Micron Technology Q3 2025 Earnings Report

Micron Technology EPS Results

• Actual EPS: $1.91
• Consensus EPS: $1.57
• Beat/Miss: Beat by +$0.34
• One Year Ago EPS: $0.62

Micron Technology Revenue Results

• Actual Revenue: $9.30 billion
• Expected Revenue: $8.83 billion
• Beat/Miss: Beat by +$474.25 million
• YoY Revenue Growth: N/A

Micron Technology Announcement Details

• Quarter: Q3 2025
• Date: 6/25/2025
• Time: After Market Closes
• Conference Call Date: Wednesday, June 25, 2025
• Conference Call Time: 4:30PM ET

Micron Technology (NASDAQ:MU) was founded in 1978 by four friends in the basement of a dentist's office. The company was focused on making DRAM memory chips and began work on its first fabrication plant in 1981. Micron Technology came out with its first product a few years later and made history with the world's smallest DRAM microchip. By 1994 the company had earned a spot on the Fortune 500 and soon grew to be a leader in the microchip industry. Micron Technology went public in 1984 as well and is headquartered in Boise, Idaho.

Among Micron’s many achievements are the first 1-gigabyte DRAM product in 1987 and the shipping of the first 2-gigabyte NAND product in 2004. Among the latest innovations is the DDR5. The DDR5 is the next generation of DRAM chip for the server market and it can provide an 85% increase in the memory performance.

Today, Micron Technologies designs, manufactures, and sells memory and storage-focused microchip products worldwide. Its chips provide not only the power to store information but the foundation for new technologies like AI and 5G. Micron is the 4th largest semiconductor manufacturer in the world with revenue topping $27 billion in 2022. The company is ranked 127th on the Fortune 500 list and counts more than 50,000 patents and growing in the field of semiconductor manufacturing and storage solutions. The company operates in 17 countries with 11 manufacturing sites and employs more than 45,000 people.

The company operates through four segments that include Compute and Networking, Mobile, Storage, and Embedded. These solutions are marketed under the Micron and Crucial brands, as well as through private labels. In regard to the memory chip market, Micron Technologies is the only company offering all three types of memory storage products giving it the broadest portfolio and most experience and seamless interfaces.

The company manufactures memory and storage technologies including DRAM, NAND, and NOR microchips. The DRAM products are dynamic random access memory semiconductor devices with low latency that provide high-speed data retrieval. The NAND products are non-volatile and re-writeable semiconductor storage devices The NOR memory products are non-volatile re-writeable semiconductor memory devices that provide fast read speeds.

Micron Technologies memory products are in demand by industries ranging from the cloud server to enterprise, client, graphics, and networking markets, as well as for smartphone and other mobile-device markets including EVs and self-driving cars.

Among the more visible of Micron Technologies products are its line of SSDs and component-level solutions for the enterprise and cloud, client, and consumer storage markets. Often seen in movies and TV, these small-sized memory storage and transport devices can be as small as a key fob.

Micron Technology Q3 2025 Earnings Call Transcript

Key Takeaways

• Micron delivered a record $9.3 B in Q3 revenue (up 15% sequentially, 37% YoY) with gross margin, EPS, and free cash flow all topping forecasts, and guided to a $10.7 B Q4 revenue (up 15% seq) and 42% gross margin.
• The company announced a ~$200 B U.S. investment plan ($150 B manufacturing, $50 B R&D over 20+ years), including new fabs in Idaho and upgrades in Virginia and New York to boost capacity and advanced packaging.
• Micron reorganized its business units around key market segments to capitalize on the AI growth opportunity, shifting resources to high performance memory and storage engagements with AI-focused customers.
• Micron’s HBM leadership continues with accelerating HBM3E 12-high ramp (shipments crossover in FQ4) and early HBM4 sampling, delivering up to 60% higher bandwidth and 20% lower power versus prior generation.
• Legacy D4 and LP4 DRAM products are entering end-of-life, leading to allocations and increasing shortages for high-volume segments over the next 2–3 quarters, though support remains for specialized customers.

Presentation

[Operator]

Thank you for standing by, and welcome to Micron's Third Quarter twenty twenty May Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. As a reminder, today's program is being recorded. And now I'd like to introduce your host for today's program, Satya Kumar, Investor Relations. Please go ahead, sir.

[Satya Kumar, Corporate VP of Investor Relations & Treasurer at Micron Technology]

Thank you, and welcome to Micron Technology's fiscal third quarter twenty twenty five financial conference call. On the call with me today are Sanjay Mehrotra, our Chairman, 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 the prepared remarks for this call. Before we begin, let me remind everyone that today's discussion contains forward looking statements that are subject to risks and uncertainties.

[Satya Kumar, Corporate VP of Investor Relations & Treasurer at Micron Technology]

These forward looking statements include statements regarding our financial and 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 these 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.

[Satya Kumar, Corporate VP of Investor Relations & Treasurer at Micron Technology]

We encourage you to visit our website at micron.com throughout the quarter for the most current information on the company, including information on financial conferences that we may be attending. You can also follow us on LinkedIn, X, and YouTube. I'll now turn the call over to Sanjay.

[Sanjay Mehrotra, Chairman, President & CEO at Micron Technology]

Thank you, Satya. Good afternoon, everyone. Micron's strong competitive position and solid execution delivered record revenue in fiscal Q3, with revenue, gross margin, and EPS all exceeding the high end of our guidance ranges. Data center revenue more than doubled year over year and reached a record level, and consumer oriented markets had strong sequential growth. We generated substantial free cash flow in the quarter, even as we continue to make strategic investments critical to sustain long term growth.

[Sanjay Mehrotra, Chairman, President & CEO at Micron Technology]

I'm thankful to all our Micron team members for their focus and execution, which made these results possible. In fiscal Q3, DRAM revenue reached a new record, driven by a nearly 50% sequential growth in HBM revenue. We remain the sole supplier in volume production of LPDRAM in the data center. In NAND, we achieved a new quarterly record for market share across data center SSDs as well as client SSDs in calendar Q1. For the first time ever, during calendar Q1, Micron has become the number two brand by share in data center SSDs, according to third party data.

[Sanjay Mehrotra, Chairman, President & CEO at Micron Technology]

Looking ahead to fiscal Q4, we see a robust demand environment and expect to grow revenue by 15% sequentially to a record $10,700,000,000 at guidance midpoint. In June, we have completed a strategic reorganization of our business units around key market segments to capitalize on the tremendous AI growth opportunity ahead. As high performance memory and storage becomes increasingly critical to enabling AI driven innovation, this new structure enhances Micron's ability to engage more deeply with customers by shifting more resources to AI focused opportunities across our portfolio. We are making excellent progress on our one gamma DRAM technology node, with yield ramping ahead of the record pace we achieved on our one beta node. We completed several key product milestones during the quarter, including the first qualification sample shipments of one gamma based LP5 DRAM.

[Sanjay Mehrotra, Chairman, President & CEO at Micron Technology]

Micron one gamma DRAM leverages EUV, and the node provides a 30% improvement in bit density, more than 20% lower power, and up to 15% higher performance compared to one beta DRAM. We will leverage one gamma across our entire DRAM product portfolio to benefit from this leadership technology. In NAND, we reached a record high mix of QLC bits in the quarter. We started qualifications for new high performance SSD products based on our G9 two terabit QLC NAND, and we continue to ramp our G9 node at a pace consistent with demand. We are making disciplined investments in our global operations network to add to supply in line with demand over time.

[Sanjay Mehrotra, Chairman, President & CEO at Micron Technology]

Two weeks ago, with support from the Trump administration, Micron announced plans to invest approximately $200,000,000,000 in The U. S, which includes $150,000,000,000 in manufacturing and $50,000,000,000 in R and D over the next twenty plus years. As part of this $200,000,000,000 investment plan, Micron plans to invest an additional $30,000,000,000 beyond previously announced plans, which includes building a second leading edge memory fab in Boise, Idaho expanding and modernizing our existing fab in Manassas, Virginia, serving the automotive, aerospace, defense, and industrial markets, and bringing advanced packaging capabilities to The U. S. To support our long term HVM growth plans after we have established sufficient DRAM wafer scale in our U.

[Sanjay Mehrotra, Chairman, President & CEO at Micron Technology]

S. Operations. We are pleased with the strong endorsement we received for our technology, products, and investment plans from our customers and ecosystem partners as part of this announcement. Our first Idaho fab, ID. One, achieved another key construction milestone in June.

[Sanjay Mehrotra, Chairman, President & CEO at Micron Technology]

We expect first DRAM wafer output at ID. One to begin in the second half of calendar twenty twenty seven, with customer qualifications to follow. The second Idaho fab, ID. Two, will benefit from manufacturing economies of scale with ID. One and add to R and D colocation benefits with greater efficiencies and faster time to market.

[Sanjay Mehrotra, Chairman, President & CEO at Micron Technology]

To meet anticipated demand, ID. Two will begin production before the first New York fab. We expect to begin ground preparation in New York later this year, following the completion of state and federal environmental reviews. Turning to our end markets. In data center, we expect the CY25 server market to grow mid single digits percentage in units, largely driven by significant growth in AI servers.

[Sanjay Mehrotra, Chairman, President & CEO at Micron Technology]

In fiscal Q3, data center DRAM revenue reached a new record for the fourth consecutive quarter, driven by strong growth and share gains in HVM and robust performance by our industry leading portfolio of high capacity DIMMs and low power server DRAM products. We are executing well on our HBM ramp and product development roadmap. Our yield and volume ramp on HBM3E 12i is progressing extremely well, and we expect shipment crossover in FQ4. We expect to reach HBM shares similar to our overall DRAM share sometime in the second half of calendar twenty twenty five. At AMD's Advancing AI event earlier this month, we announced that Micron's HBM3E 36 gigabyte 12 high has been designed into AMD's Instinct MI355X GPU platform.

[Sanjay Mehrotra, Chairman, President & CEO at Micron Technology]

We are now shipping HBM in high volume to four customers, spanning both GPU and ASIC platforms. As generative AI workloads grow in size and complexity, the performance demands on HBM continue to rise. Micron's HBM4 leverages our well established one beta DRAM technology, along with an internally developed and manufactured advanced CMOS logic based die, to deliver bandwidth exceeding two terabyte per second per memory stack, over 60% higher performance than the previous generation. Additionally, Micron's HBM4 offers a 20% lower power consumption compared to the already industry leading power performance on our HBM3E12i product, setting new benchmarks in power efficiency for this product category. The expanded interface for HBM4 facilitates rapid communication and a high throughput design that accelerates the inference performance of large language models and chain of thought reasoning systems.

[Sanjay Mehrotra, Chairman, President & CEO at Micron Technology]

Micron has delivered samples of HBM4 to multiple customers and expects to ramp volume production in calendar twenty twenty six, aligned with our customers' plans. We are exceptionally well positioned for the ramp of HBM4. Building on the success of our HBM3E ramp, we have high quality, field proven technology and have executed a robust and significant ramp in our HBM manufacturing capacity. We have deep relationships with practically every major customer of HBM and have earned their trust with our execution, delivering the world's lowest power, highest performance HBM. Our portfolio of high capacity DIMMs and low power server DRAM solutions delivered another record revenue quarter.

[Sanjay Mehrotra, Chairman, President & CEO at Micron Technology]

Micron has pioneered the adoption of LPDRAM for servers, and we continue to maintain our sole source position for LP in server. Together, our high capacity DIMM and LP server products have already generated multiple billions of dollars in revenue in fiscal twenty twenty five, reflecting a remarkable fivefold growth compared to the same period in the previous year. During calendar Q1, for the third consecutive quarter, Micron achieved a record for data center SSD market share, driven by our portfolio of differentiated products enabled through vertical integration. In fiscal Q3, our data center 9,550 performance SSD, which is on the NVIDIA GB200 NVL72 recommended vendor list, completed additional customer qualifications at multiple OEMs. Micron's 9,550 SSDs provide an industry leading performance and energy efficient Gen five data center storage solution for AI server systems.

[Sanjay Mehrotra, Chairman, President & CEO at Micron Technology]

We continue to qualify additional customers and ramp revenue for our 6,550 ION 60 terabyte capacity SSDs. Turning to PC. We expect PC market units to grow in the low single digit percentage range in calendar twenty twenty five. In the quarters ahead, key catalysts for growth include the increasing adoption of AI enabled PCs and the Windows 11 upgrade cycle. Micron is focused on bringing differentiated high performance products to the PC market.

[Sanjay Mehrotra, Chairman, President & CEO at Micron Technology]

Our strong SSD portfolio resulted in Micron achieving a record high client SSD market share in calendar Q1. Tomorrow, we will be announcing our new G9 QLC two terabit based SSD, featuring our proprietary adaptive write technology, which enables 4x faster write performance. This technology expands the addressable market for QLC SSDs by delivering performance equivalent to TLC NAND for most consumer use cases. Turning to mobile. We expect smartphone units to grow low single digits in calendar twenty twenty five.

[Sanjay Mehrotra, Chairman, President & CEO at Micron Technology]

AI adoption remains a key driver of DRAM content growth for smartphones, and we expect more smartphone launches featuring 12 gigabyte or more compared to eight gigabyte of capacity in the average smartphone today. Micron is focused on providing solutions to the high end smartphone segments, leveraging our leading one beta and one gamma technology nodes for LP5X DRAM and G8 and G9 technology nodes for our UFS4 NAND products. During the quarter, we began shipping qualification samples of the industry's first LP5X memory build on the one gamma node, offering a wide range of capacities and industry leading speed grades for twenty twenty six flagship smartphones. Micron's One Gamma LP5x DRAM is engineered to accelerate AI applications in high end devices, delivering over 25% faster recommendations across several use cases, while reducing power consumption by 20%, all in an ultra thin form factor ideal for mobile. In NAND, we secured a key customer design win and ramped high volume production of our G9 based UFS4 products.

[Sanjay Mehrotra, Chairman, President & CEO at Micron Technology]

The strength of our mobile portfolio was further recognized through top quality awards from seven smartphone OEMs during the quarter. Turning to automotive, industrial, and consumer embedded markets. We expect increasing adoption of L2 and L3 ADAS features and AI enabled in vehicle infotainment systems to drive memory and storage content growth as well as higher bandwidth requirements. Micron is positioned for long term success in the automotive market with new product introductions, such as the industry's first one beta dual channel LP5 DRAM with high speed 9.6 gigabits per second support, which achieved production readiness during the quarter. In industrial, we are seeing a resumption in our growth as customers increase their investments for the adoption of AI, including in key areas like factory automation.

[Sanjay Mehrotra, Chairman, President & CEO at Micron Technology]

Micron is driving price improvements with a market backdrop of constrained D4 and LP4 supply and low distributor channel inventory. Now turning to our market outlook. Customer inventory levels have been healthy overall across end markets, and there may have been some tariff related pull ins by certain customers. Our customers continue to signal a constructive demand environment for the remainder of this calendar year, and we remain agile to adjust to any unforeseen demand changes that may occur due to macro conditions or the evolving tariff related situation. We expect CY25 industry DRAM bit demand growth to be in the high teens percentage range and industry NAND bit demand growth to be in the low double digit percentage range.

[Sanjay Mehrotra, Chairman, President & CEO at Micron Technology]

We expect Micron's bit supply growth to be below industry bit demand growth for non HBM DRAM and NAND. Over the medium term, we anticipate industry bit demand growth of mid teens CAGR for both DRAM and NAND. As previously communicated, our efficient node conversions will result in 10% structurally lower NAND wafer capacity ending fiscal twenty twenty five versus the end of fiscal twenty twenty four levels. Additionally, given NAND technology transitions provide a significant increase in overall bit output, Micron plans to manage our node conversions at a measured pace consistent with our demand. Recent press reports have discussed the end of life of D4 and LP4 products.

[Sanjay Mehrotra, Chairman, President & CEO at Micron Technology]

Micron's leading edge DRAM nodes, such as one beta and one gamma, are focused on the latest generation products, such as D5, LP5, and HVM, and are not utilized to produce D4 and LP4. D4 and LP4 products are largely produced in our one alpha DRAM node. Micron has sent EOL notices for these products to customers in high volume segments, like mobile, client, data center, and consumer, several months ago, with final shipments occurring in two to three quarters from now. This EOL process is similar to prior transitions from one generation of memory to another, and consistent with history, Micron intends to support its longevity customers with long term and relatively lower volume requirements in segments like automotive, industrial, defense, and networking with supply of these one alpha DRAM products for several years. In the near term, customers in the high volume segments are starting to see increasing shortages of D4 products.

[Sanjay Mehrotra, Chairman, President & CEO at Micron Technology]

We are now on allocation for these products and are working with customers to try and support their high priority near term demand. D4 revenues are low single digit percentage of our revenues in second half of fiscal twenty twenty five. We anticipate LP4 shortages may also increase as a result of EOL. In closing, Micron's record Q3 revenue performance and strong Q4 outlook are the results of our strategic focus and consistent execution. As AI drives unprecedented demand for high performance memory and storage, Micron is exceptionally well positioned to capitalize on this transformative era.

[Sanjay Mehrotra, Chairman, President & CEO at Micron Technology]

Our leadership in technology, highlighted by progress in HBM, one Gamma DRAM, and G9 NAND, alongside disciplined global manufacturing investments, supports our path to sustained growth. We are confident that our strategic direction, innovation capabilities, and the execution by our exceptional team will continue to create meaningful value for our shareholders, customers, and employees. We are on track to deliver record revenue with solid profitability and free cash flow in fiscal year 'twenty five, while we invest to build on our leadership to addressing growing AI driven memory demand. I will now turn it over to Mark for our financial results and outlook.

[Mark Murphy, Executive VP & CFO at Micron Technology]

Thank you, Sanjay, and good afternoon, everyone. Micron delivered strong results in fiscal Q3 with revenue, gross margin, and EPS all above the high end of the guidance ranges provided in our last earnings call. Total fiscal Q3 revenue was $9,300,000,000 up 15% sequentially and up 37% year over year and a quarterly revenue 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 Q3 DRAM revenue was $7,100,000,000 up 51% year over year and represented 76% of total revenue.

[Mark Murphy, Executive VP & CFO at Micron Technology]

Sequentially, DRAM revenue increased 15% with bit shipments increasing over 20% and prices decreasing in the low single digit percentage range, primarily due to a higher consumer oriented revenue mix. Fiscal Q3 NAND revenue was $2,200,000,000 up 4% year over year and represented 23% of Micron's total revenue. Sequentially, NAND revenue increased 16% with bit shipments increasing in the mid-20s percentage range and prices decreasing in the high single digit percentage range. Now turning to revenue by business unit. Compute and networking business unit revenue was $5,100,000,000 up 11% sequentially and a quarterly record.

[Mark Murphy, Executive VP & CFO at Micron Technology]

This performance was driven by a nearly 50% sequential increase in HBM, along with growth in our high capacity DRAM and low power server DRAM. Revenue for the storage business unit was $1,500,000,000 up 4% sequentially. This growth was primarily driven by an increase in consumer oriented revenue. Mobile business unit revenue was $1,600,000,000 up 45 sequentially. Sequential revenue growth was due to reduced customer inventories and strong demand from DRAM content growth.

[Mark Murphy, Executive VP & CFO at Micron Technology]

Embedded business unit revenue was $1,200,000,000 up 20% sequentially, supported by growth in industrial and consumer embedded markets. The consolidated gross margin for fiscal Q3 was 39, up 110 basis points sequentially and up two fifty basis points versus the midpoint of our guidance. Gross margins were above the high end of our guidance range, primarily due to better prices for both DRAM and NAND, partially offset by a higher consumer oriented mix. Operating expenses in fiscal Q3 were $1,100,000,000 up $87,000,000 quarter over quarter and in line with our guidance range. The increase was primarily driven by higher R and D investments and labor related costs.

[Mark Murphy, Executive VP & CFO at Micron Technology]

We generated operating income of 2,500,000,000 in fiscal Q3, resulting in an operating margin of 26.8%, up approximately 190 basis points sequentially and up 13 percentage points year over year. Fiscal Q3 taxes were $3.00 $6,000,000 on an effective tax rate of 12.3, lower than our guidance due to the effects of one time discrete items in the quarter. Non GAAP diluted earnings per share in fiscal Q3 was $1.91 above the high end of the guidance range, with 22% sequential growth and up over 200% versus the year ago quarter. Turning to cash flows and capital spending, in fiscal Q3, our operating cash flows were over $4,600,000,000 and our capital expenditures were $2,700,000,000 Free cash flows in the quarter were over $1,900,000,000 the highest quarterly amount in over six years. Ending inventory for fiscal Q3 was $8,700,000,000 or one hundred and thirty nine days.

[Mark Murphy, Executive VP & CFO at Micron Technology]

Inventory was down $280,000,000 sequentially and inventory days were down nineteen days sequentially, driven by strong sequential bit shipment growth in both DRAM and NAND. On the balance sheet, we held a record $12,200,000,000 of cash and investments at quarter end and maintained $15,700,000,000 of liquidity when including our untapped credit facility. During fiscal Q3, we refinanced our $900,000,000.20 27 notes with $1,700,000,000 in new notes maturing in fiscal years 2033 and 02/1936. We closed the quarter with $15,500,000,000 of debt, maintaining low net leverage and a weighted average debt maturity of 02/1932. Now turning to our outlook for the fourth fiscal quarter.

[Mark Murphy, Executive VP & CFO at Micron Technology]

We expect our revenue growth to be weighted towards DRAM, supported by robust pricing execution, favorable product mix and continued cost improvements, all of which benefit gross margins. Operating expenses for fiscal Q4 are projected to be approximately $1,200,000,000 with the sequential increase primarily driven by planned R and D investments in future technology nodes and HBM product development. Our fiscal twenty twenty five capital spending plans remain unchanged at approximately $14,000,000,000 The overwhelming majority of the fiscal twenty twenty five CapEx is to support HBM as well as facility, construction, back end manufacturing and R and D investments. We expect a fiscal Q4 tax rate of around 13%. As previously disclosed, our fiscal twenty twenty six tax rate is expected to be in the high teens percentage range following Singapore's adoption of the global minimum tax.

[Mark Murphy, Executive VP & CFO at Micron Technology]

Any impacts that occur due to potential new tariffs are not included in our guidance. With all these factors in mind, our non GAAP guidance for fiscal Q4 is as follows. We expect revenue to be 10,700,000,000 plus or minus $300,000,000 gross margin to be in the range of 42% plus or minus 100 basis points and operating expenses to be approximately $1,200,000,000 plus or minus $20,000,000 We expect our fiscal Q4 tax rate to be around 13%. Based on a share count of approximately 1,150,000,000.00 shares, we expect EPS to be $2.5 per share plus or minus $0.15 With another quarter of shipment growth forecasted in fiscal Q4, we expect to exit fiscal twenty twenty five with tight DRAM inventories, significantly reduced NAND inventories and overall company DIO near our target levels. With low inventories on hand and a constructive demand environment, we will continue to focus on improving pricing and further strengthening our product mix.

[Mark Murphy, Executive VP & CFO at Micron Technology]

In fiscal Q3, Micron delivered earnings above the guidance range, achieved record revenue and continued ramping our industry leading HBM. We also began transitioning to a new market segment focused business unit structure. Starting in fiscal Q4, we will report revenue, gross margin and operating margin metrics across these new business units. With strong execution and a differentiated product portfolio, Micron is well positioned to maintain our leadership and to deliver record revenue and significantly improve profitability once again in fiscal Q4. Thank you for joining us today. We will now open up for questions.

[Operator]

Certainly. Our first question comes from the line of Timothy Arcuri from UBS. Your question please.

[Timothy Arcuri, Managing Director at UBS Group]

Thanks a lot. Sanjay,

[Timothy Arcuri, Managing Director at UBS Group]

I wanted to ask sort of how you see the HBM TAM scaling with the Accelerator TAM. One thing that's been clear over the past three months or so is that the Accelerator TAM is definitely upsiding and growing a lot. And it seems if I take their projections and I take your HBM projections, it kind of seems like the HBM market is going to remain 15% to 20% of what the overall accelerator market is. I guess, how do you see the HBM TAM scaling with that market? And then is there some sort of limit or, like, asymptote that we begin to reach in terms of HPM attached to these GPUs and these custom ASICs?

[Sanjay Mehrotra, Chairman, President & CEO at Micron Technology]

So with respect to HPM growth, we certainly see that HPM demand grows in the future. I'll tell you that in this year, if you look at calendar year 'twenty five, HBM is growing from last year about $18,000,000,000 in revenue to approximately $35,000,000,000 in calendar year 'twenty five. We see in calendar year 'twenty six, if you look at HVM bit demand growth, it will significantly exceed the overall DRAM industry demand growth. And of course, the transition from eight high to 12 high in HBM in 2016, transition to HBM four as well, which is even a higher value product. All of that essentially bodes well in terms of the value of HBM and the overall need for HBM in these accelerator platforms that are of course evolving fast.

[Sanjay Mehrotra, Chairman, President & CEO at Micron Technology]

And of course, our customers are very much focused on working with us and looking at their platforms, assessing the mix of 12 high and HBM4. And then when we look at '27 that goes into HBM 4E, '28 starts introducing customization in HBM as well. So the trajectory of HBM in terms of the value proposition in these accelerators continues to be strong and healthy. And of course, we are well positioned. As we shared with you, we have already begun to sample our HBM4 products, and these again, we plan to maintain our leadership with respect to specifications here, and we have certainly demonstrated a capacity ramp up as well.

[Sanjay Mehrotra, Chairman, President & CEO at Micron Technology]

So we remain excited about HBM. We see this as clearly strong growth driver as well as value driver for our business.

[Timothy Arcuri, Managing Director at UBS Group]

Thanks a lot, Sanjay.

[Operator]

Thank you. And our next question comes from the line of Vivek Arya from Bank of America Securities. Your question please.

[Vivek Arya, Managing Director at Bank of America]

Thanks for taking my question. I wanted to talk about gross margins. So first, what is driving the upside sequentially? And then, is this the new baseline for gross margins? And then, what would be kind of the puts and takes as we look at the next few quarters beyond Q4? Thank you.

[Mark Murphy, Executive VP & CFO at Micron Technology]

Vivek, it's Mark. So in third quarter, I think maybe start with what happened in gross margin in the third quarter. We a strong sequential volume growth in the quarter. But versus the guide, the defining factor was we had prices were down, as I said in the opening comments, but we had better than expected pricing that drove the margin improvement versus expectations. I'll add to that we had good cost performance all, but certainly the price was better than we had expected.

[Mark Murphy, Executive VP & CFO at Micron Technology]

Now that carries on into rebaselining on the fourth quarter. We provided an indication of the fourth quarter before when the market was in transition. And we said at that time that the inventory outlook that we would was improving when it had weakened a bit late last year. And we had intended to work to inflect price. And as you know, a few weeks later, situation with Liberation Day tariffs, the environment got a bit more challenging.

[Mark Murphy, Executive VP & CFO at Micron Technology]

The condition of the market is better than expected since then and it strengthened through the quarter. You saw that outperformance and then we've executed well. And so what you see here from this rebaseline of the business, you see us add to that through favorable mix Q3 to Q4, that's more DRAM growth than NAND. So you have favorable mix there and then more data center than consumer oriented mix, which was weighing down the margins in the third quarter. It's again, it's a continued good market backdrop.

[Mark Murphy, Executive VP & CFO at Micron Technology]

We're going to continue to focus on pricing. But third quarter to fourth quarter, we have favorable mix effects that is helping drive margins up to the current guide of 42%.

[Vivek Arya, Managing Director at Bank of America]

And anything beyond this, Mark? Any puts and takes as we look at the next several quarters? Is this kind of the new baseline or is it going to be entirely dependent on the direction of pricing?

[Mark Murphy, Executive VP & CFO at Micron Technology]

Yes, we're not going to provide Q1 guidance. We are positive on the trajectory of the business. The market environment does remain constructive, particularly in DRAM versus NAND. Again, we're focused on pricing and making sure to put our bits in the right places. As we said in the prepared remarks, our inventories are very tight, particularly on leading edge and then now even pockets of some of the legacy and DRAM.

[Mark Murphy, Executive VP & CFO at Micron Technology]

So we're going to have some bit constraints going into first quarter, but we're going to mix to DRAM, higher value DRAM and higher value NAND products. And so we think gross margins can be up.

[Vivek Arya, Managing Director at Bank of America]

Thank you.

[Operator]

Thank you. And our next question comes from the line of C. J. Muse from Cantor Fitzgerald. Your question please.

[CJ Muse, Senior Managing Director at Cantor Fitzgerald]

Yes, good afternoon. Thank you for taking the question. I was hoping to revisit your comments on HBM. You're talking 23%, 24% market share. And it sounds like you're now calling not exiting the year, but sometime in the second half.

[CJ Muse, Senior Managing Director at Cantor Fitzgerald]

So that's coming in better. And so I guess, first question is, should we be thinking that that number is kind of a two, two, two, three depending, I guess, on seasonality of the $35,000,000,000 number? And then perhaps more importantly, as you think about HBM growth in calendar twenty twenty six, how should we be thinking about the contributions to that growth, both from bits as well as higher ASPs as you go to next generation products? Thanks so much.

[Sanjay Mehrotra, Chairman, President & CEO at Micron Technology]

PJ, I didn't quite understand the question around 02/02/2023. What exactly did you say there?

[CJ Muse, Senior Managing Director at Cantor Fitzgerald]

Just trying to understand how you talked about getting to your DRAM market share, which I think you said 23%, 24% for the HBM market. And your previous comments were exiting the year. Now you're saying sometime in the second half. So trying to get an idea of of kind of what that revenue number looks like.

[Sanjay Mehrotra, Chairman, President & CEO at Micron Technology]

We are already at if you look at our performance based on FQ3, we are already at more than $6,000,000,000 run rate here with our HBM, and certainly continuing to ramp up our HBM output shifting production to 12 high HBM as well. So yes, it could be that compared to what we said before in terms of toward the end of the calendar year, we expect to get to our HPM share in line with our DRAM share. So versus that, it could be that we do end up getting to our industry share for in line with industry share for HBM share earlier than that. So it could be. And that's really absolutely based on our very, very strong execution.

[Sanjay Mehrotra, Chairman, President & CEO at Micron Technology]

And strong execution in terms of output, in terms of yield ramp. We noted that our 12 high yield ramp is actually going faster than our eight high yield ramp, of course, built on all the learning that we have had. The team has done an excellent job with capacity ramp as well. All of that is contributing to our strong performance on HPM, extremely pleased with where we are and extremely pleased with not just execution today and our ability to ramp up yield and capacity successfully and build in the process trust with the customers, but very pleased with the roadmap that is ahead for us for the HBM as well. So, I mean, are things that will obviously play an important role in calendar year 'twenty six as we work closely with the customers to understand their overall mix requirements for 2026.

[CJ Muse, Senior Managing Director at Cantor Fitzgerald]

Thank you.

[Operator]

Thank you. And our next question comes from the line of Thomas O'Malley from Barclays. Your question, please.

[Thomas O'Malley, Director - Equity Research at Barclays]

Hey guys, thanks for taking the questions. Two here. So my first on HBM side, you're obviously reaching your share target a little bit earlier. Going into next year, are you guys ready to talk about what you think that your normalized share will be? Obviously, there's difficulties with some of your competitors getting qualified.

[Thomas O'Malley, Director - Equity Research at Barclays]

If that continues into next year, do you guys have a view of if you're able to increase capacity? And if you are, what that share may look like? And then two, on the NAND side, where does utilization stand today? And obviously, you're going through some bit transitions right now internally, which has allowed you to kind of keep some things offline. But as you move into next year, what is your plan for utilization?

[Thomas O'Malley, Director - Equity Research at Barclays]

Is that going to be market dependent? Or at some point, do you need to start bringing on utilization just from the fact that there's a gross margin headwind? Thank you.

[Sanjay Mehrotra, Chairman, President & CEO at Micron Technology]

So as I said, we are very pleased that we are executing well and with what we told you several quarters ago in terms of our shared objectives with HBM, that we are going to be able to achieve that goal for this year in second half of twenty twenty six. Now our HBM is really at scale, it has healthy shares, and we are successfully delivering. So going forward, of course, this becomes like part of our overall product portfolio. And just like we manage the rest of the portfolio with respect to total eye on ROI and profitability, and of course, HBM really positions us very well with respect to our profitability objectives. We will of course continue to manage the mix of our products in the portfolio, including that of HBM, including the share that sometimes can move around in different parts of the end market segments that we address.

[Sanjay Mehrotra, Chairman, President & CEO at Micron Technology]

So I think that's how you have to look at it. Overall, really very pleased with our HBM products, 12 high as well as HBM4, built with our well proven one beta technology, which also gives us cost effective benefits. And of course, the packaging technology well established, and company of course has been investing in expanding our HBM backend capacity as well. You know, we have talked about investments in Singapore, bringing assembly and packaging capacity there in line, starting production, targeting that for 2027 timeframe. And I'll tell you that HBM, given that it uses our well proven one beta technology, is really fungible capacity with the rest of the portfolio as well.

[Sanjay Mehrotra, Chairman, President & CEO at Micron Technology]

So this gives us plenty of flexibility in terms of managing our business, and extremely focused on really meeting customers' requirements and continuing to deliver and enhance our product capabilities to meet their growing requirements. And your second question around NAND in terms of utilizations, so we have said before that toward the end of fiscal twenty five, our NAND overall capacity would be down versus end of fiscal twenty twenty four by about 10%, and that's a structural reduction in capacity. And of course, as we have discussed before, that structural reduction was implemented to achieve capital efficient next node transition for us, like G9 node transition. So as that capacity has come down, of course, our underutilization has come down as well, although part of NAND continues to remain underutilized. I must note here that of course leading edge of NAND is fully utilized.

[Thomas O'Malley, Director - Equity Research at Barclays]

Thank you, Sanjay.

[Operator]

Thank you. And our next question comes from the line of Harlan Sur from JPMorgan. Your question, please.

[Harlan Sur, Executive Director - Equity Research at JP Morgan Chase & Co]

Hey. Good afternoon. Thanks for taking my question. If I rewind back one year ago during your June earnings call, you guys did say back then that you were sold out on your HPM supply through calendar twenty five and that majority of that committed supply was locked in from a pricing perspective. One year later, you know, where are you on your negotiations for your calendar twenty six HPM supply and pricing discussions?

[Harlan Sur, Executive Director - Equity Research at JP Morgan Chase & Co]

Is the team supply outlook for next year fully committed to? Or or maybe a better way to frame it. Right? Because I know that the HBM 3E and HBM 412HI qualification cycles might be taking a bit longer. But maybe the other way to frame it is if you look at your customers' calendar twenty six forecasted demand for HBM, is it exceeding your forecasted supply capability?

[Sanjay Mehrotra, Chairman, President & CEO at Micron Technology]

With respect to HBM in 2025, yes, very pleased that what we told you back a year ago, we are continuing to deliver on that, as I said earlier, and yes, our HVM is sold out for 2025. And as I mentioned earlier, we are working closely with our customers as their platforms, AI accelerated platforms, both with GPUs as well as with ASICs are continuing to evolve and move fast. And they themselves are working on overall their supply chain requirements and product mix with respect to HBM3E, 12 high, as well as HBM4. So we continue to work with the customers in those, and we are still in the middle of 'twenty five and for 2026. As I said earlier, we see with respect to bit demand growth, strong trend in 2026, bit demand growth for HBM significantly exceeding DRAM demand growth, and of course, we have a strong product roadmap.

[Sanjay Mehrotra, Chairman, President & CEO at Micron Technology]

And we are working on continuing as we said, we sampled HBM4, focused on getting these products qualified with the customers, and HBM 3E12HI is already in volume productions and doing very well with our yield ramp there as well. So very much focused on addressing the 26 needs for the customers and executing well and remaining extremely focused on our execution for 2026.

[Harlan Sur, Executive Director - Equity Research at JP Morgan Chase & Co]

Thanks, Sanjay.

[Operator]

Thank you. And our next question comes from the line of Joseph Moore from Morgan Stanley. Your question please.

[Joseph Moore, Managing Director at Morgan Stanley]

Hey, thank you. I wonder if you could talk in terms of your long term CapEx plans and sort of 35% of revenue levels, is that kind of a reasonable guideline to think about for fiscal twenty twenty six? Or are you thinking because of the opportunity here you need to invest ahead of that? Thank you.

[Mark Murphy, Executive VP & CFO at Micron Technology]

Yes, Joe, I mean, we have a generational tech transition opportunity in front of us that Micron is exceptionally well positioned for. And we've talked about inventory levels for some time now getting leaner, especially being very tight on the leading edge. And with the silicon requirements of HBM and the trade ratio, we need to build greenfield capacity. So that's underway. If you look at our CapEx forecast, we had a little bit lower CapEx than we expected in the quarter at 2.7, but you'll see by the guide that we're going to see that CapEx increase in the fourth quarter. So we stuck with our approximately $14,000,000,000 number. I think as we go forward, we're continuing to build out the greenfield capacity and there'll be equipment installs on the new nodes. There's grants involved and construction, so the timing of that spend can be a bit lumpy, but we anticipate generating free cash flow in the fourth quarter. And you will see we'll just continue to build out our capacity.

[Mark Murphy, Executive VP & CFO at Micron Technology]

I do want to note that we continued to make steps to improve the balance sheet further in the quarter. We're down net debt now down to $3,000,000,000 We further reduced maturities in the short end of the maturity schedule, taking out the $900,000,000.27 notes and issuing 1.75 further out. And we continue to be in a great position with a flexible balance sheet to invest in the business, make sure we maintain technology leadership and then return capital to shareholders through dividend and opportunistic buyback.

[Joseph Moore, Managing Director at Morgan Stanley]

Great. Thank you. Great quarter.

[Operator]

Thank you. And our next question comes from the line of Krish Sankar from TD Cowen. Your question please.

[Krish Sankar, Managing Director at TD Cowen]

Yeah. Hi. Thanks for taking my question. I had two questions for Sanjay or two part question. One is, when you look into HBM four, given the double IO count and two silicon vias, what kind of trade ratio should we expect for HBM four? And also, when you look at, broadly speaking, is there a difference in HBM bits and margin profile between selling to GPU versus ASIC customers? Thank you.

[Sanjay Mehrotra, Chairman, President & CEO at Micron Technology]

With respect to HVM four, its trade ratio is greater than three. For the HVM three e, previously, we have shared that trade ratio is approximately three, and HBM4 has a higher trade ratio than three. It has a larger die size. And of course, as you noted, it has higher performance. We shared 60% higher performance given the high bandwidth interface that this has.

[Sanjay Mehrotra, Chairman, President & CEO at Micron Technology]

And HBM 4E will have a ratio that would be even greater. So as we have shared with you in the past, that as we are going from HPM 3E to four to 4E, the trade ratio is going from about three towards four in that timeframe. So of course, this puts HPM trade ratio and the growth of HPM absolutely puts a pressure on the non HPM supply in the industry as well. And with respect to your question on the margin difference for GPU versus ASIC, of course, HBM commands high value, whether it's in GPU accelerators or ASIC based accelerators, and that value proposition is only growing. You know, when you look ahead over the years, the content that the future generation GPUs or ASIC platforms that will be out there of HBM continues to is expected to continue to increase as well.

[Sanjay Mehrotra, Chairman, President & CEO at Micron Technology]

We have shared with you in the past that going from about 200 to two eighty eight gigabytes in GPU accelerators today, as well as in the ASIC based accelerators in that range going to higher levels as we go from eight high to 12 high capacity. So don't so value proposition is strong, both for GPU accelerators as well as ASIC accelerators, and of course, we don't get into the specifics of differentiating the two here.

[Krish Sankar, Managing Director at TD Cowen]

Thanks, Sanjeet.

[Operator]

Thank you. And our next question comes from the line of Chris Caso from Wolfe Research. Your question, please.

[Chris Caso, Managing Director at Wolfe Research LLC]

Yes, thank you. So just a clarification on one of the things you said in the prepared remarks, you talked about there may have been some tariff related pull ins by certain customers. I think overall, comments suggest that you, at least my interpretation is that you think that the customer inventory levels are getting a bit cleaned up here. Could you clarify the remarks a little bit, put it in context of what you expect that means for customer inventory levels and how that kind of affects your view of bit demand in the second half?

[Sanjay Mehrotra, Chairman, President & CEO at Micron Technology]

Yes, as we said, customer inventory levels have been healthy overall across our end markets. Some customers may have some level of tariff related pull ins. We think the impact of that is relatively modest here and customers definitely continue to signal a constructive demand environment for the remainder of the calendar year. And of course, the demand trends are driven by strength in AI driven data center demand, demand coming back in the automotive industrial resumption of growth there as well as distribution channels. And as we have discussed, smartphone and PCs, really as AI penetration increases, the content and key stories there intact for AI smartphones as well as PC.

[Sanjay Mehrotra, Chairman, President & CEO at Micron Technology]

We provided some details in our script there. So we see a constructive demand environment as our customers discuss with us. And again, the effect of the pull in is relatively modest here. Our growth in Q3 as well as our exceptional record for FQ4 guidance is really driven by Micron's strong execution in the growing market for AI.

[Chris Caso, Managing Director at Wolfe Research LLC]

Got it. Thank you.

[Operator]

Thank you. And our final question for today comes from the line of Vijay Rakesh from Mizuho. Your question, please.

[Vijay Rakesh, Managing Director at Mizuho Financial Group]

Yeah. Hi, Sanjay and Mark. Just a quick question on the XBM four. Just wondering how the qualification is progressing. And you know, if you if if you can really see that similar power performance leadership that you guys have had on HPM three e, do you see that continuing on the HPM four side as well? Thanks.

[Sanjay Mehrotra, Chairman, President & CEO at Micron Technology]

So we have, you know, provided early units to our customers. We have sampled the products to our multiple customers with HVM-four. Really very pleased with the execution and all the specs that we see our HVM-four delivering, as I mentioned, not only performance, but we plan to continue to focus on that power, a strong power position, which is critically important in AI applications that we have established with our HBM portfolio as well. So of course, the qualifications, the customer qualifications are ahead of us, and we will be ready to meet customers' demand in 2026 time frame. So HBM in terms of volume ramp is a 2026 product and meeting the timeline requirements of customers with their next generation platforms that will be implementing the HBM four products.

[Sanjay Mehrotra, Chairman, President & CEO at Micron Technology]

Want to again remind you that HBM four uses our well proven, cost effective one beta technology node. And of course, it has internal advanced CMOS logic die, internally developed and internally manufactured advanced CMOS logic die, which positions us well as well. And all of our experience of HPM 3E ramp up, we're going from 3E12 high to HPM going from, sorry, going from HPM 3E8 high to HPN 3e 12 high, we told you that that ramp is going extremely well with our yields ahead of our plans, output ahead of our plans, as well as yields faster than the ramp that we had experienced in ATHY. All of that gives us confidence and positions us well for HBM4 ramp as well. So we feel very, very good about our overall capabilities to address the HPM4 markets in 2026.

[Vijay Rakesh, Managing Director at Mizuho Financial Group]

Got it. And on the SSD side, just quickly, with your focus on AI servers, are you seeing an accelerated pull through on the AI server side for SSDs as well? Thanks.

[Sanjay Mehrotra, Chairman, President & CEO at Micron Technology]

So, you know, we had mentioned on the data center side in SSDs in late Q4 of calendar 'twenty four, as well as early part of calendar 'twenty five, you know, there had been some inventory digestion for the data center SSDs, given that prior to this period that I just mentioned, there was a very strong demand growth for SSDs. And as we look ahead, we think second half of calendar 'twenty five will be better than first half of 'twenty four I mean, half of 'twenty five, which was impacted by some of that inventory digestion as well. And our data center SSDs are well positioned with some of these recently announced accelerator platforms as well, and that, of course, will be contributing toward the data center SSD future growth as well. We are very pleased with our record data center SSD share as achieved in CQ1 for the third party reports. And we are now clear number two brand in terms of market share at the end of CQ1.

[Sanjay Mehrotra, Chairman, President & CEO at Micron Technology]

So we plan to continue to leverage our SSD portfolio to continue to focus on shifting the mix of the products toward higher value parts of the NAND market.

[Vijay Rakesh, Managing Director at Mizuho Financial Group]

Great. Thank you.

[Operator]

Thank you. This does conclude the question and answer session as well as today's program. Thank you, ladies and gentlemen, for your participation. You may now disconnect. Good day.

Participants

Executives

• Satya Kumar, Corporate VP of Investor Relations & Treasurer
• Sanjay Mehrotra, Chairman, President & CEO
• Mark Murphy, Executive VP & CFO

Analysts

• Timothy Arcuri, Managing Director at UBS Group
• Vivek Arya, Managing Director at Bank of America
• CJ Muse, Senior Managing Director at Cantor Fitzgerald
• Thomas O'Malley, Director - Equity Research at Barclays
• Harlan Sur, Executive Director - Equity Research at JP Morgan Chase & Co
• Joseph Moore, Managing Director at Morgan Stanley
• Krish Sankar, Managing Director at TD Cowen
• Chris Caso, Managing Director at Wolfe Research LLC
• Vijay Rakesh, Managing Director at Mizuho Financial Group