Thank you, and welcome to Micron Technology's fiscal fourth-quarter 2026 post-earnings analyst call. On the call with me today are Manish Bhatia, President and Chief Operating Officer; Dr.

Scott DeBoer, President and Chief Technology and Products Officer; and Mark Murphy, our Chief Financial Officer. As a reminder, the matters we're discussing today include forward-looking statements regarding market demand and supply, market trends and drivers, and our expected results and guidance, and other matters.

These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from the statements made today. We refer to documents that we filed with the SEC, including our most recent Form 10-K and upcoming 10-Q, for a discussion of risks that may affect our results.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. We are under no duty to update any of the forward-looking statements to conform these statements to actual results.

We can now open up the call for Q&A.

Hey, guys. Thanks a lot for the question, and congrats on the promotion, Scott, and I'm not sure if Manish is on, but congrats.

Wanted to ask about— I'm here, Ben. Hey, how you doing?

Congrats. Wanted to talk about 2028, new commentary here regarding 2028.

You guys felt compelled to kind of say you see things tighter in 2028 than this year as well as 2027. I wanted to know a little bit more about what changed and what that means for margins.

You gave more margin commentary than you usually do around 2027, which was great, by the way, but I just don't see any reason why margins would change in 2028 from the level you implied for 2027. Just a little more comment around 2028 would be great.

Sure, Ben. I can I can start, and then if Mark wants to add anything.

Thank you for the for the shout-out. In, in terms of 2027 and 2028 in our commentary, we are, seeing stronger demand drivers than we've seen before.

We commented about the server units continuing to grow into 2027. Of course, I think everybody's talking about how agentic AI is really growing fast, and that's creating a, CPU-driven demand stream as well.

As we've gone through, working on our fiscal year 2027, and we we commented that we have more than 75% of our, shipments committed for the year, that, shows a strengthening demand and allows us to shift our, conversations on allocation with our customers out to 2028. That's one element of our conference, is that, 2027 is shaping up, with stronger demand than maybe we had seen before.

Then, of course, as we, also have now more SCA conversations with customers, including extensions that we've now negotiated, that gives us more confidence in the long term as well. The combination of those two things gives us very strong, outlook for demand, through 2028.

Then on the supply side, there's still the same, structural constraints on supply growth that we've talked about before, which is, diminishing returns from technology transitions versus past technology transitions, HBM growing faster than conventional DRAM through 2028, which means that as a portion of the industry's output capability, HBM is growing in terms of that share. Of course, the trade ratio, not just today's trade ratio for HBM, but future more complex HBM having higher trade ratios, that's, that's also going to be constraining supply.

Then it just takes a long time for these new cleanrooms that, the whole industry is working on to be able to build and then qualify and then equip. It takes even from the time they open, it takes, a few quarters for, meaningful shipments to come.

That really gave us, the combination of that demand outlook and this, supply outlook, we made the statement that, we really don't have line of sight to when supply and demand balances.

Ben. I would maybe just add to Manish's comments that, as you noted in 2027, we had indicated for the balance of the year that we would see margin expansion relative to Q1, a function of continued price increases, albeit at a more moderate pace.

We've said that for some time, that eventually price increases would moderate. Then at that point, in addition to just price increases at a lower rate, we have a better mix of products, and we would work our mix based on our technology and product leadership.

The market conditions, as we said, we would expect to remain tight, and that would be supportive through 2028. Of course, the partial offset to price and favorable mix would be startup costs.

These are all things we're managing, we've been managing them, and we would expect to be able to sustain strong financial performance.

Great. If I could just sneak one other in.

Sanjay had a great seat at the Trump lunch. Just wondering, did he come away feeling good about the industry's ability to grow and self-regulate and the future coming out of that meeting?

Did that lend a hand to any of the upbeat guidance you gave, or just any color out of that and how he felt coming out, and even if memory came up a lot in at the meetings? Thanks.

Ben, Sanjay is not here, but I'll give you the conversations I'm aware of. For sure, we're very happy to participate in that forum, and it does show the importance of memory that Micron was invited there along with the model companies as well as the accelerator companies.

I think that in the white paper that was published out of that that many of the model companies have already signed, that framework is constructive toward continuing to have advancement in AI infrastructure, and in particular AI hardware infrastructure. I know that one of the concepts that got discussed quite a bit was that the way to manage some of the security aspects is to actually have security solutions which will require more advanced hardware, including higher-performance memory, lower-latency memory, as part of those security solutions, higher-bandwidth memory, because if you can imagine setting up a gateway to be able to manage much of the security aspects that could be proposed in the future, the responsiveness of those gateways are going to depend a lot on the availability of high-performance and low-latency memory.

Oh, that's cool. Thanks.

Hi there. Thank you for the question, and my congrats as well to new promotees.

In past quarters, you've given us a view on where you think the HBM total TAM could be by 2028, 2030. Clearly, the pricing environment has changed since those updates.

I don't know if you want to give us an official new number for where you think the HBM TAM could go, but directionally, can you help us sort of try to size how much is coming from bits and how much is coming from pricing, and just any updated views on how big you think that market could be?

Sure, Melissa, and thank you again. We are not updating that TAM outlook right now, but what we have said is that HBM shipments, we expect to grow faster than conventional DRAM.

That means that HBM will continue to grow as a portion of the industry's capacity here through 2028. The pricing for HBM, at least for us, we did comment that we have increased that pricing significantly for calendar year 2027, which will reset at the beginning of the calendar year to narrow the profitability gap with conventional DRAM.

Beyond that, we haven't made any comments on the specific outlook for the HBM TAM. It continues to grow, continues to be a very important enabler.

HBM deployments continue to be an important enabler of much of the rest of the AI to be able to reach its potential as well, it's an important part of the market.

Got it. Maybe following up on that, from a market share perspective, any updated view on how you guys are targeting market share for HBM?

In the past, you said you want to get it to within the corporate average, kind of low-20s percent market share. Is that still the case?

Then I noticed in the prepared remarks your comments on HBM4E and the engagements with NVIDIA there. Just any more color on 2027 and HBM4E and the progress you're making there with customers would be great.

Sure. Melissa, I'll take the first, and then maybe Scott can take the HBM4E since his team is driving that product development.

In terms of the HBM market share, about a year ago, we had achieved the milestone that we talked about, that our HBM market share reached our broader DRAM market share. At that time, we said that our goals would then move around based on various different factors.

We haven't really updated exactly our HBM share target other than to say that we do expect our HBM share to be around our broader DRAM market share. We're not necessarily targeting one number or the other.

It will move around based on various different factors there. As I mentioned on your prior question, it's a really important part of the market.

It allows us to be very close to the leading edge of the accelerator platforms that many of our customers are designing and then deploying. It's a key enabler for all the rest of AI to be able to deliver on its promise and its potential.

Then I can just add a little bit about the work with NVIDIA on what really will be the first major custom HBM product out in the market, and we've been working with NVIDIA for over a year on HBM4E, what's called NV-HBM. We see substantial opportunity there for us in the co-design of that product with obviously key customer to have this be a product that delivers truly substantial value beyond standard HBM4E.

I think it'll be a real huge impact on the industry showing where future systems can go with optimized memory products.

Thank you.

Hi. Thank you for taking my questions.

The first one, on the 26 SCA, 35% of sales by 2030, are these for both DRAM and NAND? If you can just split them out?

Hi,

Atif. We're not splitting those out, but the SCA agreements do cover both DRAM and NAND.

It is through 2030, but we're not breaking it out specifically. I can tell you that the DRAM volume is a little bit less than that approximately 35, and the NAND bit volume is a little bit more.

As we think about these going forward, we have more availability. As we said, that this number could get up to be higher in the future as we continue negotiations for SCA.

Understood. Then on the impact of China competition, firstly, if you can confirm that your China sales exposure is fairly minimum, and if Scott can comment on how should we see kind of China competitors kind of closing the gap on technology, if you can provide any color?

On the first question, yes, our exposure to China has been reducing over the last couple of years and the last several quarters, and we expect that exposure will be in the single-digit range in fiscal 2027.

Then I can comment a little on the technology side. Currently, our technology leadership is at least two nodes ahead of the China competition.

I think it's important to say that our focus is on maintaining technology leadership and having true differentiation in our products in how we compete. As Manish, I think, mentioned earlier and as it was mentioned in the call, our 1-gamma DRAM technology is already the majority of our bits, and it's set up to be the largest node in the company's history.

It is dependent on EUV technology. The next generation 1-delta is well underway, and we're focused on the ramp of that in the second half of next year.

EUV technology is critical to all advanced DRAM nodes going forward, and our expertise in that, both from the technology side in partnership with our supplier there, and as well as mask technology and other things, continues to be a key differentiator for Micron.

Hey, Atif—

Thanks, Scott. Manish,

well deserved

on the promotion.

Thank you, Atif. Can I just clarify that the response in terms of DRAM and NAND was actually a bits comment, just to make sure that was clear?

I'm not sure I specified, making sure it's clear.

Got it.

Yes, thank you, gentlemen. You are seeing robust demand across much of your portfolio, but this quarter does appear to be the second quarter in a row that mobile and client segment saw bit shipments decline.

Are higher memory prices reducing demand in this area of the market? While this area of the market has been slower to adopt SCAs, I'm curious if your growth in SCAs is coming from this cohort.

Thanks Thanks, Karl. I we did we did see, sequential bit decline, in our Mobile and Client Business Unit.

Um, but we did see revenue growth, obviously with both higher pricing and, and favorable mix. I think what's important to note is that the the premium segments of the both client as well as the flagship smartphones do see, robust demand for higher-content, higher-performance solutions.

That's, a segment that, of course, were Those are the segments that, of course, were very, focused on. With that with with that wind at their back, we see the PC and mobile industry revenue to be growing, even though we do see units volumes, declining.

And, in terms of SCAs And

in terms of SCAs, I'll just, comment that, we do have SCAs across all of our, business units, including, the, Mobile and Client Business Unit. And, we're not specifically breaking them out, but I will tell you that we have SCAs because it's important for us to be, maintaining, diversified supply to all our end markets.

Got it. Yes.

Maybe a question for Scott, if I could. How do you view the competitiveness of your in-house optimized base die on HBM4E versus peers?

As certainly some of these customers are seeking custom solutions, does the complexity and economic value flow primarily to the compute customers or to the HBM providers? Thank you.

Maybe just a little clarification first. On HBM4E, we have co-designed with NVIDIA, but not in-house base die like we use on HBM4.

I think just to be clear on your question, I just wanted to be sure I was answering it in the right way. On HBM4E, this co-design is on a foundry process, both for the customized product and for the, say, JEDEC-specified product.

Understood. Okay.

Okay. Then I think maybe to add a little color to that, the differentiation, just as we have demonstrated in the past on prior HBM products, winds up being in the power and the ultimate speed performance and the margin of the product working with our customers.

That in all previous generations hasn't been the same between different suppliers, and that we think will continue to be a strength for Micron in terms of quality of the product and the capabilities that we're able to put out.

Then, Karl, in terms of your question on economic value, HBM is a premium product, and as Scott mentioned, as we look at the NV-HBM with customization, we do expect that to be a high-value product as well. We're confident that HBM will continue to contribute and be a strong ROI product for us.

Good evening, and congratulations, Manish and Scott. Just wanted to maybe get a sense of the 10 new customer SCAs you signed in the quarter, maybe give us a little bit of color on what customers are asking for.

Obviously, they want supply, and they want longer-dated supply. Is there any kind of change in the pricing construct either you or they are asking for?

The reason I ask the question is kind of given the expectation about tightness through calendar 2027 and 2028, are you maybe a little bit less inclined to call for those fixed ceiling and floor pricing if you think you can capture a little bit more upside over the next couple of years?

Yeah. Thanks, Jim, and thanks for the shout-out.

I would say that the framework of the SCAs that we have is similar. What's different is that the negotiations reflect current market conditions and outlook for market pricing, right?

The direction of travel has been for higher pricing, and so those are now factored into the discussions that we're having with customers versus the prior ones which we had talked about that were set at CQ2 kind of market conditions. As I think we gave color that about 3/4 of the SCA revenue has a defined pricing framework, and about one 1/4 is open to periodic negotiations of pricing that move with market dynamics.

I guess I would answer that in terms of the overall framework, similar. The majority of the pricing frameworks have floor and ceiling bands, but the newer ones are negotiated with an eye towards the current market conditions and the future market tightness that we see.

Got it. Just to be clear, does that mean all the pricing ceilings and floors just reset to the higher market conditions you're seeing today, or is the nature of the pricing conditions actually different, too?

I don't think you disclosed signing any additional hyperscale customers, but I'm wondering if any of those are included in the 10. Thanks.

Yeah. There are multiple different frameworks.

What I commented on is that the majority of the frameworks that have pricing are set with floor and ceilings, but there are multiple different frameworks that we're continuing to use. Since the last call, in these new 10, we've signed a range of agreements from small to large SCA customers.

Thanks.

We're not commenting specifically. Even in the previous question, not specifically breaking out which one, just commenting that we now have SCAs across all of our business units, and we have SCAs ranging from small to large even in the last 10 that we've signed, and, of course, in the total 26.

Yes, thanks. Good evening.

I guess for first question, if you could address the construction CapEx as compared to the tool purchases. What I seemed to hear in the comments is that the construction CapEx was increasing faster, and I'm not sure I interpreted that correctly.

Understand that the cleanroom space constraints are constraining the ability to bring in tools for this year. The increase in construction CapEx is obviously interesting because it doesn't result in bit production until 20 at least 2029, probably beyond that.

Chris, I can start and then maybe Mark can add, but that's exactly right, is that the principal constraint in the industry is on cleanroom space, because the strong growth of AI in this demand vector has come on relatively recently in terms of the timeline that it takes to build these cleanrooms. While we're all starting, that's why we're focusing there.

Then you're right that we did comment that the majority of the construction CapEx increase for fiscal 2027, versus our prior plans, is for cleanrooms that will come online in late 2028 and beyond, which shows both how long it takes to build these cleanrooms and why we need to get started with the construction investments now, but also shows our confidence in longer-term demand, both through the observation of the demand trends and the near-term market trends that we're seeing, as well as the structure of the SCAs and the discussions we're having with SCAs and customers now extending those commitments beyond 2030. These SCAs are transformational for us in terms of being able to match supply with future demand, and to be able to invest with confidence.

Chris, maybe I could just add that just to make it clear that a majority of the increases is for construction CapEx. Most of that construction increase is to accelerate cleanroom space availability in 2028 and beyond.

It is a trend that we would expect to continue beyond 2027. I think you made a very important point that just the spend there doesn't translate into bits, and that we put the equipment in the fabs and produce wafers when needed based on our view of the market.

These SCAs are a good way for us to keep a pulse on the market and make sure that, yeah, we get a return on that CapEx.

One other point, Chris, is that we will equip the cleanrooms and build capacity to the demand trends that we see. We have been executing long-term supply agreements with equipment suppliers to be able to make sure we have access to equipments as needed, but, of course, we'll still equip and build the production capacity in those cleanrooms in line with demand trends at the time.

Of course. Okay.

As a follow-up question, I want to ask a question on the impact of CPU strength on both overall bit demand and your view of supply-demand balance. Obviously, that's probably been the biggest incremental surprise since the beginning of the year.

You don't have the same trade ratio effects on CPU as you do on HBM. I guess the question is, how significant is that in contribution to the supply-demand imbalance?

I think definitely the realization that agentic workloads are executed across CPU has been a big driver. There is a large attach rate of both LP as well as DDR memory and SSD to enable those agentic workloads.

You're already starting to see multiple ones, whether in the enterprise or consumers being implemented in driving real value. That's been one of the reasons that server units are growing so strongly, as we noted, in the high teens.

I think the other thing that this shows is that it's just another vector of logic and logic silicon to grow to be able to take advantage of the AI trends, and so that is driving higher logic silicon and into the overall demand for AI compute, and, frankly, creating more of a constraint on DRAM and making clear that DRAM is the principal constraint versus logic or power to the data center. There are many different software implementations for enterprise agentic workloads that we're all seeing.

Seeing how quickly Meta's Muse has been moving, just in the last couple of weeks since being released, is just an example of how quickly these agentic workloads are enabling consumers to realize real value.

Great. Thank you.

Great. Thank you, guys.

In terms of supply growth decelerating next year, I guess that's a little surprising in the context of the CapEx. I know you talked about some of the dampening effects of HBM, but I don't think that delta should be changing that much.

I just wonder if you could just kind of explain what the puts and takes are that supply would decelerate given the CapEx that you see.

Sure, Joe. You're asking for both DRAM and NAND?

Principally DRAM.

Okay. I think that we gave the color that HBM is growing faster than conventional DRAM, and the trade ratio, as you move more of the industry is shifting from HBM3E to HBM4, and then towards later in the year in 2027, HBM4E, and these are increasing trade ratios.

If you just look at both of those two things happening together, that has a dampening effect on the ability for bit growth to be growing. Keep in mind that both the bit growth for us and other industry participants from new technology nodes, both over time as you make more of your transition, the timing of transitions affects how much bit growth you can have, as well as the nature of the diminishing returns of each of those newer nodes.

These are all the factors that are going to be constraining supply, but, of course, the principal one is cleanroom space for everyone. Even though we're going to be having first wafer output from our Idaho facility mid calendar 2027, and others in the industry as well maybe opening cleanrooms, meaningful supply growth takes a few quarters after that.

I think those are all the reasons why we see that DRAM is reducing supply industry shipments next year.

That's helpful. Thank you.

Then to the extent that if you end up having been conservative on industry supply, and there's more supply next year, can you talk about there's a lot of pent-up demand. There's a lot of appetite to have more supply.

We've seen de-speccing out of necessity for some of these AI racks and things like that. It seems like they'll just re-spec to higher levels if there's more supply, but am I too optimistic there?

Just how do you think about that?

No, I think that's exactly the point, that these And Sanjay mentioned this on the main call. We definitely think that our customers are choosing to maximize the compute silicon shipments they can make with the available memory supply that they have.

That does create latent demand for more memory to attach to those, which would then end up delivering higher system performance and improved performance at the end customers. Yes, that latent demand, I think, is aligned with your concept that were more memory to become available, it would easily get put into use in higher content growth in AI workloads, whether attached to accelerators or CPUs.

Very helpful. Thank you.

Yes. Thanks for taking my question.

A couple of follow-ups for me. You did highlight your NAND bit shipment in 2026 is tracking below industry average, but what should we expect 2027 through 2028?

Would you be able to be growing NAND bit demand or bit shipment in line with the industry average of 25%?

Mehdi, we're not commenting out that far, frankly, on either DRAM or NAND. We do expect conditions to be tight on NAND overall, even as the industry is expected to grow in the mid-20% range in calendar 2027 and 2028.

Some of the factors that account for our supply growth, we are utilizing some of the cleanroom space in Singapore now for our advanced R&D line for future NAND growth. We are also preparing for the ramp of our HBM facility in Singapore next year, and so some of the existing cleanroom was for some pilot HBM operations.

That's some of the reasons why our supply growth grew less than the industry this year. We feel confident in our technology, and we do expect that our continued ramp to Gen 9 will provide good, very high-ROI, cost-effective supply for us as we move forward.

Then, of course, we do have the new cleanroom that we broke ground on earlier this year that will come online in the second half of calendar year 2028.

Got it. Thank you.

Mehdi, maybe if I could interject just because of time here, and then if you got an additional Well, why don't you start with your question, then second question, and I'll make a comment after that.

Sorry, Mark. Didn't mean to interrupt you.

Very quickly, I just want to get the team's opinion. When I look at DRAM, especially at the wafer level, the devices are all the same, and I argue that there is a fungibility of DRAM at the wafer level, and then there are some differentiation in the back end.

This fungibility at the wafer level hasn't been seen before, because in the past, the cycles were driven by just one product, and there was a significant concentration of customers. Am I right with this assumption that fungibility of the DRAM at the wafer level gives you a better way of managing DRAM costs?

Does that make any sense to you?

Let me start with one thing. I think there's a bit of what you say, but I actually probably would have gone the other direction.

If you look at the front-end variability or what we do differently on the DRAM processes between optimizing for HBM, optimizing for high-performance SOCAMM, LP DRAM, and optimizing for DDR6, there's at this moment in time probably more difference than ever in the history of DRAM. In the same node, the different kinds of products that we have to build on it, and a lot more differentiation built into those.

I don't know what you would add, Manish.

Yeah. I would say that what it really helps us with in the near term, the fact that we do run the different products in the same manufacturing lines, and it does help us adjust mix.

We don't have to run products in different fabs. We can run them on the same lines.

There, as Scott mentioned, each product has its own vector that is trying to optimize. Obviously, in HBM, it's bandwidth with the TSVs, and that requires unique process steps.

In DDR and LP, they each have their own as well process steps that are unique. I think the most important part of the fungibility is that we do have the ability to flex wherever demand is, or even mix adjustments, to try and meet our customers' requirements.

I think that's probably the all within the same fab, that's probably the most important part. I wouldn't say that it helps necessarily with cost.

Got it. Thank you.

I think, Mehdi, I think we're at the end of the call, and I am really happy to hear the nature of the questions being focused on technology and the longer-term strong foundation and performance of the business. Let me just do a couple of housekeeping things that I thought would come up earlier.

Our first-quarter guidance factors in a single-digit sequential bit growth of and double-digit for cost for both DRAM and NAND. I wanted to make sure you had that for your modeling.

Then also, excluding the incentive comp effects, the year-over-year R&D increase is going to be more than the billion that we said last quarter. It'll be over a billion in 2027 as we have added additional R&D activities.

Again, I wanted to just make sure we got that out for your modeling.