Micron Technology, Inc.
Fiscal Q1 2022 Earnings Call Prepared Remarks

Farhan Ahmad, Vice President, Investor Relations
Thank you, and welcome to Micron Technology's fiscal first-quarter 2022 (FQ1-22) financial conference
call. On the call with me today are Sanjay Mehrotra, President and CEO, and Dave Zinsner, Chief Financial
Officer. Today’s call will be approximately 60 minutes in length. This call, including the audio and slides, isalso being webcast from our Investor Relations website at investors.micron.com. In addition, our website
contains the earnings press release, and the prepared remarks filed a short while ago.
Today’s discussion of financial results will be presented on a non-GAAP financial basis unless otherwise
specified. A reconciliation of GAAP to non-GAAP financial measures may be found on our website. As areminder, a webcast replay will be available on our website later today. We encourage you to monitor our
website at micron.com throughout the quarter for the most current information on the company,
including information on the various financial conferences that we will be attending. You can follow us on
Twitter at MicronTech.
As a reminder, the matters we will be discussing today include forward-looking statements. These
forward-looking statements are subject to risks and uncertainties that may cause actual results to differ
materially from statements made today. We refer you to the documents we file with the SEC, specificallyour most recent Form 10-K and 10-Q, for a discussion of risks that may affect our future 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 after today’s date to conform these statements to actual results.
I’ll now turn the call over to Sanjay.
Sanjay Mehrotra, President and Chief Executive Officer
Thank you, Farhan.
Good afternoon, everyone.
Intro/FQ1 Highlights
Micron delivered outstanding results in fiscal first quarter (Q1), achieving strong year-over-year revenue
growth and solid profitability. Our strong start to the year and our product portfolio momentum keep uson track to deliver record revenue and robust profitability in fiscal 2022. We are rapidly ramping ourindustry-leading 1α (1-alpha) DRAM and 176-layer NAND products and achieving excellent yields, andthese products are now shipping across our major end markets. We achieved significant productadvancements and customer wins, including launching our first DDR5 solution, introducing our verticallyintegrated Gen4 NVMe data center SSD, validating the world’s first low-power DDR5X with MediaTek, and© 2021 Micron Technology, Inc.

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shipping our GDDR6 for AMD’s Radeon RX 6000 graphics card. The secular demand for memory andstorage, along with Micron’s focus on building our technology and product leadership and deepening ourcustomer relationships, continues to strongly position us to create significant shareholder value in fiscal
year 2022 (FY22) and beyond.
Technology and Operations
With the successful ramp of 1α DRAM and 176-layer NAND products across major end markets, we areseveral quarters ahead of the industry in market deployment of these leading-edge process technologies.
The combination of 1α and 1z DRAM nodes represents the majority of our DRAM bit production, and176-layer NAND now accounts for the majority of our NAND bit production. Our strong execution onthese advanced nodes sets us up for a successful FY22. We are also investing to scale our technology forthe next decade. We are planning for volume DRAM production on extreme ultraviolet (EUV) lithography
in 2024 with our 1γ (1-gamma) node. Integrating EUV with our existing multi-patterning immersion
lithography expertise will help us maintain DRAM technology leadership for many years to come. And in
NAND, we have successfully transitioned to replacement gate and have a roadmap to scale for several
generations while leveraging our leadership in CMOS under array and QLC to maintain bit density
leadership. In addition to being a technology leader, Micron is the industry quality leader, with two-thirdsof our customers ranking us No. 1 in quality.
As a technology and quality leader and as an innovation partner with a strong global manufacturing
network, we have become a strategic supplier to our customers. Amid ongoing semiconductor supply
chain challenges, Micron has leveraged our deep partnerships with customers and suppliers to support
DRAM, NAND and NOR supply continuity. On the customer side, we are seeing greater commitment andcollaboration on supply planning, including the use of long-term agreements. Today, over 75% of ourrevenue comes from volume-based annual agreements, a significant increase from five years ago when
they accounted for around 10% of our revenue. On the supplier side, we have entered into strategic
agreements to secure supply of certain components that we need to manufacture our products. As aresult of these agreements, the current tight supply of these components is expected to gradually
improve for us throughout calendar 2022.
End Markets
Now let us review our end markets. Demand for memory and storage is broad, extending from the data
center to the intelligent edge and to a growing diversity of user devices. Memory and storage revenue has
outpaced the rest of the semiconductor industry over the last two decades, and we expect this trend tocontinue for years to come, thanks to artificial intelligence (AI), 5G and electric vehicle (EV) adoption. In
addition, the buildout of immersive virtual worlds, often referred to as the metaverse, will offer even more
opportunity, due to the intensive use of significant memory and storage in these applications.

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Our team’s execution on strengthening our product portfolio has been outstanding, with several new
product launches and customer qualifications in FQ1 — achievements we are very proud of. I will
highlight some of these achievements as I discuss our end markets.
Data Center
Data center is the largest market for memory and storage, and we expect it to outpace the broader
memory and storage market over the next decade. Memory and storage is growing as a portion of serverbill of materials (BOM), supported by new and heterogenous computing architectures, the growth of dataintensive workloads and AI, and the ongoing displacement of HDDs by SSDs. In the fiscal first quarter,
data center revenue grew more than 70% year over year as a result of continued cloud demand and a
resurgence of enterprise IT investment.
Our strengthening product portfolio also contributed to strong profitability. In FQ1, we launched the 7400
SSD, the first data center NVMe SSD to utilize our internally developed controller and firmware along with
our DRAM and NAND. This Gen4 NVMe product has already been qualified by two key customers.
Looking ahead, we expect a strong ramp in our data center SSD revenues in FQ2, driven by increased
sales of our NVMe SSD products. In addition, we launched the industry’s leading DDR5 and see strong
demand as customers prepare for new server product launches in calendar 2022.
PC
While PC end demand remains strong, our client revenue declined sequentially due to the PC production
impact from ongoing non-memory component shortages and related customer inventory adjustments of
DRAM and NAND products. Consistent with the expectations we articulated in our last earnings call, theinventory adjustment at most PC customers is now largely behind us, and we are seeing signs ofstabilization in demand in this end market. As we enter calendar year 2022 (CY22), we expect PC unit sales
to be in line with those for CY21. Mix of enterprise PCs in CY22 is projected to be higher as companies
invest to support hybrid work environments. This shift in the mix of PC unit shipments should increase
average PC DRAM and NAND content.
Low-power DRAM has grown to 20% of the PC industry DRAM bit demand today and is projected to
become the majority of the PC market in five years. Given our industry-leading solutions in low-power
DRAM, we are well positioned to benefit from this trend.
In FQ1, we achieved qualifications and volume production of our 176-layer Gen4 PCIe client SSD atseveral PC OEMs, as well as our first revenues for DDR5 memory. Across the PC industry, demand for
DDR5 products is significantly exceeding supply due to non-memory component shortages impacting
memory suppliers’ ability to build DDR5 modules. We expect these shortages to moderate through 2022,© 2021 Micron Technology, Inc.

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enabling bit shipments of DDR5 to grow to meaningful levels in the second half of calendar 2022. We arepoised to take advantage of this transition with industry-leading DDR5 solutions for PCs.
Graphics
In the fast-growing graphics market, Micron holds an excellent position, with a broad product portfoliofeaturing our proprietary GDDR6X product line and deep partnerships with leading GPU suppliers. We
increased our revenue sequentially and year over year. Our propriety GDDR6X continues to have market
success, including integration on NVIDIA’s high-end gaming cards. In FQ1, we were pleased to announce
availability of our GDDR6 memory solutions on AMD’s Radeon RX 6000 graphics card extending the valueof GDDR6 memory to the entire gaming market.
Mobile
FQ1 mobile revenue increased more than 25% year over year. Mobile memory and storage demand
continues to strengthen, supported by content-hungry applications and the continued transition from 4G
to 5G. Recent 5G phones feature more than 50% higher DRAM and double the NAND content versus 4G
phones. 5G smartphone sales are forecast to exceed 500 million units in CY21, with 700 million units
forecast for CY22. We expect mobile content to continue increasing as 5G phones benefit from further
innovation in 5G-enabled applications.
Following several industry firsts last year, in FQ1, our 1α-based LPDDR5X, the world’s fastest mobile
DRAM, was sampled and validated with MediaTek, further demonstrating Micron’s leadership in themobile market.
Auto & Industrial
We expect automotive and industrial to be the fastest-growing memory and storage markets over the
next decade, and we are exceptionally well positioned as the market share leader, with over 10% of ourrevenue coming from these end markets.
In the near term, non-memory component shortages are limiting CY21 auto unit production to be flat
year over year, significantly below end-consumer demand. However, our FQ1 year-over-year auto revenue
growth remained strong at 25% as a result of content growth from in-vehicle infotainment and driverassistance applications, which are advancing rapidly, especially as EV adoption accelerates. New EVs are
becoming like a data center on wheels, and we are already seeing examples of 2022-model-year EVs
supporting level 3 autonomous capability with over 140GB of DRAM and also examples with over 1TB of
NAND. In addition to continued content growth, we expect CY22 auto unit production to increase as nonmemory component shortages ease. We entered into a new supply agreement with UMC to improve ourability to support our automotive customers with NAND solutions as market demand strengthens in CY22.

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In industrial IoT, we saw more than 80% year-over-year revenue growth, fueled by the continued ramp in
applications such as factory automation and security systems. In consumer IoT, we saw more than 40%
year-over-year revenue growth, driven by applications such as virtual reality (VR) headsets and smart
home devices. We expect internet of things (IoT) demand trends to accelerate further as 5G speeds the
adoption of data-intensive applications powered by intelligent-edge infrastructure.
Market Outlook
Our view of calendar 2021 and calendar 2022 industry bit demand and supply growth is largely
unchanged from last quarter. We expect calendar 2021 DRAM industry bit demand growth to be in thelow 20% range and industry NAND bit demand growth to be in the high 30% range. We expect calendar
2022 industry bit demand growth to be in the mid to high teens for DRAM and approximately 30% for
NAND, in line with our view of the long-term bit demand growth CAGRs for each.
We anticipate underlying demand in calendar 2022 to be led by increasing volume of data center server
deployments, 5G mobile shipments and continued strength in automotive and industrial markets. Nonmemory supply shortages have constrained customer builds and pushed out some demand across manyend markets. While these shortages may cause some variability to our demand, we expect them to easethrough 2022, supporting memory and storage demand growth.
Turning to our bit supply expectations for the year. Given prudent industry capex and very lean supplierinventories, we expect a healthy industry supply-demand balance in CY22. Micron's CY22 bit supply
growth for DRAM and NAND will be in line with industry demand. We are planning to deliver record
revenue with solid profitability in FY22 with stronger bit shipment growth in the second half of the fiscal
year. The stronger second-half bit shipments will be aided by the easing impact of non-memory
component shortages on our supply and on customer demand, together with additional productqualifications of our 1α DRAM and 176-layer NAND-based products.
As expected in FY22, the continued ramps of 1α DRAM and 176-layer NAND are providing us with good
front-end cost reductions. As we mentioned before, our efforts to increase supply chain resilience andprovide business continuity to our customers are headwinds for our assembly and packaging costs,
consistent with the broader industry. Overall, we expect annual cost-per-bit reductions to be competitive
with the industry in FY22 and over the long term.
Turning to capital expenditures. We expect FY22 capex in the range of $11 billion to $12 billion. For both
DRAM and NAND, we plan to achieve bit supply growth with node transitions alone through the middleof the decade. Beyond this time horizon, we anticipate the need to add greenfield wafer capacity for
DRAM. However, for our NAND supply growth, we expect continued 3D scaling to be sufficient to meetindustry demand growth without the need for wafer capacity additions. We recently announced our intent
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and research and development (R&D). As part of our commitment to investing in R&D, we announcedplans to establish a state-of-the-art memory design center in Atlanta. These announcements reflect ourconfidence in persistent, long-term demand growth for memory and storage and our ability to generate
returns on these investments. We look forward to working with governments around the world, includingin the U.S., as we consider sites to support future expansion.
I will now turn it over to Dave.
Dave Zinsner, Senior Vice President and Chief Financial Officer
Thanks, Sanjay.
Opening
Micron delivered outstanding results to start the fiscal year, with revenue, margin and earnings per share(EPS) all coming in within our guidance ranges, while also generating healthy free cash flow.
Revenue
Total FQ1 revenue was approximately $7.7 billion, down 7% quarter over quarter and up 33% year overyear. The sequential revenue decline was predominantly attributable to weakness related to non-memory
component shortages at our customers, as Sanjay discussed earlier.
DRAM
FQ1 DRAM revenue was $5.6 billion, representing 73% of total revenue. DRAM revenue declined 8%
quarter over quarter and was up 38% year over year. Sequentially, bit shipments declined in the midsingle-digit percentage range while average selling prices (ASPs) declined in the lower-single-digit
percentage range.
NAND
FQ1 NAND revenue was approximately $1.9 billion, representing 24% of Micron’s total revenue. NAND
revenue declined 5% quarter over quarter and was up 19% year over year. Sequential bit shipments wereapproximately flat, and ASPs declined in the mid-single-digit percentage range.
Revenue by Business Unit
Now turning to our FQ1 revenue trends by business unit. Revenue for the Compute and Networking
Business Unit was $3.4 billion, down 10% quarter over quarter and up 34% year over year. Cloud,enterprise and graphics performed well in the quarter, while client revenues declined sequentially.

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Revenue for the Mobile Business Unit was $1.9 billion, up 1% sequentially and up 27% year over year.
Micron continues to lead in managed NAND, and MCP revenue surpassed 50% of mobile revenue in FQ1
for the fifth consecutive quarter.
Revenue for the Storage Business Unit was $1.2 billion, down 4% from the prior quarter and up 26% year
over year. SBU profitability benefited in FQ1 from the strong progress made in ramping our 176-layer
node.
Finally, revenue for the Embedded Business Unit was $1.2 billion, the second highest in our history. EBU
revenue was up 51% year over year and down 10% from record levels in the prior quarter. EBU grossmargin and operating margin improved sequentially, driven by strong execution.
Operating Results
Gross Margin
The consolidated gross margin for FQ1 was 47.0%, at the midpoint of our guidance and down
approximately 85 basis points from the prior quarter. A higher mix of NAND sales was a headwind to FQ1gross margin.
Opex
Operating expenses in FQ1 were $891 million. We continue to expect FY22 R&D to be up approximately
15% over FY21 as we invest to strengthen our portfolio.
Operating Income
FQ1 operating income was strong at $2.7 billion, resulting in an operating margin of 35%, down slightly
from 37% in FQ4 and up from 17% in the prior year.
FQ1-adjusted EBITDA was $4.4 billion, resulting in an EBITDA margin of 57%, flat from the prior quarterand up from 43% in the prior year.
Earnings Per Share
Non-GAAP earnings per share in FQ1 were $2.16, down from $2.42 in FQ4 and up from $0.78 in the yearago quarter. EPS included approximately $0.01 of gains from Micron Venture’s investments.
Operating Cash Flow
Turning to cash flows and capital spending, we generated $3.9 billion in cash from operations in FQ1,
representing 51% of revenue.

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Capital Allocation
Net capital spending was $3.3 billion during the quarter. We continue to expect fiscal 2022 capex to be
between $11 billion and $12 billion, and it will be front-end-loaded in the fiscal year.
Due to the strong revenue and profitability, we generated approximately $671 million in free cash flow. In
addition, we received approximately $900 million from the sale of the Lehi fab, which closed in thequarter.
We completed share repurchases of approximately $260 million, or approximately 3.6 million shares, in
FQ1. Including our dividend payment, we returned around $371 million to shareholders in the quarter,
which represented more than 50% of the free cash flow generated during the quarter. In addition, ourboard of directors approved a quarterly dividend of $0.10 to be paid on Jan. 18 to shareholders of record
on Jan. 3. We remain committed to returning more than 50% of the cross-cycle free cash flow through a
combination of dividends and buybacks. As we have mentioned before, we will be opportunistic in share
repurchases and more aggressive when the shares are trading at larger discounts to intrinsic value.
Inventory
Our ending FQ1 inventory was $4.8 billion, and average days for the quarter were 103 days, within ournormal target range of 95 to 105 days. We expect to exit FY22 with days of inventory at less than 100
days, as we expect our DRAM and NAND supply to be tight for the year.
Total Cash/Debt
We ended the quarter with $11.5 billion of total cash and investments and $14 billion of total liquidity.
Our FQ1 total debt was $7 billion. Following our successful sustainability-linked credit facility in May andcontinuing with our strong commitment to enhancing our environmental and social performance, in FQ1,
we achieved two important milestones for Micron: our inaugural green bond and inaugural long bonds.
The total proceeds from these bonds were $2 billion, and several nationally recognized minority, disabledveteran and women-owned financial institutions participated. The $1 billion green bond proceeds will
finance eligible sustainability-focused projects, including reducing the company’s greenhouse gas
emissions, energy and water use, and waste generation. The $1 billion proceeds from the long bonds,
along with cash on hand, were used to redeem Micron senior notes maturing in 2023 and 2024. The net
result from the green and long bond offering was essentially leverage-neutral for Micron while improving
our net interest expense and increasing the weighted average maturity of our notes and bank debt fromfour years to nine years.

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OutlookNow turning to our outlook for the fiscal second quarter. We are starting to see stabilization in demand
from PC customers, and end demand remains solid across our markets. On the margin front, we expectthat mix improvements are a positive factor for gross margins in NAND. While we continue to have cost
headwinds due to COVID-19 mitigation expenses and above-normal assembly/test and component costs,
our front-end costs continue to benefit from our ramp of 1α DRAM and 176-layer NAND. We expect
operating expenses to increase sequentially as we invest in next-generation technologies and products forboth DRAM and NAND and accelerate our new product roadmap.
Non-GAAP GuidanceWith all these factors in mind, our non-GAAP guidance for FQ2 is as follows. We expect revenue to be$7.5 billion, plus or minus $200 million; gross margin to be in the range of 46%, plus or minus 100 basis
points; and operating expenses to be approximately $975 million, plus or minus $25 million. We expect
our non-GAAP tax rate to be approximately 10% for FQ2. Based on a share count of approximately 1.14
billion fully diluted shares, we expect EPS to be $1.95, plus or minus $0.10. Our FQ1 results and FQ2
outlook keep us on track to deliver record revenue and solid profitability and free cash flow in FY22.
Closing
In closing, our business is delivering strong cross-cycle performance: Revenue growth has significantly
outpaced the broader semiconductor industry, gross margins have averaged over 40%, and operating
margins have averaged around 30%. The strong product and technology momentum and Micron’s solid
execution give us confidence that we can sustain solid financial performance in the future.
I will now turn it back to Sanjay.
Sanjay Mehrotra, President and Chief Executive Officer
Thank you, Dave.
Micron’s culture has played a significant role in driving our strong results. Our vision, to transform how
the world uses information to enrich life for all, serves both as an inspiration for our team and as afoundation for everything we do. Earlier this month, we released Micron’s 2021 DEI report, entitled “ForAll,” which highlights significant accomplishments across the six DEI commitments that we introduced lastyear. These accomplishments included achieving comprehensive global pay equity, as well as increasing
representation of underrepresented groups among new college graduate hires by 7%. We also publicly
disclosed consolidated Equal Employment Opportunity or EEO-1 data for the first time. This report isavailable on our website.

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Fiscal Q1 2022 Earnings Call Prepared Remarks

Demand for memory and storage remains strong. The broad integration of AI, proliferation of theintelligent edge, continued data center growth, EV adoption and 5G deployment are creating expanded
opportunities for Micron to innovate and deliver new value to our customers. The strategic importance ofsemiconductors to economic growth has never been more clear — and ensuring the security of supply forcustomers across all industries has never been more important. We look forward to working withgovernments on initiatives to invest in domestic production, both here in the U.S. through the Creating
Helpful Incentives to Produce Semiconductors for America (CHIPS) Act and Facilitating American-Built
Semiconductors (FABS) Act and in other countries around the world.
It is a truly exciting time in the industry. Our business is robust and growing, and our team is energized to
seize the opportunities ahead of us.
We’ll now open for questions.

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