Thank you for standing by, and welcome to Micron Technology's Fiscal Fourth Quarter 2025 Financial Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. To remove yourself from the queue, please press star 11 again. I would now like to hand the call over to Satya Kumar, Investor Relations. Please go ahead.

Thank you, and welcome to Micron Technology's fiscal fourth quarter 2025 financial conference call. On the call with me today are Sanjay Mehrotra, our Chairman and President and CEO, and Mark Murphy, our CFO. Today's call is being webcast from our Investor Relations site at investors.micron.com, including audio and slides. In addition, the press release detailing our quarterly results has been posted on the website, along with prepared remarks for this call. Today's discussion contains forward-looking statements that are subject to risks and uncertainties. These forward-looking statements include statements regarding our future financial and operating performance, including our guidance as well as trends and expectations in our business, market, industry, and regulatory and other matters. These statements are based on our current assumptions, and we assume no obligation to update these statements. Please refer to our most recent financial report on Form 10-Ks and our other filings with the SEC for more information on the risks and uncertainties that could cause actual results to differ materially from expectations. Today's discussion of financial results is presented on a non-GAAP financial basis unless otherwise specified. A reconciliation of GAAP to non-GAAP financial measures can be found on our website. I'll now turn the call over to Sanjay.

Thank you, Satya. Good afternoon, everyone. Micron had an outstanding finish to fiscal 2025, delivering fiscal Q4 revenue, gross margin, and EPS all above the high end of our updated guidance ranges, driven by pricing execution and strong performance across end markets. We achieved record revenue in Q4. In our March 2024 earnings call, we said that we expect Micron to be one of the biggest beneficiaries of AI in the semiconductor industry and that we expect to deliver record revenue and significantly improve profitability in fiscal 2025. I'm pleased to report that in fiscal 2025, Micron's revenue grew nearly 50% to a record $37.4 billion, and gross margins expanded by 17 percentage points to 41%. This performance was supported by the ramp of our high-value data center products and our broad-based DRAM pricing strength across end markets. The combined revenue from HBM, high-capacity DIMMs, and LP server DRAM reached $10 billion, more than a fivefold increase compared to the prior fiscal year. Our data center SSD business reached record revenue and market share in fiscal 2025. I want to thank our global Micron team for their focus and execution, which made these results possible. As we enter fiscal 2026, Micron is positioned better than ever. Our leadership in advanced technologies, including HBM, one gamma DRAM, and g9 NAND, enables a differentiated product portfolio that drives strong ROI. AI-driven demand is accelerating, and industry DRAM supply is tight. Our HBM performance has been strong, and robust demand, tight DRAM supply, and disciplined execution have significantly strengthened the profitability of the rest of our DRAM portfolio. In NAND, our higher mix to data center and improving industry conditions are contributing to profitability. Our fiscal Q1 guidance reflects new records for revenue and EPS. In addition to being a demand driver, AI…

Thank you, Sanjay. Good afternoon, everyone. Micron delivered strong results to close out the fiscal year, with Q4 revenue, gross margin, and EPS all exceeding our updated guidance. For the full year, we achieved record revenue of $37.4 billion, up 49% year over year. Gross margins expanded to 41%, a 17 percentage point improvement from fiscal 2024. EPS reached $8.29, reflecting a 538% increase compared to the prior year. Total fiscal Q4 revenue was $11.3 billion, up 22% sequentially and up 46% year over year, and a quarterly record for Micron. Higher sequential revenue was driven by growth across our end markets, including record data center revenues and strong sequential growth in consumer-oriented markets. Fiscal Q4 DRAM revenue was $9 billion, up 69% year over year and represented 79% of total revenue. Sequentially, DRAM revenue increased 27%. Bit shipments increased in the low teens percent driven by strong demand across all end markets. Prices increased in the low double-digit percentage range driven by tight industry DRAM supply, pricing execution, and favorable mix. Fiscal 2025 DRAM revenues were a record $28.6 billion, up 62% year over year. Fiscal 2025 DRAM all-in costs inclusive of HBM were down by low single-digit percentage points. Fiscal Q4 NAND revenue was $2.3 billion, down 5% year over year, and represented 20% of Micron's total revenue. Sequentially, NAND revenue increased 5%. NAND bit shipments declined in the mid-single-digit percentage range, and prices increased in the high single-digit percentage range due to favorable mix. Fiscal 2025 NAND revenues were a record $8.5 billion, up 18% year over year. Fiscal 2025 NAND all-in cost reductions were around low teens percentage. Now turning to quarterly financial performance by business unit. Our new segment disclosures for our business units, which you see starting in today's press release and will see…

Thank you, Mark. Fiscal 2025 was a year of many records for Micron, as we have highlighted today. We have strong momentum entering fiscal 2026, with a robust fiscal Q1 demand outlook led by data center, and the most competitive position in our history. Over the coming years, we expect trillions of dollars to be invested in AI, and a significant portion will be spent on memory. As the only US-based manufacturer of memory, Micron is uniquely positioned to benefit from the AI opportunity ahead. Thank you for joining us today. We will now open for questions.

Thank you. As a reminder, to ask a question, you will need to press 11 on your telephone. To remove yourself from the queue, you may press 11 again. Please limit yourself to one question and one follow-up to allow everyone the opportunity to participate. Please standby while we compile the Q&A roster. Our first question comes from the line of Timothy Arcuri of UBS. Please go ahead, Timothy.

Thanks a lot. Mark, I was wondering if you could help on the guidance a little bit. I know you do not want to get into too much detail, but of the, let's say, $2.2 billion sequential that you're or sorry. The, you know, $200 million sequential revenue. Can you help us how that splits out between DRAM and NAND? And I guess, any gross margin puts and takes that you might have as well would be helpful.

Yeah. Tim, you were breaking up a bit at the end, but I believe I've got it. So in the first quarter, we'll be heavier DRAM mix than NAND in that growth. As you mentioned, we're not gonna break out, you know, bits in ASP, but we are, you know, guiding up, you know, 580 basis points sequentially. It is split across, you know, mixed pricing and strong execution on our cost reductions. We're in a very constructive pricing environment. Supply is tight for DRAM and improving substantially in NAND. Yeah. We've got, you know, we've got essentially strong demand and supply factors at work. As you heard in the script today. On the demand side, data center spend remains robust. Projected to grow. Traditional server spend is improving and expected to grow. Refresh and inference workload demand drivers, and then PC, smartphone, auto all have increased content growth, and that's becoming clear. And then on the supply side, we'll get into that more in the Q&A here, but that is, you know, tight as well due to a number of factors that are structural. So, yeah, we're focused on our execution. And, again, sequentially here, expect price mix and strong execution to drive that 580 basis point margin expansion.

Thanks a lot, Mark. And then Sanjay, I guess you had previously guided us to, like, a $100 billion HPN TAM by 2028, but since you gave us that number, there's been some massive numbers given out, some, you know, TAM numbers by NVIDIA and some, you know, some investments that are, you know, going on at and whatnot. So it's obvious that the Compute TAM is much bigger than what I think you probably would have seen at that time. So do I give an update to that number? I would assume it's bigger than that number, and maybe if you could comment on sort of what you see next year. I know this year sounds like mid-thirties. I'm wondering if you can give us any, like, milestone year and, you know, update that, you know, $100 billion and, you know, 2020. Thanks.

But, Tim, your connection is poor, and you were breaking up a lot. But I think I got the gist of your question. What we have said before regarding longer-term HBM TAM, we have said that by 2030, we expect HPM TAM to reach $100 billion. And we had also said that HPM BIT CAGR will grow faster than the DRAM CAGR. And we see that in absolutely 2026 as well, you know, in terms of bits in HPM will outgrow the overall DRAM bits. And, of course, you know, as we look ahead, the value proposition of HBM continues to increase. And, of course, as we talked about, HPM now in 2026, transitioning to HPM four, Micron, of course, well-positioned. The market is starting to require even higher performances. And we today pointed out that Micron with our HPM four will have the highest performance product with over 11 gigabits per second and, of course, highest power efficiency as well. So the specs of HVM are becoming increasingly more demanding, which is exciting for us because we are very well positioned with these products. So this just means the value proposition of HPM just continues to grow. So we definitely continue to see strong long-term growth, very excited about all these various announcements of massive data center infrastructure spend. We have talked about trillions of dollars of spend over the next several years. And, of course, memory is very much at the heart of this AI revolution. This means a tremendous opportunity for memory and certainly a tremendous opportunity for HPM. So we feel very good about HPM longer-term opportunities, good about HPM opportunities in 2026, and very good about Micron's positioning. With our very strong product portfolio and strong execution, our track record, and the trust that we have built with our customers and our ability to supply quality and meet our customers' volume requirements. So exciting times ahead, and we are, of course, continuing to work very closely with our customers.

Thanks a lot. Thank you.

Our next question comes from the line of Vivek Arya of Bank of America. Please go ahead, Vivek.

Thank you for taking my question. I'm curious. How do you see the transition from HPM three e to four? When do you expect the crossover next year? And I think as part of that, you mentioned that the pricing for three e is settled for 26. And I'm curious what is the direction of that pricing versus what you're getting now? Is it higher or lower? And do you expect your CE share to stay the same or change next year?

So with respect to HPM four, you know, this is, of course, we will be at the forefront of this production ramp very much aligned with customers' timing. And, as we have mentioned, we have the best product in the industry, with the highest performance over 11 gigabits per second, and we have sampled that product. As well as low power. So industry-leading product performance. And so we will be ramping it up in line with customer demands, of course, you know, first production shipment and CQ2 of 26 time frame and production will ramp during the course of 2026. Again, in line with customer demand. And overall, in 2026, versus 2025, we see our share growing, product well-positioned. We are not commenting on the pricing of HPMC e. We had told you that HPMC e, we have pricing agreements completed with almost all customers for the vast majority of our HPMC e supply in 2026, and we are in discussions with regarding HPM four with our customers. What I will tell you is that supply is tight. We expect a healthy demand supply environment in 2026 for overall DRAM, and that bodes well for the profitability of DRAM, profitability of HBM, and, of course, profitability of non-HBM as well. Is experiencing tight supply.

And for my follow-up, maybe, Mark, on the gross margin side, one is just conceptually, how do you think about the puts and takes of gross margins as you go through the rest of the year, the 51.5 this kind of the baseline? And as long as sales grow, can you expand off of this level? And then, you know, related to that, when I look at your cloud data center business, gross margin's 59%, operating margin's 48%. How much more room is there to from those very strong levels right now? Thank you.

Yeah. Vivek, so we're not providing out quarter guidance, but what we will say is that we believe or we expect gross margin to improve sequentially first to second quarter. And it's on this tight DRAM supply and the associated pricing along with, you know, NAND business continuing to improve. And then just mix effects as we continue to steer bits towards high-value markets. And then our cost performance continues to be good. As, you know, mentioned in the prepared remarks, these supply-demand factors are, we believe, they're durable on the demand side. Data center spend continues to increase. I talked earlier about traditional server spend, and then the edge and auto. Having increased content. And then on the supply side, you know, customer inventory levels are healthy. Our supply is lean. Our DRAM inventories are below target. Band continues to improve. You know, we are, you know, we're working to be as efficient as we can in providing a supply response. You know, we're doing node transitions, but as the industry extends support for d four, that's constrained those node transitions. And then finally, it just takes a long time and is expensive to add new clean room space. And we all know the silicon intensity of HBM creating the urgency for that capacity requirement. So it's a good setup as we go into 26. And we, you know, delivered this strong guide on the first quarter gross margin, and we expect to see gross margins up in Q2. I also wanna reiterate something Sanjay mentioned that we expect margins to be healthy in both HBM and non-HBM in '26. So I'd leave it at that on the Alcorder guidance.

Thank you.

Thank you. Our next question comes from the line of CJ Muse of Cantor Fitzgerald. Your line is open, CJ.

Yeah. Good afternoon. Thank you for taking the question. I guess first question, you know, it certainly feels like in the last month or two, there's been an inflection in DRAM demand led by inference hyperscalers. So curious if you could kinda speak to what you have seen, the breadth of demand, and particularly the sustainability of that, and we'd love your thoughts. You've talked about tightness expected into fiscal 26. Your thoughts into this what is typically seasonally slower February should we see kind of normal seasonality? Or are there supply trends so limited that things can hold up much better than kinda normal seasonality?

So, of course, we are not providing you f Q2 guidance at this point. But, you know, certainly, the AI trends are strong. And as you noted, not just in training, but in finance as well. And as the AI applications broaden, innovations increase, you know, greater different architectures, you know, all of this is only continuing to broaden the demand vector for AI, you know, in the data center as well as on edge devices such as smartphones. In the data center, of course, AI servers have driven strong demand as we have all known. Particularly with, you know, adjust the increasing demand and increasing demand for all DRAM, not just HPM, but LPDRAM, high-density DRAM module. But we are also seeing traditional server demand, as we noted in our remarks, increased as well. So this is really driving a strong growth trend overall for the industry. And then the demand vectors are broadening, as I noted, smartphones in particular, you have seen some recent launches of and shipments already starting of AI-enabled smartphones, which have higher content of DRAM in them versus the prior generation phones. And, of course, PCs is another tailwind. AI PCs and end of life for Windows 10 as the AIPCs are a tailwind for DRAM content as well. So overall, AI trends are strong, and this is across data center, across AI-enabled smartphones, and AI-enabled PCs. And this is what leads to, you know, strong demand in 2026. Across 2026, and we have talked about tight supply as well. Mark just laid out the factors for tight supply, which we also discussed in our prepared remarks. So overall, we look forward to a healthy demand supply environment in calendar year '26 for us.

Very helpful. And I guess that's my inventories customer inventories as well as supplier inventories. Are in good place. I mean, supplier inventories are actually running lean. Micron DRAM supply is very tight.

Thank you for that. As a quick follow-up on CapEx, Mark, it appears net CapEx implied $18 billion versus $13.8 billion last year. I think you talked about front-end equipment versus clean room space in DRAM. Is there a way to kinda partition how much, you know, on equipment versus clean room? And then can you share with us what the implied gross CapEx is for fiscal 26? Thanks so much.

Yeah. Yeah. Yeah. We've not laid out in detail. It's just that our spend in '26 will be the majority, the vast majority will be for DRAM, and we've got construction and facilities related to that, some tools for node transitions and beginning to install for the new greenfield. As it relates to you're right that we guided, you know, framework to be at around $18 billion. We will generally talk about CapEx in the context of net, which is gross CapEx offset by proceeds from government incentives. Yeah. We're not gonna talk about, you know, the gross and net for twenty-six. But you can see the components. You can bit back into the components here on what you've seen in the filings. For the gross spend in '25. And then the government incentives. And so we ended up at 13.8 net, and we were at 15.8 gross with 2 billion of government incentives. In '25. Yeah. You'll, yeah, you'll see that going forward. And, you know, the government incentives in '25 are largely the US, Singapore, and Japan. And we can talk more about those in the future.

Thank you.

Thank you.

Our next question comes from the line of Harlan Sur of JPMorgan. Please go ahead, Harlan.

Yeah. Good afternoon. Thanks for taking my question. Days of inventory are now at your target levels as you had expected previously. And within that, DRAM is actually below your targets. Right? So given the strong three e 12 high RAM, continued strong demand pull for non-AI DRAM. How are you guys thinking about your total and DRAM inventories exiting this quarter? Will days of inventory continue to come down? Just given the overall supply tightness, are your lead times extending? And customers placing orders further in advance? And is this better visibility? What gives the team confidence on continued tightness into calendar '26?

Yeah. Harlan, I'll cover that. We do expect inventories to remain at or better on DIO than we've seen in the fourth quarter. DRAM will remain very tight as we talked about through the year, so we would expect to be, you know, below target. And then NAND, you know, we're being very disciplined around NAND, and that market continues to improve. So we do expect NAND DIO to decrease as well.

And, of course, we work closely with our customers. And customers are fully aware that the demand environment is strong and the supply is very tight in the DRAM and supply outlook is tight. So we work closely with the customers. And I just want to point out that as we look ahead at our supply, we are looking at one gamma ramp to support our demand. In non-HBM products. HBM products we will support them with our one beta. And, of course, continue maintaining focus on, you know, maximum production efficiencies leveraging the clean room space that is available to implement the technology transitions as well as drive maximum production efficiency.

No. I appreciate that. Thank you for the insights there. And Sanjay, you know, as your customers continue to differentiate their GPU and XPU platforms, memory continues to be sort of that key focus area of differentiation. As you mentioned, some of your HPM four customers are looking for as much as 25% more bandwidth versus the plain vanilla Jetix standard. Looks like the Micron team delivered a solution that's 40% more performant than the Jetix spec, right, and well exceeding your customers' requirements. Did the team have to redesign the base logic diet to achieve these impressive results? Just wondering if the higher performance HBM four skew maybe pushed out customer calls or have the call schedules remained on track relative to your original plan? But more importantly, even with the higher speeds, is your power consumption still superior to your competitive solutions?

Very good questions, Harlan, and thank you for asking those questions. Very proud of our team's execution. Proud of our team's design, of our DRAM die and the SIEM advanced CMOS technology that is used in their DRAM die. As well as our base die, which has advanced CMOS as well. Combination of all of this, our innovative design, our memory architecture, our advanced CMOS in the DRAM, as well as advanced CMOS in the base die, and, of course, that advanced CMOS base die is manufactured here by Micron giving us a competitive advantage. All of this actually has enabled us to achieve, you know, customers' increasingly higher requirements bandwidth, at 2.8 gigabyte per second and speed at 11 more than 11 gigabits per second as well. And this has really positioned us well, you know, getting ready for the production ramp of our HP four product. With these kind of specs, and as I said, with these kind of specs, we'll be at the forefront of HPM shipment ramp, keeping it in line with customer demand. Thank you.

And I just wanted to hear, I think I said for Bandwidth, 2.8 terabyte per second. I hope that came across clearly. 2.8 terabyte. Per second. Speed, 11 gigabit per second.

Thank you. Our next question comes from the line of Krish Sankar of TD Cowen.

Yeah. Hi. Thanks for taking my question. I told them, Sanjay, you mentioned about getting sold out in HPM, hopefully, in the next few months. Is there a way to quantify the supply opportunity in calendar twenty-six? Assuming you're fully sold out? And also, if the HBM demand is start better than expected, can you increase supply in calendar twenty-six? You're sold out in the next few months? And then I had a quick follow-up.

Yeah. We are not breaking down the supply volumes, etcetera. But, yes, HPM three e as we mentioned, pricing agreements are done with the vast majority of our HPM CE for our vast majority of our HP and CE supply, and volume is also fixed for HBM three e with most customers. And as our customers are looking at their finalizing their plans with HPM four, particularly plans with increased specifications and their own deployment of that in their next-generation platforms. We expect to be concluding our agreement on, you know, HPM four supply as well as all of 2026, HPM supply here in 2026. I mean, in the next few months. And really very pleased with our industry-leading HPM four product specifications, absolutely outperforming the rest. So we are well positioned with this. And it really, you know, with respect to your question, we will, of course, manage the mix of in our now that we have reached our HPM share, in CQ3, to be in line with our industry DRAM share, we will manage and non-HPM being, you know, healthy margins as well. We will now manage the mix of our portfolio keeping in mind, of course, ROI on our portfolio as well as being disciplined with our total investment. We as you can well understand, we have, of course, flexibility to opportunistically manage share here for HPN because at the front end, it uses the same one beta wafers as rest some of the rest of our products as well. So that gives us fungibility at the front end in terms of supply management and assembly and test we have, of course, all the investments that we have made over the course of last several quarters, we are well positioned with capacity in assembly and test as well. So our investments and our team's strong execution in ramping up capacity and giving us the total confidence gives us now the flexibility to manage the mix of the full portfolio between HPM and non-HPM keeping ROI in mind, and, of course, staying disciplined here with our investments as well.

Got it. Thanks, miss, Sanjay. Another quick question on HVM four. It's nice to see the 11 gigabits per second pin speed. You also said that you have the offering of both your in-house base dial, so that's customized TSM logic die. There a way to figure out what do you expect that mix to be? Do you expect more customers to go with the in-house die or the TSM die? And how easy is it for you from the Micron standpoint of switching between the two based on customer demand?

So HBM four is the product that is with our internal base die. And HBM four e is where we said in our remarks, that, you know, we will be offering standard products as well as customized products. HBM four e is where we are partnering with TSMC. HVM four e is not in the industry, it's not the 2026 product that will be, you know, 2027. Kind of product, and we'll share more details with you, and we will have both standard and customized products in HBM four e. HVM four, using our own base die in the industry, HVM four is what will be the product that will be ramping in production. And as you mentioned that with, you know, the value proposition of HPM continues to increase, and with HPM four e, value proposition increases even further. And we would certainly expect, you know, the customization to provide high gross margin as I indicated in my prepared remarks. And once again, I would like to point out our HPM uses our own logic die. That means Micron's own CMOS and that gives us unique advantages and, of course, has been a key contributor along with our DRAM design and DRAM architecture as well as the CMOS that is embedded inside the DRAM. All of that gives us a unique advantage in terms of industry-leading performance.

Thank you. And as that is all the time we have for Q&A today, that does conclude the Q&A portion of this call and today's conference call. Thank you for participating. You may now disconnect.