Sanjay Mehrotra
President and Chief Executive Officer at Micron Technology
Thank you, Satya. Good afternoon, everyone.
Micron delivered a strong finish to fiscal year 2024, with fiscal Q4 revenue at the high end of our guidance range and gross margins and EPS above the high end of our guidance ranges.
In fiscal Q4, we achieved record-high revenues in NAND and in our storage business unit. Micron's fiscal 2024 revenue grew over 60%. We expanded company gross margins by over 30 percentage points and achieved revenue records in data center and in automotive. I am thankful to all our Micron team members for their focus and execution, which made these results possible.
We are entering fiscal 2025 with the strongest competitive positioning in Micron's history. We have leadership 1-beta DRAM and G8 and G9 NAND process technology, and leadership products across our end markets. Robust data center demand is exceeding our leading-edge node supply and is driving overall healthy supply-demand dynamics.
As we move through calendar 2025, we expect a broadening of demand drivers, complementing strong demand in the data center. We are making investments to support AI-driven demand and our manufacturing network is well positioned to execute on these opportunities. We look forward to delivering a substantial revenue record with significantly improved profitability in fiscal 2025, beginning with our guidance for record quarterly revenue in fiscal Q1. Micron is ramping production of the industry's most advanced technology nodes in both DRAM and NAND.
Our 1-beta DRAM and G8 and G9 NAND nodes are ramping in high volume and will become an increasing portion of our mix through fiscal 2025. As a reminder, our G8 NAND node refers to our 232-layer NAND technology node. Our 1-gamma DRAM pilot production using extreme ultraviolet lithography is progressing well, and we are on track for volume production in calendar 2025.
We delivered fiscal 2024 DRAM front-end cost reductions at the high end of the outlook provided at the beginning of the year and NAND cost reductions were consistent with our forecast. We expect fiscal 2025 DRAM front-end cost reductions excluding HBM to be in the mid-to high-single-digit percentage range. We expect fiscal 2025 NAND cost reductions to be in the low-to mid-teens percentage range.
We continue to make progress on the construction for our new fab in Idaho and are working with state and federal agencies on the permitting process for our New York site. Construction is underway on our India assembly and test facility, as well as our China Xi'an back-end expansion.
We are continuously assessing opportunities to manage our manufacturing footprint in a capital-efficient manner. Consistent with this strategy, we announced the acquisition of an LCD factory in Taiwan that will be converted to enable DRAM production testing. Micron's proprietary and vertically integrated testing capabilities provide competitive differentiation and enable us to provide high-quality products to our customers.
Now turning to our end markets. Memory is essential to extend the frontier of AI capability. Multiple vectors will drive AI memory demand over the coming years. Growing model sizes and input token requirements, multimodality, multiagent solutions, continuous training, and the proliferation of inference workloads from cloud to the edge.
Micron is focused on translating the opportunities from AI demand into value captured for all our stakeholders. Demand from data center customers continues to be strong and customer inventory levels are healthy. Industry server unit shipments are expected to grow in the mid-to high-single-digit percentage range in calendar 2024, driven by strong growth for AI servers as well as low-single-digit percentage range growth for traditional servers.
We expect traditional server demand to benefit from a refresh cycle as a single latest-generation traditional server can replace multiple older-generation servers to provide valuable space, power and performance improvements to improve data center efficiency. We see increasing DRAM and NAND content both in traditional as well as AI servers.
Our mix of data center revenue reached a record level in fiscal 2024 and we expect will grow significantly from here in fiscal 2025. Micron is well positioned in the data center with our portfolio of HBM, high-capacity D5 and LP5 solutions, and data center SSD products. We expect each of these three product categories to deliver multiple billions of dollars in revenue in fiscal 2025.
In HBM, we are making excellent progress on our yield and output capability. In fiscal Q4, we delivered on our expected volumes and achieved our objective of several hundred millions of dollars in revenue from HBM in fiscal year 2024. Even as our DRAM gross margins improved, our fiscal Q4 HBM gross margins were accretive to both company and DRAM gross margins, indicative of our solid HBM yield ramp. We expect to achieve HBM market share commensurate with our overall DRAM market share sometime in calendar 2025.
We expect the HBM TAM to grow from approximately $4 billion in calendar 2023 to over $25 billion in calendar 2025. As a percent of overall industry DRAM bits, we expect HBM to grow from 1.5% in calendar 2023 to around 6% in calendar 2025. We have a robust roadmap for HBM and are confident we will maintain our time-to-market, technology and power efficiency leadership with HBM4 and HBM4E.
During the quarter, Micron started shipments of production-capable HBM3E 12-high 36GB units to key industry partners to enable qualifications across the AI ecosystem. Remarkably, Micron's HBM3E 12-high 36GB delivers 20% lower power consumption than our competitors' HBM3E 8-high 24GB solutions while providing 50% higher DRAM capacity. We expect to ramp our HBM3E 12-high output in early calendar 2025 and increase the 12-high mix in our shipments throughout 2025. As we have said before, our HBM is sold out for calendar 2024 and 2025, with pricing already determined for this time frame. In calendar 2025 and 2026, we will have a more diversified HBM revenue profile as we have won business across a broad range of HBM customers with our industry-leading HBM3E solution. We see strong demand for our high-capacity D5 and LP5 solutions.
We are seeing increasing adoption of our high-capacity mono-die-based 128GB D5 DIMM products. We are leveraging our innovative, industry-leading LP5 solutions to pioneer the adoption of low-power DRAM for servers in the data center. Micron's LP5 is specifically designed with data center and AI applications in mind, offering unique features for enhanced reliability, availability and serviceability or RAS in a server platform. We are focused on LPDDR design innovation to optimize the capacity, power and system reliability requirements of AI server infrastructure.
Data center SSD demand continues to be driven by strong growth in AI as well as a recovery in traditional compute and storage. Our strategy to use greater levels of vertical integration, including Micron-designed controllers and firmware has resulted in a data center SSD portfolio that addresses customer requirements for a robust set of features and functionality, competitive total cost of ownership and industry-leading performance and quality. We have gained substantial share in data center SSDs as a result. We achieved a quarterly revenue record with over a billion dollars in revenue in data center SSDs in fiscal Q4, and our fiscal 2024 data center SSD revenues more than tripled from a year ago.
Turning to PC. As discussed in our last earnings call, PC customers have built inventories due to the rising memory price trajectory, anticipated growth in AI PCs as well as an expectation of tight supply caused by an increasing portion of production output being dedicated to meeting the growing data center demand. As sell-through of PCs continues at a steady pace with a seasonal increase in the second half of calendar 2024, we expect healthier inventories at PC OEMs by spring 2025. PC unit volumes remain on track to grow in the low-single-digit range for calendar 2024. We expect unit growth to continue in 2025 and accelerate into the second half of calendar 2025, as the PC replacement cycle gathers momentum with the rollout of next-gen-AI PCs, end of support for Windows 10 and the launch of Windows 12.
The PC market is in the early stages of a transformation and we expect a significant shift towards AI-driven functionalities that promise to enhance user experiences and productivity. AI PCs require a higher capacity of memory and storage. As an example, leading PC OEMs have recently announced AI-enabled PCs with a minimum of 16GB of DRAM for the value segment and between 32GB to 64GB for the mid and premium segments, versus an average content across all PCs of around 12GB last year.
Micron is well positioned to support the growth of AI PCs with our portfolio of client LPDRAM, DRAM and SSD products. Our low-power compression attached memory module or LPCAMM2 product has had multiple design wins at leading PC OEMs. These modules offer all the benefits of low-power DRAM in an upgradable form factor.
Compared to the alternative modular D5 based solutions, LPCAMM2 provides up to 60% lower power and up to 70% better performance along with 60% space savings. Our 3500 client SSD is qualified at all the major PC OEMs and provides the power-performance enhancements needed for AI workloads.
Turning to mobile. Smartphone customer inventory dynamics are evolving in a manner somewhat similar to that of PC customers. Smartphone unit volumes in calendar 2024 are on track to grow in the low-to mid-single-digit percentage range, and we expect unit growth to continue in 2025.
Smartphone OEMs are seeking to differentiate their devices by incorporating more AI features such as personalized recommendations, improved camera functionalities and smarter voice assistants. Recently, leading Android smartphone OEMs have announced AI-enabled smartphones with 12GB to 16GB of DRAM, versus an average of 8GB in flagship phones last year.
Micron is well positioned to support the growth of AI smartphones with our leading-edge memory and storage products. During the quarter, we extended our product leadership with the first customer qualification of our second-generation 1-beta based LP5X DRAM and second-generation of G8 NAND UFS 4.0 products.
In the automotive market, infotainment and ADAS are driving long-term memory and storage content growth. For the fourth consecutive year, Micron achieved a fiscal year record for automotive revenue in 2024. Micron has built an industry-leading portfolio of automotive-grade DRAM and NAND products that provide best-in-class solutions for these high growth applications leveraging our technology and product leadership, top quality rankings, and close customer collaborations.
During the quarter, we achieved qualification of our 1-beta based 16Gb LP5 with 9.6 Gbps speed for the automotive market, which will support the increased performance requirements driven by AI both in the digital cockpit and ADAS. The automotive industry continues to adjust the mix of EV, hybrid and traditional vehicles to meet evolving customer demand. As auto customer inventories adjust to this new mix, we expect a resumption in our automotive growth in the second half of fiscal 2025.
Now, turning to our market outlook. Calendar 2024 DRAM industry demand outlook has improved, driven by strength in data center servers, and growth in the other market segments has performed consistent with our prior market commentary. Hence, we have upgraded our expectation for calendar 2024 industry DRAM bit demand growth to now be in the high-teens percentage range. Our expectation for calendar 2024 industry NAND bit demand growth remains in the mid-teens percentage range. In calendar 2025, we expect both DRAM and NAND industry bit demand growth to be around the mid-teens percentage range.
Turning to supply. Constructive industry conditions will help drive the considerable improvements in profitability and ROI that are needed to enable the investments required to support future growth. Due to CapEx and supply reduction actions taken across the industry in 2023, we expect industry wafer capacity in both DRAM and NAND in 2024 to be below 2022 peak levels, and for NAND meaningfully so. This factor combined with the increasing mix of HBM wafers is reducing DRAM supply allocated to traditional products and contributing to the healthy industry supply-demand environment that we expect for DRAM in calendar 2025.
Given the significant reduction in industry wafer capacity in NAND and the ongoing low NAND CapEx environment, we also expect a healthy industry supply-demand environment for NAND in calendar 2025. NAND technology transitions generally provide more growth in annualized bits per wafer compared to the NAND bit demand CAGR expectation of high-teens.
Consequently, we anticipate longer periods between industry technology transitions and moderating capital investment over time to align industry supply with demand. This can reduce both R&D expense growth and capital intensity in NAND over time, which can contribute to the improved financial health of the NAND industry.
Micron invested $8.1 billion in CapEx in fiscal 2024. We expect fiscal 2025 CapEx to be meaningfully higher and at around the mid-30s percentage range of revenue based on our current CapEx and revenue expectations. The growth in both greenfield fab construction and HBM CapEx investments is projected to make up the overwhelming majority of the year-over-year CapEx increase.
As a reminder, our investments in facility and construction in Idaho and New York will support our long-term demand outlook for DRAM and will not contribute to bit supply in fiscal 2025 and 2026. Micron will continue to exercise supply and CapEx discipline and focus on improving profitability, including walking away from less profitable business, while still maintaining our overall bit market share for DRAM and NAND.
I will now turn it over to Mark for our financial results and outlook.
