty strong play for us. And the fact that we have half of our drive is going in the channel today, we'll tell you that we are pretty focused on winning that segment as well.

Relative to the second piece of the equation, I think does a lot of things that go in the hopper when you add new capacity. And we're certainly very encouraged with the directions, as Mark just commented, but we'll have to take a little bit of a wait-and-see approach.

I have an excellent quick follow up on that. Just for the different types of NAND products that you sell, your chips into between your retail branded SSDs versus the private label products versus cards and then on one in, what sort of the pecking order in terms of the most attractive from a profitability standpoint?

Let me give you more of an industry take on it as far as where the projections are in terms of ASPs, and we don't normally comment on that. But it's an attractiveness for longer-term margin opportunities in the industry. We think enterprise storage historically and will continue to be a very attractive space for us. We think client SSDs, given the performance requirements people are looking at it and endurance will continue to be a good space. We think there are mobile applications that will be more embedded. We also been doing in our ESG business, there will be custom specialty NAND applications that will develop and be somewhat attractive relative to more commoditized things like USB products or micro SD cards. So kind of a rough sketch of how we look at it.

The next question is from Doug Freedman with RBC Capital.

I was wondering if you could clarify something for me. On the NAND side, you offered an ASP erosion that included mixed shift. What was the ASP erosion on just the MLC like for like, quarter-to-quarter then?

Virtually all of it, all the change from Q4 to Q1, Doug, was mixed related.

So you would call MLC would've been flat MLC?

Well, uplift in certain markets like SLC type NAND and then, of course, some retail drop. So you can't do a one-to-one on the all parts. But with the mix all in, ASPs were relatively flat and it was just a matter of shipping more SLC that drove the 10% down.

Okay. And then if I look at the NAND market, can you offer a bit growth for the year on what you think the industry will do?

We think the industry, Doug, is going to come down a little bit in 2012. Certainly, in line of Steve's comment, where spending to be down by $1.5 billion as well. So it looks like the markets coming in around a 65% year-over-year growth rate.

And then when we talk about, you mentioned already the impact of disk drives on the PC build rates, do you think that we've seen the worst already? Or is the PC unit production going to decline materially in Q1 due to continued drive shortage? What's your outlook there in the near term? Where are we in that recovery?

I can give you a little bit of that, Doug, and then Mark can jump in if he likes. It looks like they're going to improve drive production by about 20 million units in Q1 over Q4. So if all those get put in boxes and those boxes get shipped and then you should see a better quarter. Mark, would you like to add anything to that?

That's about what we're hearing from our major OEM customers is that they deal the worst is behind them in terms of the ability to get supply. And certainly the Tier-1 OEMs were able to put a lot of pressure on their suppliers to get them first in line. So we think that in Q1 calendar year, we'll see some normalization around PC shipments.

I probably have one more thing too. Don't forget that the SSD capacity can increase as well. I think Mark mentioned it in some of his comments, that we actually maxed out our SSD shipments. So we're adding production capacity. So SSDs will be able to ship in to those clients as well.

And then if I could just move on to the specialty memory, the server side of the market. Is there any signs that you're feeling any impact from the pending launch of Romley either any sort of a pause? Or is there an expectation of mixed shift that you're going to see that's driven by the Romley ramp? Can you talk about how you're preparing for that and what you're seeing in the market?

If anything we said the latter might be true, that there might be a potential mixed shift over time. We're seeing the server business change only in terms of the demand from our customers in terms of the type of lead times. That business is becoming more of a business that we have to plan strategically with inventory to react to increase opportunities. Server growth is fairly stable for us and in the industry. But the way these orders are coming in, there's an acronym in the industry called LVO for large volume orders, and they come in somewhat with very short lead times. These are data center applications when you think of companies like Google and Facebook and others and those supporting those types of businesses, and we have to react more strategically with strong inventory positions to take upside. And then I think we've done a fairly good job in that as you can see from our growth numbers. Actually Steve commented earlier that we actually had a record for Micron in terms of number of makeshifts to the server market this quarter. And we're going to continue to focus on that category and we don't pay the demand is going to change or pause just because of Romley.

Our final question the will come from Betsy Van Hees of Wedbush Securities.

I was wondering if we can talk a little bit about the NOR Flash business. It seems like there's been a couple of tough quarters and I was wondering if there's any changes you might be making structurally in the organization? And then I think I have a question on SSDs as well.

Well, the NOR Flash business primarily difficulties have been around the wireless space. As I mentioned earlier, a couple of our customers are having a tough go on it. And so I guess I would only add that when we always knew that the NOR space in the wireless would transition over time to other types of memory, NAND, DIMM, et cetera. And I would say that probably the lack of demand in the marketplace and the challenges some companies are facing maybe we have that occurring fast and then you might have otherwise expected, although it's hard to tell what comes out of it. But basically, it's on course to declare it over time, but we already knew that. The NOR embedded space other than the market being a really bit weaker is actually been pretty stable and pretty steady and the margins are pretty good. So we don't plan on making a lot of changes there, other than I do think that we're actually gaining some market share back in the NOR embedded. And we believe that, that will continue as we get our 45-nanometer 8-inch into the marketplace and then 45-nanometer 12-inch that we're working on that. So we think we're in a pretty good spot there, and it hasn't really changed our perspective on that at all. And what was your next question?

That was helpful. And then on the SSD space, I was wondering if you could help us on the client and commercial. So when you're shipping into the client, are you shipping them SSDs in terms of the separate or just buying it and saying, I want to buy 128-gigabyte or 256? Are they actually being shipped within the system itself? Or if you could kind of help sparse that out for us?

I think I understand the question to be the type of form factors we ship SSDs to the market. Is that what you're asking, Betsy?

I was asking is if, shipping them into the consumer too crucial depending on, say, I want to buy -- that's already bought a PC and then they said, I want to go ahead and I want to get an SSD to complement that. Or whether the SSD is actually being complementing the hard drive. So the OEM is not shipping the hard drive at all, but shipping the SSD in place of the hard drive.

It's really is a little bit of both to that equation. I think we see the consumer maybe in an upgrade type of application. And then given all that's going on, I think then there's a borrower and integrator customer are also goes through a crucial, and they're actually fabricating their own light box systems. And the other side of that is the OEM model we serve as well, which is basically we sell the SSD and they get made into finished good products that gets sold to consumer.

Okay. And then one last question. Where do you think the price point is? You talked about the consumer and willing to buy SSD and trying to go back to hard disk drive, what do you think the price point is that the consumer is going [indiscernible] reduction buy an SSD over or preferring SSD over hard disk drives?

You mean the price point of the PC?

Oh, no, just I think the SSD itself, the 128-gigabyte. Does it need to be $100? Or what price point does it need for the consumer?

That gets into a whole different set of questions that is challenging for me to answer. I would be easier for me to answer the PC targets that I think consumers would react to. And I think basically the common economics is somewhere marginally even to or slightly above where the current PC hard drives are. And I don't mean by capacity, I mean more by just average dollar out of wallet for a price of the PC. And so, I think $499 was kind of a going price for the high-volume PCs in retail. And I think somewhere between $499 and $599 for an SSD-enabled PC will trigger mass adoption in the market.

And with that, we would like to thank everyone for participating on the call today. If you will please bear with me, I need to repeat the Safe Harbor protection language. During the course of this call, we may have made forward-looking statements regarding the company and the industry. These particular forward-looking statements and all other statements that may have been made on this call that are not historical facts are subject to a number of risks and uncertainties, and actual results may differ materially. For information on the important factors that may cause actual results to differ materially, please refer to our filings with the SEC, including the company's most recent 10-Q and 10-K. Thank you.

Ladies and gentlemen, thank you for joining today's conference. This does conclude the program, and you may now disconnect.