Good afternoon. My name is Saeed, and I will be your conference facilitator today. At this time, I would like to welcome everyone to Micron Technology’s Third Quarter 2014 Financial Release Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer period. (Operator Instructions) It is now my pleasure to turn the floor over to your host, Mr. Kipp Bedard. Sir, you may begin your conference.

Thank you very much and welcome to Micron Technology’s Third Quarter 2014 Financial Release Conference Call. On the call today is Mark Durcan, CEO and Director; Mark Adams, President; and Ron Foster, Chief Financial Officer and Vice President of Finance. This conference call, including audio and slides is also available on our website at micron.com. In addition, our website has a file containing the quarterly, operational and financial information and guidance, non-GAAP information with reconciliation, slides used during the conference call and a convertible debt and capped call dilution table. If you have not had the opportunity to review the third quarter 2014 financial press release, it is again available on our website at micron.com. This call today will be approximately 60 minutes in length. There will be an audio replay of the call accessed by dialing 404-537-3406 with a confirmation code of 56949074. This replay will run through Thursday, June 30, 2014 at 5:30 PM Mountain Time. A webcast replay will be available on the company’s website until June 2015. We encourage you to monitor our website at micron.com throughout the quarter for the most current information on the company, including the information on the various financial conferences that we will be attending. You can also now follow us on Twitter at Micron Tech. 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 in 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 would now like to turn the call over to Mark Durcan. Mark?

Thanks, Kipp. We had another outstanding quarter benefiting from strong market demand as well as solid operational execution. Our revenue was just under $4 billion while gross margins were stable at 34%. We had very strong free cash flow at $880 million based on operating cash flow of $1.46 billion less CapEx of $576 million. I’d like to spend some time touching on a few key areas of focus as we wrap up fiscal 2014 and continue preparing for fiscal 2015 and our brief industry update. Ron Foster will follow with a financial summary. And before turning to Q&A, we will close our prepared comments with Mark Adams covering additional details of our operational performance and market conditions. Key focus areas for the management of the remainder of this year and for 2015 include completion of the planned 25-nanometer DRAM conversion, beginning the 20-nanometer DRAM ramp, this is critical to improving our relative cost position, active management of our DRAM product mix as we balanced servicing demand growth in categories such as server or mobile while also maximizing our margin profile across other long-term strategically important segments, continued execution of our ongoing and capital efficient 16-nanometer planar NAND conversion, investment in tools and engineering resources to support the initial deployment and ramp of our innovative 3D NAND technology, increased sales of 16-nanometer TLC NAND-based products, growth of a robust enterprise SSD product portfolio, continued development of our capability to deliver higher value system level solutions, including investments in advanced packaging and controllers and investment in newly emerging memory technologies to ensure we remain at the cutting edge of innovation. As you can tell, we do not plan to rest on our laurels. For 2015, as well as for the longer term, we will continue to be measured and prudent in…

Thanks Mark. Our third quarter of fiscal 2014 ended on May 29, we posted to our website a file containing the financial information I will cover, including GAAP and non-GAAP results, certain key metrics for the third quarter, as well as guidance for the fourth quarter. For the third quarter, we reported net income of $806 million or $0.68 per diluted share on net sales just under $4 billion. On a non-GAAP basis, net income for the third quarter was $913 million or $0.79 per share. Non-GAAP adjustments netted to $107 million or $0.11 per share in the third quarter and included the following: restructure charges in the quarter of $9 million were primarily related to idle charges associated with shutting down operations in Israel and Italy. Amortization of debt discount and other costs of $36 million in the third quarter include imputed interest on our convertible notes and the discount on the Elpida installment debt. The $16 million loss on restructure of debt arose from the conversion and repurchase of convertible notes in the third quarter. I will touch on this further in a few minutes. Non-cash taxes from the legacy Elpida operations were $49 million in the third quarter. Cash taxes for the year are in the low single-digit percent of pre-tax income range as previously indicated. Finally, there is a $38 million share anti-dilutive effect of capped calls based on the average stock price during the third quarter of $24.89. In the fourth quarter, we expect the following non-GAAP adjustments. We anticipate incurring restructure costs in the fourth quarter for employee termination benefits in the range of $15 million to $25 million primarily in Italy, approximately $40 million amortization of debt discounts on the convertible notes and the Elpida installment debt during the fourth quarter. We expect…

Thanks, Ron. On our last call, I introduced our new organization structure highlighted by the formation of four market-facing business units: computing and networking, otherwise CNBU; storage referred to as SBU; mobile, MBU; and embedded, EBU. I will review our performance in first quarter under the new structure and then end with some technology and operating highlights from our third quarter before handing it back over to Kipp. For comparative basis, we will use restated numbers for prior periods as if we operated under the new structure in the past. Our computing and networking business had a strong third quarter characterized by improving demand and favorable pricing. The PC market appears to be more favorable compared to prior industry forecast and supply remains constrained. Pent-up demand for corporate refresh on desktop and notebooks seems to be leading to better-than-expected sector performance. PC DRAM pricing is improving both at major OEMs and in the channel as current forecast remains strong for Q4 and through the holiday season. Demand for server DRAM is also increasing. Server bits were up 30% quarter-on-quarter driven by data center and enterprise growth in density per unit memory content leading to enhanced system level performance. Demand for our networking products remained healthy as well driven by LTE build-out in China and other emerging markets. Networking DRAM pricing improved quarter-over-quarter driven by richer mix of products and continued strong demand. Finally, our graphics business had record shipments and revenue in the quarter with strong sales of GDDR5 products driven by key OEM penetration both PC and console gaming. On the technology front, we continue to drive innovation with products such as DDR4 for servers and high-performance desktop applications; GDDR5 into high-performance gaming PCs and workstation graphics; and Hybrid Memory Cube for high-performance solutions in networking and computing. For…

Thanks Mark. We would now like to take questions from callers. Just a quick reminder, if you are using a speaker phone, please pickup the handset when asking a question so that we can hear you clearly. And with that, please open up the lines.

Thank you, sir. (Operator Instructions) Our first question comes from John Pitzer from Credit Suisse. Your line is open. Please go ahead sir.

Yes, good afternoon guys. Can you hear me okay?

Yes.

Perfect. Guys, a quick question here first on the DRAM front. I am just kind of curious when you look at the pricing in the fiscal third quarter and the guidance in the fiscal fourth quarter, I would have thought just given pricing trends in the industry, and more importantly, some of the mix drivers for you like DDR4, that you would perhaps have seen better pricing on the DRAM side of the business. Can you just help me understand a little bit about what’s happening on the mix side that’s driving the guidance for sort of flat pricing for the fiscal fourth quarter? Thanks.

Well, I think as you have identified, it really is obviously all mix-driven for us. Some of which is related to some of the specialty markets lagging in the pricing catch-up relative to the PC segment. One of the things we have stated on prior calls is that each of these businesses is obviously very unique with a unique set of customers and we are committed to all the markets. We have seen tremendous server growth and we expect that to continue to improve over time, but in general what we are just seeing is a mix effect drive, basically a stable pricing relative to where we are today.

Thanks Mark. That’s helpful. And then maybe as a follow-up, guys, just on the ramp of the 16-nanometer TLC and NAND, as that happens over the next couple of quarters, can you help us or help me get a better understanding of the magnitude of the cost savings? And maybe you can talk about, if you had an optimal mix of TLC today, how much better would the profitability be in the business at the operating or gross margin level?

Yes. I mean, a range to expect on TLC at a bit level somewhere between a 15% to 20% improvement. And as we are not specifying the actual table, we look to be in the market not just with components in the early part of the calendar year, but we should have a strong SSD play in the later part of the first half.

Perfect. Thanks, guys.

Thank you. And our next question comes from Kevin Cassidy from Stifel. Your line is open. Please go ahead.

Thanks for taking my questions. You have mentioned long-term commitments, can you say how long those – the long-term is, is it six months, is it a year?

Right now, the commitments we are looking at somewhere between 90 days and six months. And mind you, we are pretty careful about this, because these agreements have to be favorable for us over the long-term and so we have to lock in both the capacity supply piece of it as well as the pricing. And so we do these where we have confidence that the long-term relationship will drive the right behavior between both parties.

Okay, great. And maybe on the follow-up, you had mentioned that DDR4 was going to become 20% of the CNBU’s shipments in the second half of 2015. Is that at the cost of PCs or I guess is it just the mix shift you are making?

It’s really going to start out more in server upfront. And we will only do this and our current plan has us generating higher margins in this DDR4 category and we will – we certainly won’t do it, if it’s margin adverse. And we feel pretty confident we are going to drive differentiation with our customers and allow them to drive performance. And so right now that’s where our plan has and we feel pretty confident we are going to drive to that result.

Okay, thank you.

Thank you. And our next question comes from Steven Fox from Cross Research. Your line is open. Please go ahead.

Thanks. Good afternoon. Just one clarification first on the potential long-term agreement, so are you saying that you have locked some in or are planning to and what kind of commitment would that be relative to your overhaul capacity?

We have locked some but not a majority. And we have looked at each of them on their own merit in terms of the value of the relationship that we are able to drive in terms of portfolio of our products as well as market access.

Okay. And then just a little bit more color on maybe the mix trends that play out beyond this quarter, can you just sort of talk about how you think maybe between now and year end some of the mix relates to specifically on the enterprise side? So server DRAM and enterprise SSDs, what is your outlook for demand from those areas for say through December 31?

We still are very bullish on enterprise DRAM opportunities for us. And if you look at the server bit growth, I mean, I don’t have the exact number in front of me, but within the last two years, we were somewhere on the 150 million gigabit equivalents per quarter. I just stated that we were up 30% quarter-over-quarter, that was slightly below 500 million gigabit equivalents and that continues to grow in the server DRAM business and we think it’s going to continue to grow. Really, the density per box is a big differentiator in terms of performance. And we also think the hyper scale cloud and data center growth is just going to continue for the foreseeable future. And the enterprise business, we obviously continue to see growth there as well in the end markets. We also see that we feel it’s early. And there is different formats. There is hybrid drives, there is obviously SaaS and PCIe and we think we are at the beginning of a long game there with a lot of exciting opportunities and we continue to invest that way.

So, is it fair to say that the mix in those two areas that you just pointed out should be higher by the end of the year versus where it is midyear?

Let me jump in a little bit on the server piece. Clearly, there is very strong demand there and we have been – we have had more than our fair share of that segment in the market for long time based on service levels and quality levels etcetera. As we look at each of these segments though, as Mark has commented, we are going to be careful to make sure that we are looking at the long-term ramifications of the relationship with all those customers as well as optimizing our margins going forward. So, it’s not just a matter of growing share in the fastest growing segments, it’s a matter of balancing that with the return for the company as well.

Great. I appreciate the color. Thanks again.

Thank you. And our next question comes from Mehdi Hosseini from SIG. Your line is open. Please go ahead.

Yes, thanks for taking my question. Starting with NAND, I am a little bit surprised that the cost is tracking flat for two consecutive quarters can you please provide an update? Is it just the matter of timing before 16-nanometer kicks in or how should we think about this progress?

Well, thanks for the question. I think you identified one element to the equation. The primary driver, as I mentioned in my comments earlier was that we started to get back into the SSD game in scale and as that BOM cost includes all of the SSD build material, so that impacts cost that we classify under NAND as well as what you mentioned is that the – while going very well, we don’t set to get the full cost benefit until future quarter.

So, how should we think about or how do you differentiate between the debt cost versus non-debt costs? Which one is having more of an impact?

We tend to not want to give that data from a competitive perspective. It is just with the best way to take a look at it is to take a look at quarter-by-quarter the volume on SSD and how that might trend relative to cost per gigabit.

Got it. And then one question for Ron, thanks for providing guide. I just needed clarification on gross margin. Did you say that gross margin would be down by $70 million and if so can you explain again what the reason is?

Mehdi, what I broke was that I gave you the DRAM outlook including the margin trend and the NAND outlook including margin trend. In fact just to comment on that for a minute and then I gave you another piece which I will elaborate on. On the NAND margin trend, we actually indicated we were going to probably be down a couple of points Q2 to Q3 and we are actually flat. We are now thinking we will be down a couple of quarters predominantly mix driven, just so you know where that tie-in comes. But as you look at the total Q4 trend, we gave you the DRAM pieces, the NAND pieces where we think will be down a couple of points. And then there is a $30 million effect related to some expected sell-through of legacy technology inventory in the fourth quarter. And that will be basically – float out in the third quarters, but I wanted to call that out, because it’s a somewhat unique effect. It’s a technology required from our Numonyx acquisition and we will be replacing that with new emerging technology over time, but we did have some legacy inventory that we are selling off and that’s related to a specific approach to phase change that we are no longer pursuing in favor of other variance of the technology. So that $30 million is in addition to the guidance on NAND and DRAM I gave you.

Got it. Thanks so much.

Thank you. And our next question comes from Rajvindra Gill from Needham & Company. Your line is open. Please go ahead. Rajvindra Gill - Needham & Company: Yes, thanks for taking my questions and congrats on solid results. Just a question on the SSD strategy, given some of the recent consolidation or acquisitions that you have seen from your competitors, wondering what’s your response to that and how do you intend to kind of compete on the enterprise SSD space, given this recent acquisition and consolidation by your competitor?

Yes, so this is Mark. There has been ongoing activity in this area over a number of quarters, including as you know the most recent one. We continue to grow our businesses methodically and organically as well as look at a number of inorganic opportunities over time. When we see one that we think is a good fit for Micron, we will execute on it, but we are not going to comment in advance on which ones those might or might not be and we are certainly not going to comment on acquisitions by any of our competitors. Rajvindra Gill - Needham & Company: And it was pushed a little bit on the previous question, but can you talk a little bit about some of the tangible tailwinds you see on the NAND gross margins over the long-term? And how do you expect to get those NAND margins up, whether perhaps closer to some of your competitors?

Yes, sure. So, firstly, as I commented on, we think the enterprise market is a very attractive market for the enterprise storage devices and continue to make investments in building out capabilities around our controller team, our firmware team. We have had a very good entry in the PCIe enterprise storage class products and great performance there and we continue to grow and continue to invest in SaaS as well. So, we believe that we will grow that business accordingly and be successful in that business. Secondly, as I commented on my earlier comments, we are continuing to drive and accelerate to a TLC roadmap that takes advantage, the cost advantages there. And I would say finally, we believe that beyond SSDs, the mobile market for NAND will be a good contributor for overall margins over the long-term and that’s really how we collectively look at this business. We are in this business for long-term. We are going to make these investments and drive overall, our capacity strategy and end-market product roadmaps that way. Rajvindra Gill - Needham & Company: Great. Thanks for taking my questions.

Thank you. Our next question comes from Monika Garg from Pacific Crest Securities. Your line is open. Please go ahead.

Thanks for taking my questions. First is on the CapEx, CapEx has almost doubled quarter-over-quarter, so could you kind of give a split between NAND, DRAM or is it more be weighted towards 3D NAND?

For the year of fiscal ‘14, the number that I gave you was 2.8 to 3.2, that’s over $1 billion of capital fourth quarter as you have observed. It’s just timing of payment schedules, but within the range that we have been guiding for a number of quarters now. And in terms of the breakdown, it’s heavier to DRAM. It’s probably 40% DRAM, 30% NAND and the remainder in a bunch of other areas, including R&D.

Thanks. Just then a question on the 3D NAND, could you maybe talk about when you expect to have samples of 3D NAND? And when do you think you will ramp 3D NAND basically conversion from 2D NAND to 3D NAND? Thanks.

Yes, Monika, we are not – we have commented on previous call that we would have more to say about that later in the year and we are not planning to make any announcements as to explicitly when we might sample or announce any products in that area. We have said that we believe that this is going to be a material impact on the industry in the second half of 2015 and we wouldn’t change that guidance today.

Thank you so much.

Thank you. And our next question comes from C.J. Muse from ISI Group. Your line is open. Please go ahead.

Yes, good afternoon. Thank you for taking my question. I guess first question is a follow-up. On the 3D NAND side, curious as you think about some of the well-known I guess issues there at one of your competitors, curious how you think about supply demand heading into next year and whether or not the industry will need to add incremental planar capacity to meet expected demand if the issues around 3D persist?

It’s probably hard to speak for our competitors in that way, but I would say that our intent is to keep going down the path we are. We have stated in Mark’s comment we have got a plan in place that we are not making any changes to that plan today and as we look at industry demand over that period, we will consider matching up our customer requirements, but in general, we are on a plan with the current 3D strategy is not going to really affect our planar output.

Yes. And I think it’s – let me add a little bit to that, Mark, it’s really hard to look at the NAND business today and the changes coming with 3D NAND technology and say makes a lot of sense to make large investments in planar NAND. So, I think to the extent some of our competitors have issues with 3D NAND technology. I wouldn’t expect to see anybody go in and backfill out with incremental planar NAND, I would just expect the market to be a little tighter as competitors work through that situation.

That’s helpful. And I guess as a follow-up to your prepared remarks regarding system-level investments, curious, I guess first, if you can opine on I guess where on the technology side, whether controller, firmware, etcetera that where you think you might need incremental technology as well as whether you would pursue partnerships or whether it would be pure organic or acquisition driven?

This is just a big, big space to cover. When you start think about stores and all the places it goes and all the end applications and interfaces you have got, you got mobile applications, you got client, you got data center, you got hardened enterprise, you got UFS, you got PCIe, you got SaaS, you got SATA, it’s a lot of engineering resources across a broad spectrum to service all those system-level solutions. And so the answer is yes, all of the above. Micron needs incremental controller resources in all those areas, firmware and software resources to support those incremental controller resources and we are working at all of those areas both organically and inorganically and will continue to do that. So, stay tuned, but we are not going to broadcast in advance exactly what we may or may not do.

Sure. If I could sneak in one last one, can you provide an update on where you are in terms of shrink on the DRAM side, 25-nanometer and 20-nanometer, in terms of I guess this year or next year?

Sure. So, today, as you know, we have got 25-nanometer product, about roughly 30% of our mobile DRAM is on 25-nanometer. Today, very little is in the PC DDR3 space on 25-nanometer. Going forward, obviously that will shift and improve in terms of the mix on the 25-nanometer node. And remember, as Inotera has probably stated, they are going to bypass 25-nanometer and go directly to 20-nanometer and we expect – and we can’t speak to them, but we expect them to be out in the early part of 2015 with early volumes and customer qualification and meaningful volumes in the back half of 2015. And then over time, we will begin the migration of our capacity that way as well.

Very helpful. Thank you.

Thank you. Our next question comes from Doug Freedman from RBC Capital. Your line is open. Please go ahead.

Great. Thanks for taking my question guys and congrats on the strong results. If I could dig into the CapEx increase just a little bit more on the quarterly spend rate, Ron, you did say it had to do with the timing of payments. How should we think about that equipment getting turned on? And is there an inflection at all in the bit growth that we should see in maybe the Q1 quarter as that equipment gets put in place?

Yes. So, it’s just mainly timing quarter-to-quarter and variation, but the way we normally recognize CapEx is when we pay it. So, when we actually pay it per vendor agreements. And typically, those vendor agreements have qualification process just to enable them to be available for production. So, it’s a function of when they are available for production and we pay according to our vendor agreements. So, yes as we go forward, that will certainly contribute to what Mark and Mark have been commenting about with bit growth trends over time as well as migrating some of the new product technology areas, but it can vary based upon the qualification scheduling of the technologies and the individual machines. Keep in mind as Mark also mentioned, we have got a number of investment going on in other areas such as 3D NAND technology and it has a little bit different timeline etcetera. So, there is a lot going on inside, Micron. The timing, quarter-to-quarter, tends to vary around, but I gave you the full year view and that was about where we thought we would be for the year, just some slipped out of the third quarter into the fourth, a little bit more than planned.

Okay, great. Thanks for that color. And it’s a great segue into my next question. There is a lot going on between all the different technology transitions you guys are doing. When we merged Micron and Elpida, we really did not see much in the way of any R&D synergies. Is there a point in time at which maybe the R&D roadmaps start to come together and joint development efforts might increase, such that we should see maybe some synergies be realized on the R&D lines? Is there anything that we should be thinking about there?

Well, I don’t want to forecast too far in the future, but Doug, I think you have identified a potential benefit downstream as we remember, Elpida was on a roadmap to 25-nanometer upon the acquisition. And we have obviously continued in parallel with the 20-nanometer investment on the R&D line. I think out in the future as the market warrants and dictates from a financial return perspective, you can envision us getting to a single architecture out beyond 20-nanometer.

Okay. And with that would that – and that could lead to some sort of an R&D synergies?

Potentially.

Yes, it could, Doug, but keep in mind we are also making investments in storage-class memories and advanced system-level solutions etcetera. So, I think the nature of R&D is going to change. We are not as focused on driving that R&D line down as we are making sure that we are deploying whatever capital we do spend or whatever corporate resources we do allocate to R&D that we use them effectively and efficiently.

Alright. And if I could sneak one more in, can you talk a little bit about the wafer output that you are going to see in the back half of the year, maybe in a percentage Q3 over Q4 and then going forward and whether those are internally or purchased from Inotera?

I think the best way to characterize that, we see that as generally flat quarter-over-quarter.

Great, thank you. Congrats on the strong results.

Thanks, Doug.

Thank you. And our next question comes from Mark Newman from Bernstein. Your line is open. Please go ahead.

Hi, thanks and congrats for the good results again. Question is more on the NAND side, it seems like, if you talk about – you are talking about a few things going on there, it seems like you are having some success on the SSD side. But from what I understand, it seems like the TLC part of the equation seems to be getting pushed out a little bit. So, I just wanted to check with you in terms of those two things, the movement towards more SSD solutions, what has worked and what are the kind of stumbling blocks for moving further, in terms of getting more SSDs, enterprise, end-computing PC SSDs out of the door to improve your mix? And similarly, on the TLC side, what is it that is delaying TLC adoption? Did you foresee those things being fixed? And if you could talk specifically through if those are more controller-related or silicon-related on the TLC?

Well, maybe I could start with the question on market access and what we think is working. Remember, there are two dynamics that were going on over the last two quarters. So, when I commented on in the April call about this, one of which is we were obviously converting new capacity to NAND in our Singapore Fab 7 and that material need to get qualified with our major customers. In addition, we were also shifting from 20-nanometer and 25-nanometer drives to new product development on 15-nanometer and 20-nanometer high end drives. That transition at the time of the Singapore fab slowed our growth not necessarily driven by market growth, but driven by our ability to get customers quals and our products ramped at the right time. You saw the improvement in Q3 and that’s really – it should highlight that our access to the market is pretty strong. Our customers are relying and we drove pretty good results, but so it wasn’t something that I would say that we change behaviorally, it was just some transition in both technology and where the capacity was coming from. And we feel pretty confident we will continue to grow. On the TLC side, I would say that we are now confident with our internal testing that we can drive high capacity TLC into solid-state market. We were also positioned as a performance even on the client side, a high-end performance high-quality drive with our OEM customers and we want to make sure we were able to drive the right volume and the investments in TLC. And we think with our 16-nanometer roadmap we can do so, and as I said, as I commented earlier, we will get there probably by – from a drive format by spring of 2015.

So, on the TLC side, are those more things or improvements on the controller side or is that also a combination to the NAND silicon itself?

I think it’s a little bit of both. The controller piece has to handle obviously the error correction element of TLC and that’s a little bit different, but I think the reliability of the TLC and the actual testing of it internally in our development, early stage modeling has got us to higher comfort level.

And then just a follow-up on the SSD portion of the question, have you shared or maybe I missed the percentage mix of your NAND that is going into SSDs? And then if that’s also broken out into enterprise versus PC as well by any chance?

Yes. I am happy to do that. And let me just clarify, in the past we have actually included in our SSD revenue capacity we have sold to third-party SSD companies. And we are no longer going to do that. The best way to think about our SSD share today is that of overall NAND, SSD is roughly about 20% and that’s up from 12% last quarter. And again for competitive reasons, I just don’t want – I don’t feel comfortable breaking out the enterprise client mix.

Okay, great. So, it’s from 12% to 20% and….

Of our overall NAND revenue.

Overall NAND revenue got it. And that’s purely your own SSDs, not accounting going to third-parties?

That’s right. That’s right.

Great. And is that – any idea where that may go to fiscal Q4 and into next year in terms of percentage of mix?

Well, I think it’s fair to say that it will continue to grow. We don’t want to set any numbers on the call, but it will be an upward growth from here.

Yes, I guess, all of this sounds good. I am just still a little bit curious why based on the guidance the next quarter’s gross margin looks like it’s going to come down, even with your mix improving SSDs. It seems like the ASP part of the line would be a little bit better, is there anything I am missing as to why that ASP wouldn’t be better?

It’s really a function of our growth and our scale on getting big in some OEM sockets in terms of the SSD qualification and future business commitment. And the second piece on the margin question, as I mentioned, we are now getting 16-nanometer in volume obviously and that ramp is on the front end of the cost benefit curve that we would see in future quarters.

Got it, okay. Much appreciated. Thanks very much.

Thank you.

Thank you. And our next question comes from Vijay Rakesh from Sterne. Your line is open. Please go ahead.

Yes, hi guys. Just going back on the same NAND question here, when you look at the SSD mix going from 12% to 20%, you mentioned some of the frontloading of the costs. As those costs flow through the August quarter, do you see NAND margins kind of bouncing back towards the end of the year into the November quarter?

Well, it’s again we try to avoid forecasting going into that kind of out in the future. We will continue – guys, we are going to continue to drive performance in this business. And we think we have got line of sight on the key fixes to drive better performance over the long-term.

And when you look at the 16-nanometer mix on the NAND side, where are you now and how much of the SSD goes to 16-nanometer, as you look out towards the end of the year?

Okay. So, in terms of where we are in terms of leading-edge production for NAND, we are relatively light relative to we were 3% in the prior quarter and roughly of more or less, less than 20% in the – in Q4 we are projecting on 16-nanometer. So, we are still ramping the technology in this product and SSD is probably behind that as an overall mix.

Got it. Last question, I mean, when do you see those cost improvements on the 16-nanometer start to flow through? When do you start to see that manifest on the margin side?

Yes. Probably, the best comment I would say is that out in the early calendar ‘15.

Okay, great. Thanks a lot.

I think we have time for one more caller.

Thank you. And our final question comes from Joe Moore from Morgan Stanley. Your line is open. Please go ahead.

Great, thank you. Now that the transition in Singapore from DRAM to NAND is mostly behind you, can you talk about how you feel about the DRAM NAND mix today and what would drive you in the next few years to make further changes to change that mix?

Well, we feel pretty good about where we are at. We certainly are long-term believers in the growth of NAND demand. And as we learn more about what the elasticity of demand there is, I would think that it’s more likely that market is going to outgrow the ability to service it with existing capacity than it is in DRAM. And so while we are pretty happy with our mix today we don’t think in terms of flipping capacity back and forth on a go forward basis. I think we are kind of at least under today’s conditions happy with the mix we have got and we will look at dialing our mix between different segments within NAND and DRAM and we will look over time at having the right capacity. More likely, that’s going to be in NAND and DRAM as we move through time.

Okay, great. Thank you. And then separately, you talked about the potential benefits in moving to more straight debt at investment grade, what would be the change that would gauge the timing of that? And what, it seems like your bonds are trading pretty well now like how do you think about that potential opportunity?

Sure, Joe. Obviously, the market is pretty favorable right now with regard to straight debt. We did one of the early offerings in our rating class for high-yield debt and it turned out extremely well. We basically got an investment grade covenants and very close to investment grade pricing. Since that time, the market has got even better. We never know how long that will hold, but it’s a very good environment today especially for Micron. So, we will be watching it closely and making moves as we think they are prudent over time in terms of our overall mix. But as I mentioned in general, we will be trending towards more high-yield given the current condition in rates and pricing and less in convert. We will continue to move on those over time as well to reduce them.

Okay, thank you.

Thank you, Joe.

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 the 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, thanks for participating in today’s conference. This concludes today’s Micron Technology third quarter 2014 financial release conference call. You may now disconnect.