Good afternoon. My name is Abigail and I will be your conference facilitator today. At this time I would like to welcome everyone to the Micron Technology's Fourth Quarter 2015 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]. Thank you. It is now my pleasure to turn the floor over to your host, Ivan Donaldson. Sir, you may begin your conference.

Thanks very much Abigail. I’d like to welcome you to Micron Technology's fourth quarter 2015 financial release. On the call today is Mr. Mark Durcan, CEO and Director; Mark Adams, President and Ernie Maddock, Chief Financial Officer. 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 an opportunity to review the fourth quarter 2015 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 an audio replay of the call by dialing 404-537-3406 with the confirmation code of 43149721. This replay will run through Friday, October 19 at 11:30 PM Mountain Time. A webcast replay will be available on the company's website until October 2016. We encourage you to monitor our website at micron.com throughout the quarter for the most current information on the company, including information on the various financial conferences that we will be attending. You can also follow us on Twitter @microntech. 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. Thank you very much and before I turn the call over to Mark Durcan, we want to make a quick update. There was some information posted on our website under the earnings slides which were posted to micron.com on page 20, the Summary Key Data slide. It does include some errors on the Q1 2016 guidance. That is being updated and will be replaced shortly. Please note page 17 is accurate which shows our fiscal Q1 ’16 non-GAAP guidance on that page. So with that I will turn it over to Mark Durcan.

Thank you, Ivan. For fiscal Q4 2015, Micron posted total revenue of $3.6 billion within our revenue guidance of $3.45 billion to $3.7 billion. Revenue was sequentially lower as expected in fiscal Q4 due to near term market headwinds, driven primarily by weakness in the PC sector. Micron posted overall gross margins of 27%, while generating operating cash flow of over $1 billion. Non-GAAP net income was $399 million and non-GAAP earnings per share were $0.37. We are pleased with the execution that delivered these results. We continue to invest in our business with capital expenditures of $1.85 billion in Q4 as well as ongoing investments in technology and product development. For fiscal year 2015, we achieved revenue of $16.2 billion, $2.72 per share in non-GAAP earnings, $5.2 billion in cash from operations, and $2.3 billion in dilution management activities, including convert retirements and over $800 million in share repurchases. While fourth quarter results were impacted by continued weakness in the PC sector, we believe that memory industry fundamentals remain favorable over the long term, and we are focused on improving our competitive position due to deployment of Advanced Technologies and System Level solutions. Reflecting on market conditions, despite the recent softness in the PC market, we continue to see healthy end market demand in other segments. Within the context of that variability, we will continue to manage product mix and allocate our capacity to maximize our opportunities over time. Demand for NAND is relatively stable. We are encouraged by customer response to early sample of our 16-nanometer TLC products, as well as a significant customer interest in our early 3D NAND product. We expect the majority of our NAND production on 3D by late calendar 2016, which should put us in a stronger competitive position. We expect the demand…

Thank you, Mark. I will begin by reviewing our performance in DRAM and Non-Volatile memory, which on a going forward basis will include our NAND and 3D cross point product. I will follow an update on each of our four business units before closing with commentary on our operational performance and focus. Let’s begin with DRAM, which represented 60% of our total revenue in fiscal Q4. PC DRAM ASPs remained under pressure in Q4. As a result, gross margins were down sequentially, in line with our expectations. While we did see some mild spiller effect to pricing in other DRAM segments, overall gross margin in these other segments, and demand remained relatively healthy. As a percentage of DRAM revenue in fiscal Q4, mobile was in the low 30% up from the high 20% in Q3. The PC segment was in the low 20 percentile, down from about 30% in the prior quarter. The server business was in the low-to-mid-20%, up from the low-20% in Q3 and their especially DRAM business which includes networking, graphics, automotive and other embedded markets was in the low 20 percentile in aggregate. Moving on to our Non-Volatile memory business, trade revenue represented 32% of total revenue in fiscal Q4. Performance was consistent with our guidance highlighted by stable gross margins. As a percent of trade, Non-Volatile memory revenues in fiscal Q4, consumer represented about 40%; that includes our cards, USB, and components. Mobile included in multi chip packages was in the low 20%. SSDs were in the mid-teens, and Automotive and Industrial mid-markets and other embedded segments were in mid-teens as well, while 3D cross point technology was immaterial. These percentages were generally consistent with the prior quarter. Positive mix effects, including growth and enterprise SSDs and a reduction of our spot market more transactional…

Thanks Mark. Our GAAP net income for the fourth quarter was $471 million, $0.42 per diluted share or net sales of $3.6 billion. Compared to the third quarter margins declined primarily as a result of pricing in the DRAM space. Non-GAAP income for the fourth quarter reflections adjustment for the following: Recurring adjustments for the amortization of debt discounts primarily relating to the imputed interest on the convertible notes of the MMJ Creditor debt and nominal amounts for the loss of our debt restructuring activities and the effects of changes and currency exchange rates for the quarter. Technology acquisitions or technology related acquisitions in the quarter resulted in a $21 million gain from the re-measurement from a previous equity method investment held in the acquired entity, as well as $21 million in tax benefits recognized in the purchase accounting. Non-cash taxes relating to the MMJ and MMT operations reflected a benefit in the quarter primarily as the result of increased estimated utilization on operating loss carry forwards in Japan. As a result our non-GAAP income was $399 million or $0.37 per share. As a reminder, Micron includes both amortization of acquisition intangibles and stock based compensation expense in our non-GAAP reporting. Taken together these two items represent approximately $0.04 per share for the recently completed quarter. Now let’s look at our results by product line. Historically we’ve referred to our product classification as DRAM and NAND. As Mark Adams just noted, rather than NAND we will refer to Non-Volatile, which includes NAND and 3D Cross Point, but will continue to exclude NOR. DRAM revenue decreased approximately 8% compared to the third quarter, primarily as the result of lower selling prices. DRAM gross margin was in the 30% range, lower than the previous quarter. On the trade NAND Non-Volatile side revenue…

Thank you, Ernie. Let me just conclude our prepared remarks by summarizing our major focus areas for the coming year; there are three such focus areas. First is technology development and manufacturing efficiency, second is delivering value added solutions for a growing set of customers and market segments, and third is investment in our long term customer and partner relationships. As we embark on our new fiscal year I’d like to take a moment to thank our customers, partners, shareholders and team members for their continued support. Let me stop here and operator I think we are ready for Q&A.

We’ll now take questions from callers. [Operator Instructions]. Operator.

Thank you. Our first question comes from the line of Kevin Cassidy with Stifel. Your line is open.

Thank you for taking my question. Just on the guidance for gross margin, can you give us some of the moving parts on that, where it’s coming down?

You know, as always it’s a combination of mix and pricing, and both of those move around within ranges that are quite similar to one another, so part of the reason why we wanted to talk to you about an aggregate gross margin was in fact that both of those factors are things in some cases that we don’t control and in other cases that we do in response to the changing pricing environment, so we can’t really provide too much color on that or else it would sort of negate why we chose to go to this more broad based guidance across the company’s revenue stream.

Okay. Maybe if I could just ask one detail around that. With the TLC NAND products ramping or becoming a larger percentage of revenue, should we expect that gross margins can move up with that ramp?

I think the ramp through fiscal year 2016 will generally lead to that trend. Certainly from a cost base, it’s not trying to forecast where the ASPs go from here, from a competitive cost position, yes.

Okay, great. Thank you.

Thank you. Our next question comes from the line of Vijay Rakesh with Mizuho. Your line is open.

Yes, hi. Thanks. Just a question here; if you look at first half ’16, what do you think your mix will be on 16 nanometer TLC NAND, and I have a follow-up. Thanks.

So we’re early in the ramp of the TLC NAND. We’re shipping products this quarter to customers, but as we move through the first half of the year, it will be into the 20% range and we’ll see where it goes from there.

If I could just add one more comment that what we’re hearing and seeing from the market is that by segment TLC is entering in some segments, but not all segments. As a matter of fact, in the last part of Q4 and early into Q1, we’ve seen significant interest for our higher performing, more reliable MLC, both 20 and 25 nanometer products where they are designed in and even new customers in the hyper scale environment, and so while 20% might not sound as high as one would have forecasted six months ago, we’re getting significant interest again in enterprise type applications for better margins, and so we’re going to dial that in around market opportunity and customer needs.

Got it. And if I may on the DRAM side, as you look at – you mentioned things should just improve through kind of ’16, but any thoughts on how you see inventory and yields playing out here through the end of the year. Thanks.

Did you say, were you saying yields?

Yes, yields and just channel inventory on the DRAM side. Thanks.

Let me add all the channel inventory in the market. Interestingly enough, in terms of DRAM market, except for one large channel player, the channel itself is pretty low inventory in the two to three weeks, and one larger channel player who in fact services a lot of the OEMs has more than that from the fulfillment standpoint, that’s the role that they play with these customers. So it’s not a significant inventory problem in the channel today. I think to extend the question a little bit, the PC demand, the PC ecosystem is also not as much of an inventory problem as more of a demand problem, and I think with new chipsets and new operating assistance and what have you, I think the buying side of the market has been a little conservative in terms of how they procured PC parts over the last three to six months, and I think it’s at this point, this could be interesting to watch how the next three or four months plays out in terms of the consumer and corporate behavior, because at some point they are going to start to replenish.

Let me handle the yield question. I think the thing we can say about yield is we’re clearly ahead of our plan and running at least as good as or probably slightly better than we have on previous similar conversions. So we’re very happy with the way that that’s going, and we look for a significant bit generation and bit crossover in our third fiscal quarter.

Thank you very much.

Thank you. Our next question comes from the line of Timothy Arcuri with Cowen and Company. Your line is open.

Thanks a lot. I had two. Ernie, I know you don’t want to talk too much about cost going forward, but that’s obviously been an issue. DRAM costs were up this quarter, and the guidance seems to imply that DRAM costs per bit is going to go down just a touch in fiscal Q1. Is that right?

If you go back to the chart that we showed in our Analyst Day, it sort of shows you what we’re expecting in general relative to output, and cost move in an impressed way with output. So as output moves up, costs decline a little bit. In addition to that as we move down the technology curve, we also get the benefit of that. So without being overly specific, I think the best thing I can do is refer you back to that curve, and the gross margin guidance we have provided and you can sort of draw the picture from there.

Okay, thanks. Then I guess Ernie, also there’s a lot of debate about when gross margins will bottom and where it will bottom. So can you – you’re beginning to see some benefit of the investments in the operational things you’re doing. So can you give us some sense that maybe you think that November might be the bottoming in gross margin.

I can’t really comment on that, and again, I’d refer you back to some of the major levers that we have, which is output that we can control and whatnot, but the biggest lever of all is pricing which is something that we can’t fully anticipate. So, I can’t really give you any indication that November would be the bottom, because I just don’t know at this point, although we continue to make progress on our operational improvements.

Okay Ernie, thanks so much.

Thank you. Our next question comes from the line of Rajvindra Gill with Needham and Co. Your line is open.

Yes, thanks for taking my question. Just I guess a follow-up on the gross margin. I am trying to get a sense of why gross margins are coming down and if some of these things that you talked about are stabilizing, for instance more rational environment and in more in 20 nanometer, some stabilization in the pricing.

Yes. So I think it’s really important to sort of parse cost and pricing. If you look at what’s happening in the market, there is still a significant amount of data that suggest DRAM pricing continues to come down a bit and so that has an offsetting impact to the improvements and the operational execution. So we’re really focused on driving the operational execution and getting costs where as well as we can effectively manage costs to get those to that level and then the pricing environment we have to deal with.

Yes, I’m just trying to square with what you’re saying in your outlook, in your slide deck. You basically are saying despite recent softness the PC DRAM market continues to see healthy end market demand and the demand environment just stabilized as we move into calendar ’16. So this means like while there is some hint that demand is stabilizing or some stabilization across the board the more you continue to drift fairly well. So I’m not very clear on why that’s happening.

Yes, okay. Well you know let’s just step back a little bit and think about – the marketplace has been weakened in PCs. We’ve seen pricing erosion there. It doesn’t take much of a shift in the supply and demand balance where your moving big numbers up and down and subtracting them to get a difference for the supply demand balance to swing from slightly over to slightly under supply. At the end of the day that’s the tough question that we’ve all got to try and figure out what the answer it. But as we think about what our end markets look like in 2016, the products we have and the customer interest we have, we think that the market is generally going to be relatively balanced and we think we have significant operational improvements coming on the pipeline. So that sort of underlines the commentary we’re giving you and we’re trying to give you a view as to how we think that’s going to balance out in the quarter ahead and its close to flattish gross margins quarter-over-quarter based on our guidance and we just have to go from there and see. We’re all trying to figure this out together.

Okay, great. And just last question on the cost side. Some of the cost headwinds that you experienced this year, they really should become tailwinds in 2016 and I was wondering if you can talk about some of those potential tailwinds and any thoughts on the shift to DDR4 and server, the shift to mobile overall and within mobile the shift to LPDDR4. These are all things that could potentially be tailwind once costs are normalized. So if you can maybe talk about some of those specific things that would be helpful. Thank you.

Surely, this is Mark Adams just responding to the last part of your question. I think that if you break all of that down, certainly DDR4 and LP4 in their early ramp don’t lend themselves to the cost benefits right away like any other semiconductor ramps that you deal with in terms of the market, and so we will see that shift from early ramp headwind to advanced process tailwind in the mid part of our fiscal year. That’s also true with our 20 nanometer product coming out in the – by the time – I said in the second half of my script, second half – at the end of the first half going to the second half we’ll be at bit crossover. More than 50% of our production will be on the 20 nanometer and we’ll be in an improved position there as well. So all in all I think what you’re asking about, we can confirm is the direction we see our cost position in the marketplace.

Thank you.

Thank you. Our next question comes from the line of Doug Freedman with Sterne Agee. Your line is open.

Great. Thanks for taking my question guys. Mark, in the past you’ve offered commentary in terms of the impact of the new contract with Inotera. Given the present pricing dynamics in the market, in the DRAM market, can you offer us some insights into how much impact that will have on gross margins when it kicks in in the February quarter?

Yes Doug, we commented on this last quarter. It’s still mid to high single digits impact in fiscal Q3 as we realized the sort of the transition to the updated 20 nanometer technology coming out of Inotera.

Okay, and that’s just on – just to make sure I understand that correctly, that’s just on the DRAM side of the business. So if we aggregate that into corporate…

That’s right. It’s just DRAM and that’s just on the Inotera output. The fiscal Q3 is the role and the time the contract kicks in at the beginning of the year, but there’s a lag effect in terms of when it flows through our financials and that’s just the best time to look at it, because that also happens to be in the 20 nanometer output.

So we’ll see that impacting the May quarter then not in the February quarter. Great, that’s very helpful. If I could move on, my next one is really in looking at the NAND market and your NAND output. I know you mentioned not moving as quickly to TLC because of market demands. There really are two different products that you’re ramping right now if I’m correct. You got the TLC at 15 nanometer, but you also have your 3D product. I know you gave us an endpoint that you’ll be at a majority of 3D by the end of ’16. Can we get any interim points to the November and maybe February quarter? What percentage of your output will be 3D NAND and how much of that will be MLC versus TLC.

Let me take that one Doug. So your right, we’re going to play this by ear, right, in terms of the planer TLC. As Mark mentioned there is a sort of resurgence in interest in our high quality MLC offerings for enterprise and high inclined applications and so we’re just going to have to see how we dial that piece. You’re also right that we said our plan is to have the majority of our 3D NAND on TLC in short order. It’s still a new technology, it’s still ramping and I think it’s probably a little premature to try and predict what that looks like in the 3D TLC, what that mix looks like in the first half of the year.

How about total output for the November, February quarters?

Of TLC?

Of 3D NANDs in any flavor.

Oh! Of 3D NANDs. It’s going to be relatively small until we get to that crossover point.

That’s great. Thanks for taking my questions.

Thank you. Our next question comes from the line of Monika Garg with Pacific Crest Securities. Your line is open.

Hi, thanks for taking my question. The first question I have is on the SBU business unit. We have seen negative up margins for two, three quarters now and you’ve talked about like 3D NAND is more end of calendar ’16 weighted. So is it fair to think that your NAND – I mean when do you expect your NAND margins to improve, when 3D picks up or sometime even before that.

I think its important Monika, again its Mark Adam. I think it’s important to make a distinction here. Directionally your characterization of our SBU margins are correct, but I would also suggest on a relative basis to our competitors, our SBU business has held up quite nicely relative to where we were 12 months ago and I mean that because there’s a number of different market segments that the team has developed and cultivated that we feel will continue to benefit as we get some of the tailwinds in place that we described in the back half of ’16. So, it’s a long winded way of saying I expect that on a relative basis we get more competitive in ’16 and that our overall performance in SBU will improve based on a number of the elements we’ve talked about, whether it be TLC or vertical and some of the higher end enterprise type products that we described.

Keep in mind, when you look at SBU numbers, your also looking at a blended trade and zero gross margin business report.

Got it. Okay, just a last one on the DRAM side. Mark you talked about you expect relatively balanced supply demand in DRAM in 2016. The Micron’s DRAM margins have come down quite a bit this year. If it’s a balanced environment next year, should we expect the margins to improve next year then?

Again it’s Mark. We can’t predict the ASPs and the margins for you. We are just telling you what we generally see and then you got to layer in that obviously we are pretty bullish on what we are doing internally and our operational improvements that will play out through the year.

Okay. Thank you.

Thank you. Our next question comes from the line of Chris Hemmelgarn with Barclays. Your line is open.

Thanks very much for taking the question. I guess taking a little different tact, could you talk a bit about the factors that would get you to the high end, low end of your gross margin guidance?

Well, ASPs are big one right. We always reserve the right to dial mix and we’ll take advantage of any opportunities we see there. I think we have a pretty good beat on what our output is going to be absent some dramatic mix changes. So I don’t think that’s as big a lever in this particular quarter.

Okay, thanks very much. I guess different direction. Talk a bit of 3D. Intel’s clearly going to be pushing the technology, but in terms of monetizing it from the Micron end, where specifically are you seeing strong customer interest?

I’ll see your different tact, with my different tact, how is that? More broadly the technology, we see in a number of different end market segments both in current application environments and in some kind of innovative new areas that might drive some new development on just solutions and technologies to address markets. The type of markets that we see, 3D Cross Point benefit from are either super high end gaming applications, which could be for just more real environment 8K type applications and provide the exact gaming performance that doesn’t have to flush out to a different type of storage media. It all could be done in 3D Cross Point. Another good one would be super high end and reliable system storage, enterprise storage applications. We think as far as emerging application development, we think the technology lends really well to medical diagnostics for example, where the instantaneous response time of symptoms going in and research data analysis coming out, what that might be as a real world application that could benefit from Cross Point. So these are type of markets that the technology fits and I think that it’s just a quick summary of few that are of interest to where the market can drive this technology.

Think in terms of anywhere where you want a large in memory database or anywhere where you want ultra high performance storage systems.

It’s very helpful. Thanks soo much.

Thank you. Our next question comes from the line of Steven Fox with Cross Research. Your line is open.

Thanks. Good afternoon. Just one question from me. You mentioned that there was some spillover effect in the DRAM market into some of your better mix markets in the last quarter. I guess I was curious, do you expect to see that in this quarter. How much could compute seasonality lead to some more spillover later on in the fiscal year and what are you guys doing to sort of firewall against that. Thanks.

Well I think the big, you sad something there as how much can compute seasonality effect and it depends on how you see the compute market. What I mentioned earlier was some of the environments that consumer similar capacity like the very low end part of the server business has some pricing pressure. Notwithstanding all that margins held up pretty well. So my interpretation to your question is that PCs rebound somewhat and we are not talking about a wild rebound, but they rebound somewhat going into the holiday season. That could have a positive impact on overall pricing in the market. But we think that the diversification of the end markets lends well to relatively stable pricing in margin as Ernie highlighted.

Just a quick follow-up on what you just said. Is there any kind of tactics you are willing to share in terms of what your most focused on in sort of shaping demand to your benefit when you see some of these excesses the next couple of quarters.

Well, I mean mot more than what we’ve talked about in the past, which is we have these end markets that we have developed, product strategies and by shifting some of the capacities away, it relieves some of the pressure in one area and the interesting thing overall about DRAM which we haven’t really talked a lot about is some of these newer categories LP4, DDR4, some of these categories actually take or have a limiting effect or reducing effecting on overall wafer production in the industry. And so as these categories take off and grow, we are of the opinion that that could have a stabilizing effect too.

Great, thank you very much.

Thank you. Our next question comes from the lines of Steven Chin with UBS. Your line is open.

Hi, thanks for taking my questions. First one Mark, if I could on the demand side, both on PC and SmartPhones. Could you provide a little color on what your hearing from your customers in those two end markets in terms of resentment [ph] and sort of how the seasonality “for the back half” how that’s shaping up so far relative to expectations.

Well I think the PC is about where it’s been. I can’t advertise there’s been a major uptick in PC demand. The only data point that I would say that is new for us is that as we sit today the relative channel inventory in PCs is not a huge burden to a recovery. I think that it’s too early to tell what consumers and even in the corporate environment are going to be doing through the holiday and through the rest of the year. So I can’t give you a great sense of what’s going to play out other than the inventory validation of what we see in the channel and that’s true not only for end units and PC. It is also overall true for PC memory relative to where the pricing pressure has been. So I don’t think it’s going to take a wild shift in behavior for PC environment to stabilize. It’s just, it’s probably too early for the holidays to see that. On the mobile side, despite what we’ve read in the media about slowdown in China, which in fact is somewhat true, there seems to be an offset in two areas. One of which is that memory content in phones continues to move upwards, which is more broadly positive, as well as you know despite the high end and mid range SmartPhones in China, the entry level SmartPhone which are really configured to be pretty good density configurations are still in pretty good shape, coupled with other emerging markets. So we continue to be bullish on the mobile market and the team’s performance has been pretty good. When you think about some of the areas that we’ve shifted to mobile, networking and automotive, the net of it all has been that we’ve been able to keep our margin in a relatively healthy place and continue to monitor that.

Great, thanks for that color Mark. As follow up for Ernie, Ernie in terms of the repurchases if I had my match correct, I think you have about $170 million in share repurchase capacity for this quarter. Just give me how much you bought back in this last quarter and with the stock under $20, any thoughts on potential expansion in your repurchase program.

So the amounts actually probably a little close to $130 million versus $170 million, and we are certainly going to continue to be opportunistic and as we think about the market during the fourth quarter we’ll be making decisions as we think is appropriate.

Okay, great, thank you.

Thank you. Our next question comes from the line of Daniel Amir with Ladenburg. Your line is open.

Thanks a lot. So another way, I was just following up to your previous question, how should we look at fiscal year ’16 and kind of the mix, the mix that you are aiming to in terms of the DRAM business, mobile, PC, server. I mean should we expect in general terms PC to decline a little bit more, mobile to a little bit increase and server and networking to stay about the same?

It’s difficult to necessarily forecast, because we’ll keep adopting our overall approach as the market conditions weren’t. But if I were to kind of categorize how we see it today, we think mobile and generally will concern more than where we sit today. We see PC on the consumption side of memory flat to down somewhat just based on the overall market demand and trends that we see. In general we think other embedded markets will only increase given automotive gaming and the launch in growth of the IoT end segments. Networking and server are very interesting because what we’ve seen in the trends and those two markets are, as much memory as they can get in they will put in and as technology and configuration allow us, DDR4 will drive pretty high growth in terms of memory consumption. So when you hear us bullish on the overall demand of the end markets, as with good reason memory consumption is really driving either reliability performance or really new market applications and in the DRAM segment we continue notwithstanding of the PC business, we continue to see growth across the board.

Okay, just a follow-up question on kind of the Non-Volatile side. Your SSD business is around mid teens. I guess if we said a year ago, I think some of us would have thought that would be a higher number of your overall sales. What do you need to do in order to make that a bigger focus given the opportunity in SSD? Is it really related to the progress of TLC and 3D NAND or is there something else that you can drive that business forward?

I think that’s true. I think a year ago we might have said that. As things have played out, the low end of the SSD market where a lot of the volume units go, that’s turning to be a bit of a blood bath and in the NAND environment and the TLC pricing, it was just not something we were going to fight with our MLC product when we can go shift that to other market segments. Secondly, as we think about the mobile business, the mobile business at Micron had a great year in NAND, tremendous growth ’15 over ’14. So we are going to continue to optimize around returns and market attractiveness and between some of the competitive pricing, as well as the growth in mobile we altered our strategy mildly and I think with TLC and with our instance in the vertical, I think you will see SSD has become more prominent, because we think we are going to be in a better position to compete with the rest of the market.

Okay, thanks.

Thank you. Our next question comes from the line of CJ Muse with Evercore. Your line is open.

Yes, good afternoon. Thank you for taking my question. I guess first question, you sound a little bit more upbeat on your ramp of 20 nanometer and talked about more than half I guess your output in the latter half of fiscal ’16. But I was just curious if we could talk a little bit about not production, but revenues and what that number would look like and what kind of contribution if at all we could see in the February quarter?

Hey CJ, this is Mark Adams. Unfortunately we are going to probably point on that with the revenue qualification. I would just validate what you started with, which is we are generally very pleased with the ramp and the yield curves that were out today and we see – as we communicated very consistently we see a cross over by the end of our first half fiscal year. So we are very excited about that, not just from a raw cost position perspective, that’s great, but also from a product enablement on 8 gigabyte configurations and can open some doors for us. So without qualifying the revenue number it’s a real positive tailwind for us.

That’s helpful and I guess Ernie a broader question looking at the February quarter and I know you don’t want to talk about bits and mix and all that. But curious, what should we be thinking of as the most material drivers of up or down kind of impact to gross margins and there I guess thinking about start up cost $20, mix shift given seasonal demand trends for DRAM, any other kind of investments that you are thinking about. How should we think about those moving parts and headwind, tailwind looking out into the February quarter?

Yes, so obviously the biggest one, we can’t tell you whether it’s a headwind or a tailwind which is market pricing. As we think about the cost side, we should continue to see some improvement as we go further down the curve with 20 nanometer and the 16 nanometer TLC NAND. And then obviously it’s going to be the mix between end markets and as we have talked about before, we do have the ability certainly in the February quarter at this point to think about where we want to direct that mix. So those are the three big levers and they are going to move in ways that we can’t fully predict right now on the market pricing side, the other two things we are actually thinking about quite carefully right now.

Very helpful. Thank you.

And operator, I think we have time for one more question.

Our last question comes from the line of Mark Newman with Bernstein. Your line is open.

Hi, thanks for squeezing me in. A question on DRAM pricing. PC DRAM was always extremely week – PC DRAM pricing was extremely week during July and August. But since then there has been some significant mix changes in including Micron, both including Samsung as well away from PC DRAM and I think some of the statements recently we sense have indicated they are not learning that PC DRAM price anymore. So I’m wondering if you are starting to see a stabilization in PC DRAM prices already and also following up to that on the other parts of DRAM, sever and mobile, with all this mix change, is there going to be more weakens in these other parts of the market as we go forward to the rest of the year and into next year, then I have one follow up as well.

Well, that was a pretty good question in and of itself, but there is a lot there. I think that yes, we filed a media, we saw the quotes in the press and all that stuff. We did see some very short term improvement on pricing at the end of mid to the end of August and even early this September. But it kind of has since, we’ve seen some softness again, some mild softness off of the high and so we are just tracking that as we look at it and see where it goes from a demand standpoint, if there is any improvement to holidays. But when you talk about the other markets and I think the question your asking is what happens when you continue to shift. Is there a danger of over supplying the other market segments and while it’s hard to predict that the data set that hasn’t happened today and we don’t sense it and we don’t see it in the market at this point. Mobile has been pretty stable despite the mix move and I think a lot of that is because the market probably didn’t have an appreciation six to nine months ago on what mobile densities will be doing and in fact you have seen tremendous growths not just in the low end, but across the SmartPhone segment on DRAM content. So we don’t think its dramatic, we have very positive signs on industry supply, potentially slowing over the next year or so, but we got to wait and see how that comes out and checks out in terms of the market. But as far as demand, we are very upbeat as you’ve heard on the call today about some of the end market trends we are seeing and our ability to drive our technology there. It’s really a byproduct of this PC environment and again that rebounded and then create more balancing over all in the end markets.

Thanks and then on the cost side for DRAM, you obviously brought in, you pulled in your 20 nanometer RAM guidance during the Analyst Day. There wasn’t very much further comments in today’s call about it. I’m just wondering if there’s any latest and greatest comment about how that’s going and when are we going to actually start seeing cost declines from 20 nanometer shrink.

Yes Mark. It’s still tracking pretty well with what we indicated at the Analyst Day, ahead of original plan and we like the way it’s going. We think you may start to see small impact in fiscal Q2, but really it’s a fiscal Q3 story.

All right, thanks very much.

All right. We’d like to thank everyone for participating on the call today. If you please bear with me, I just need to repeat the Safe Harbor projection 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.