Micron Technology(MU) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics - Fiscal Q4 revenue was $7.8 billion, up 14$25.1 billion, up 62% year-over-year [26] - DRAM revenue in fiscal Q4 was $5.3 billion, up 93$2.4 billion, up 96% year-over-year, representing 31% of total revenue [27] - Fiscal Q4 gross margin was 36.5%, up over 8 percentage points sequentially [28] - Fiscal 2024 operating income was $1.9 billion, with an operating margin of 8$3.7 billion, with an EBITDA margin of 48%, up 5 percentage points sequentially [30] Business Unit Performance - Compute and Networking Business Unit revenue was $3 billion, up 17$1.9 billion, up 18% sequentially, driven by seasonal product ramps [28] - Storage Business Unit revenue was $1.7 billion, up 24$1.2 billion, down 9% sequentially, but automotive segment achieved a fiscal year revenue record for the fourth consecutive year [28] Market Performance - Data center revenue reached a record level in fiscal 2024 and is expected to grow significantly in fiscal 2025 [12] - HBM revenue in fiscal 2024 was several hundred million dollars, with expectations to deliver multiple billions of dollars in fiscal 2025 [13] - PC unit volumes are expected to grow in the low single-digit range for calendar 2024, with acceleration in the second half of 2025 due to AI PC adoption [17] - Smartphone unit volumes in calendar 2024 are on track to grow in the low-to-mid single-digit percentage range, with continued growth expected in 2025 [19] - Automotive revenue achieved a fiscal year record for the fourth consecutive year, driven by infotainment and ADAS demand [21] Strategic Direction and Industry Competition - The company is ramping production of 1-beta DRAM and G8/G9 NAND nodes, with 1-gamma DRAM pilot production progressing well for volume production in calendar 2025 [8] - Micron is investing in AI-driven demand, with a focus on HBM, high-capacity DIMMs, and data center SSD products [12] - The company is expanding its manufacturing footprint with new fabs in Idaho, New York, and India, as well as a back-end expansion in China [9] - Micron expects to achieve HBM market share commensurate with its overall DRAM market share by calendar 2025 [13] Management Commentary on Operating Environment and Future Outlook - The company expects a broadening of demand drivers in calendar 2025, complementing strong data center demand [7] - Micron anticipates a substantial revenue record with significantly improved profitability in fiscal 2025, starting with record quarterly revenue in fiscal Q1 [7] - The company expects DRAM bit demand growth in calendar 2024 to be in the high-teens percentage range, with NAND bit demand growth in the mid-teens percentage range [22] - Micron projects fiscal 2025 CapEx to be in the mid-30s percentage range of revenue, driven by greenfield fab construction and HBM investments [24] Other Important Information - Micron repurchased $300 million or 3.2 million shares in fiscal Q4 at an average price of$93.07 per share [32] - The company expects fiscal Q1 revenue to be $8.7 billion plus or minus$200 million, with gross margin in the range of 39.5% plus or minus 100 basis points [36] - Micron forecasts fiscal Q1 EPS to be $1.74 per share plus or minus$0.08 [36] Q&A Session Summary Question: DRAM and NAND bit assumptions for fiscal Q1 - DRAM bits are expected to be up somewhat higher than previously guided, while NAND bits are expected to be sequentially flattish [41] Question: HBM revenue in fiscal Q4 - The company achieved several hundred million dollars in HBM revenue in fiscal 2024, with expectations to deliver multiple billions of dollars in fiscal 2025 [43] Question: Gross margin drivers for fiscal Q1 - Gross margin expansion is driven by healthy supply-demand dynamics, favorable pricing, and product mix, with HBM being accretive to margins [46] Question: CapEx prioritization - CapEx remains focused on HBM investments and long-term fab construction, with no significant changes in prioritization [48] Question: HBM yield and market share - The company is confident in its HBM yield ramp and expects to achieve market share commensurate with its overall DRAM share by calendar 2025 [57] Question: HBM oversupply concerns - Micron assumes a third supplier will enter the HBM market but remains confident in its product leadership and tight leading-edge supply dynamics [60] Question: DRAM bit growth deceleration in 2025 - The deceleration in DRAM bit growth from 2024 to 2025 is due to a higher base in 2024 and inventory adjustments in PCs and smartphones [69] Question: HBM gross margin outlook - HBM gross margins are expected to remain accretive in fiscal 2025, with yields and productivity offering potential upside [67]