UNITED STATESSECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q(Mark One)☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 3, 2022☐

OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period fromtoCommission file number 1-10658

Micron Technology, Inc.
(Exact name of registrant as specified in its charter)
Delaware(State or other jurisdiction of incorporation or organization)

75-1618004(I.R.S. Employer Identification No.)
83716-9632(Zip Code)

8000 S. Federal Way, Boise, Idaho(Address of principal executive offices)(Registrant’s telephone number, including area code)(208) 368-4000

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol
Name of each exchange on which registered
Common Stock, par value $0.10 per share
MU
Nasdaq Global Select Market
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the
Yes ☒
No ☐
Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be
Yes ☒
No ☐
submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or forsuch shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,”and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer

Accelerated Filer

Non-Accelerated Filer

Smaller Reporting Company

Emerging Growth Company

☒
☐
☐
☐
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period forcomplying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐The number of outstanding shares of the registrant’s common stock as of March 24, 2022 was 1,116,666,857.

☐
No ☒MicronCorporate
ProfileFounded on October 5, 1978
Headquartered in
Boise, Idaho, USA

4th

Largest semiconductor company
in the world, excluding IP/software
revenue*

135

On the 2021 Fortune 500

49,000+Patents granted and growing**

17

It’s All About Data

Data is today’s new business currency, and memoryand storage are a critical foundation for the data
economy. Memory and storage innovations will helptransform society and enable significant value forall.

Who We Are
Micron designs, develops and manufactures industry-leading memory andstorage products. By providing foundational capability for AI and 5G across data
center, the intelligent edge, and consumer devices, we unlock innovation acrossindustries including healthcare, automotive and communications. Our
technology and expertise are central to maximizing value from cutting-edge
computing applications and new business models which disrupt and advancethe industry.

Countries**

11

Manufacturing sites** and18 customer labs**~44,000
Team members**

Our Vision
As a global leader in memory and storage solutions, we are transforming how
the world uses information to enrich life for all. By advancing technologies tocollect, store and manage data with unprecedented speed and efficiency, welead the transformation of data to intelligence. In a world of change, we remain
nimble, delivering products that help inspire the world to learn, communicate
and advance faster than ever.

Our Commitment*Gartner Market Share: Semiconductors by
End Market, Worldwide, 2020 (April 2021)**Micron data as of March 3, 2022

Our customers depend on our innovative solutions every day. We dedicate
ourselves to demonstrating our environmental conscience, an inclusive teamculture where all voices are heard and respected, and engaging in ourcommunities to enrich life for all.

Media Inquiries
mediarelations@micron.com

Global Product Portfolio

Government Inquiries
govaffairs@micron.com

DRAM | NAND | NOR | Solid-State Drives | Graphics and High Bandwidth
Memory (HBM) | Managed NAND and Multichip Packages

Investor Inquiries
investorrelations@micron.com

Connect with us on micron.com
TM© 2022 Micron Technology, Inc. Micron, the Micron orbit logo, the M orbit logo, Intelligence Accelerated , and other Micron trademarks are the property of Micron Technology, Inc. All other trademarks are
the property of their respective owners. Products and specifications are subject to change without notice. Rev 03/22 CCMMD-1707390403-3712

Table of Contents
Introduction
Part I. Financial Information
Item 1.
Financial Statements:
Consolidated Statements of Operations
Consolidated Statements of Comprehensive Income
Consolidated Balance Sheets
Consolidated Statements of Changes in Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Results of Operations
Liquidity and Capital Resources
Item 3.
Quantitative and Qualitative Disclosures about Market Risk
Item 4.
Controls and ProceduresPart II. Other Information
Item 1.
Legal Proceedings
Item 1A.
Risk Factors
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
Item 6.
Exhibits
Signatures

4

6
7
8
9
10
11
28
31
34
36
36
37
37
57
58
59

3

Table of Contents

Definitions of Commonly Used Terms
As used herein, “we,” “our,” “us,” and similar terms include Micron Technology, Inc. and its consolidated subsidiaries, unless the context
indicates otherwise. Abbreviations, terms, or acronyms are commonly used or found in multiple locations throughout this report and include
the following:
Term
Definition
Term
Definition
2023 Notes
2024 Notes
2024 Term Loan A
2026 Notes
2027 Notes

2.497% Senior Notes due April 2023
4.640% Senior Notes due February 2024
Senior Term Loan A due October 2024
4.975% Senior Notes due February 2026
4.185% Senior Notes due February 2027

InoteraIntel
LIBOR
LPDRAM
MCP

2029 Notes
2030 Notes
2032 Green Bonds

5.327% Senior Notes due February 2029
4.663% Senior Notes due February 2030
2.703% Senior Notes due April 2032

MicronMTU
NVMe2041 Notes
2051 Notes

3.366% Senior Notes due November 2041
3.477% Senior Notes due November 2051

DDR
EUV
IMFT

Double Data Rate DRAM
Extreme ultraviolet lithography
IM Flash Technologies, LLC

QimondaRevolving Credit
Facility
SOFR
SSD
TI

Inotera Memories, Inc.
Intel Corporation
London Interbank Offered Rate
Low-power DRAM
Multichip packaged solutions with managed
NAND and LPDRAM
Micron Technology, Inc. (Parent Company)
Micron Technology Utah, LLC
Hardware interface for SSDs that connect via a
PCIe bus
Qimonda AG$2.5 billion revolving credit facility due May
2026
Secured Overnight Financing Rate
Solid State Drive
Texas Instruments Incorporated

Micron Technology, Inc., including its consolidated subsidiaries, is an industry leader in innovative memory and storage solutionstransforming how the world uses information to enrich life for all. With a relentless focus on our customers, technology leadership, andmanufacturing and operational excellence, Micron delivers a rich portfolio of high-performance DRAM, NAND, and NOR memory and storage
products through our Micron® and Crucial® brands. Every day, the innovations that our people create fuel the data economy, enablingadvances in artificial intelligence and 5G applications that unleash opportunities — from the data center to the intelligent edge and across theclient and mobile user experience.
Micron, Crucial, any associated logos, and all other Micron trademarks are the property of Micron. Intel and 3D XPoint are trademarks of Intel
Corporation or its subsidiaries. Other product names or trademarks that are not owned by Micron are for identification purposes only and may
be the trademarks of their respective owners.

Available Information
Investors and others should note that we announce material financial information about our business and products through a variety ofmeans, including our investor relations website (investors.micron.com), filings with the U.S. Securities and Exchange Commission (the“SEC”), press releases, public conference calls, and webcasts. We use these channels to achieve broad, non-exclusionary distribution of
information to the public and for complying with our disclosure obligations under Regulation FD. Therefore, we encourage investors, themedia, and others interested in our company to review the information we post on such channels.

4 | 2022 Q2 10-Q

Table of Contents

Forward-Looking Statements
This Form 10-Q contains trend information and other forward-looking statements that involve a number of risks and uncertainties. Suchforward-looking statements may be identified by words such as "anticipate," "expect," "intend," "pledge," "committed," "plans," "opportunities,""future," "believe," "target," "on track," "estimate," "continue," "likely," "may," "will," "would," "should," "could," and variations of such words
and similar expressions. However, the absence of these words or similar expressions does not mean that a statement is not forward-looking.
Specific forward-looking statements include, but are not limited to, statements such as those made regarding the impact of the new Idaho tax
law; potential increases in our effective tax rate; the impact of coronavirus disease 2019, including variant strains (“COVID-19”) to ourbusiness; the sufficiency of our cash and investments; the payment of future cash dividends; capital spending in 2022; and funding ofsustainability-focused projects. Our actual results could differ materially from our historical results and those discussed in the forward-looking
statements. Factors that could cause actual results to differ materially include, but are not limited to, those identified in “Part II. Other
Information – Item 1A. Risk Factors.”

5

Table of Contents

PART I. FINANCIAL INFORMATIONITEM 1. FINANCIAL STATEMENTS

Micron Technology, Inc.
Consolidated Statements of Operations(In millions, except per share amounts)(Unaudited)
Quarter ended
March 3,
March 4,
2022
2021
Revenue
Cost of goods sold
Gross margin$

7,786 $
4,110
3,676

6,236
4,587
1,649

Research and development
Selling, general, and administrative
Restructure and asset impairments
Other operating (income) expense, net
Operating income

792
263
5
70
2,546

Interest income
Interest expense
Other non-operating income (expense), net

Income tax (provision) benefit
Equity in net income (loss) of equity method investees
Net income$

Earnings per share
Basic
Diluted$Number of shares used in per share calculations
Basic
Diluted15,473 $
8,232
7,241

12,009
8,624
3,385

641
214
5
126
663

1,504
522
43
(5)
5,177

1,288
428
13
127
1,529

12
(55)
6
2,509

10
(42)
4
635

22
(100)
(69)
5,030

20
(90)
17
1,476

(255)
9
2,263 $

(48)
16
603 $

(474)
13
4,569 $

(99)
29
1,406

2.02 $
2.00

0.54
0.53

4.08 $
4.04

1.26
1.23

1,119
1,130

1,120
1,144

1,119
1,130

1,118
1,139

See accompanying notes to consolidated financial statements.

6 | 2022 Q2 10-Q

Six months ended
March 3,
March 4,
2022
2021
$

$

Table of Contents

Micron Technology, Inc.
Consolidated Statements of Comprehensive Income(In millions)(Unaudited)
Quarter ended
March 3,
March 4,
2022
2021
Net income$

2,263 $

603$

4,569 $

1,406

$

(34)
(13)
(1)
1
(47)
2,216 $

(28)
(3)
1
1
(29)
574 $

(120)
(20)
(1)
1
(140)
4,429 $

12
(4)
1
1
10
1,416

Other comprehensive income (loss), net of tax
Gains (losses) on derivative instruments
Gains (losses) on investments
Pension liability adjustments
Cumulative translation adjustments
Other comprehensive income (loss)
Total comprehensive income

Six months ended
March 3,
March 4,2022
2021

See accompanying notes to consolidated financial statements.

7

Table of Contents

Micron Technology, Inc.
Consolidated Balance Sheets(In millions, except par value amounts)(Unaudited)
March 3,
2022

As of
AssetsCash and equivalents
Short-term investments
Receivables
Inventories
Assets held for sale
Other current assets
Total current assets
Long-term marketable investments
Property, plant, and equipment
Operating lease right-of-use assets
Intangible assets
Deferred tax assets
Goodwill
Other noncurrent assets$$

Total assets
Liabilities and equity
Accounts payable and accrued expenses
Current debt
Other current liabilities
Total current liabilities
Long-term debt
Noncurrent operating lease liabilities
Noncurrent unearned government incentives
Other noncurrent liabilities
Total liabilities$

September 2,
2021

9,116 $
1,006
5,384
5,383
13
600
21,502
1,717
36,171
587
414
762
1,228
1,315
63,696 $

7,763
870
5,311
4,487
974
502
19,907
1,765
33,213
551
349
782
1,228
1,054
58,8495,650 $
123
1,145
6,918
6,953
535
704
741
15,851

5,325
155
944
6,424
6,621
504
808
559
14,916122
9,816
43,407(5,362)(138)
47,84563,696 $122
9,453
39,051(4,695)2
43,93358,849Commitments and contingencies
Shareholders’ equity
Common stock, $0.10 par value, 3,000 shares authorized, 1,223 shares issued and 1,118 outstanding(1,216 shares issued and 1,119 outstanding as of September 2, 2021)
Additional capital
Retained earnings
Treasury stock, 105 shares held (97 shares as of September 2, 2021)
Accumulated other comprehensive income (loss)
Total equity$

Total liabilities and equity

See accompanying notes to consolidated financial statements.

8 | 2022 Q2 10-Q

Table of Contents

Micron Technology, Inc.
Consolidated Statements of Changes in Equity(In millions, except per share amounts)(Unaudited)
Common Stock
Numberof Shares
Balance at September 2, 2021
Net income
Other comprehensive income (loss), net
Stock issued under stock plans
Stock-based compensation expense
Repurchase of stock - repurchase program
Repurchase of stock - withholdings on
employee equity awards
Balance at December 2, 2021
Net income
Other comprehensive income (loss), net
Stock issued under stock plans
Stock-based compensation expense
Repurchase of stock - repurchase program
Repurchase of stock - withholdings on
employee equity awards
Dividends and dividend equivalents declared($0.10 per share)
Balance at March 3, 2022

AmountAdditional Retained
CapitalEarnings

1,216 $
—
—
5
—
—

122 $
—
—
—
—
—

9,453 $
—
—
5
118
—

39,051 $
2,306
—
—
—
—

(4,695) $
—
—
—
—
(259)

2 $
—
(93)
—
—
—

43,933
2,306
(93)
5
118
(259)

(1)
1,220 $
—
—
4
—
—

—
122 $
—
—
—
—
—

(12)
9,564 $
—
—
124
129
—

(90)
41,267 $
2,263
—
—
—
—

—
(4,954) $
—
—
—
—
(408)

—
(91) $
—
(47)
—
—
—

(102)
45,908
2,263
(47)
124
129
(408)

(1)

—

(1)

(10)

—

—

—
1,223 $—
122 $—
9,816 $

(113)
43,407 $—(5,362) $—(138) $

Common Stock
Numberof Shares
Balance at September 3, 2020
Net income
Other comprehensive income (loss), net
Stock issued under stock plans
Stock-based compensation expense
Repurchase of stock - withholdings on
employee equity awards
Balance at December 3, 2020
Net income
Other comprehensive income (loss), net
Stock issued under stock plans
Stock-based compensation expense
Repurchase of stock - withholdings on
employee equity awards
Balance at March 4, 2021

Accumulated
Other
Total
Treasury Comprehensive Shareholders’
Stock
Income (Loss)
EquityAmountAdditional Retained
CapitalEarnings

(11)
(113)
47,845

Accumulated
Other
Total
Treasury Comprehensive Shareholders’
Stock
Income (Loss)
Equity1,194 $
—
—
5
—

119 $
—
—
1
—

8,917 $——
33
92

33,384 $803———(3,495) $
—
—
—
—

71 $
—
39
—
—

38,996
803
39
34
92

(1)
1,198 $
—
—
4
—

—
120 $
—
—
—
—

(8)
9,034 $
—
—
105
97

(49)
34,138 $
603
—
—
—

—
(3,495) $
—
—
—
—

—
110 $
—
(29)
—
—

(57)
39,907
603
(29)
105
97

—
1,202 $

—
120 $

(2)
9,234 $

(18)
34,723 $—(3,495) $

—
81 $

(20)
40,663

See accompanying notes to consolidated financial statements.

9

Table of Contents

Micron Technology, Inc.
Consolidated Statements of Cash Flows(In millions)(Unaudited)
March 3,2022

Six months ended
Cash flows from operating activities
Net income
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation expense and amortization of intangible assets
Stock-based compensation(Gain) loss on debt repurchases and conversions
Change in operating assets and liabilities
Receivables
Inventories
Accounts payable and accrued expenses
Other
Net cash provided by operating activities$

March 4,2021

4,569 $

1,406

3,413
247
83

3,036
189
—

(44)
(900)
107
91
7,566

533
629
(777)
8
5,024

Cash flows from investing activities
Expenditures for property, plant, and equipment
Purchases of available-for-sale securities
Proceeds from sale of Lehi, Utah fab
Proceeds from maturities of available-for-sale securities
Proceeds from sales of available-for-sale securities
Proceeds from government incentives
Other
Net cash provided by (used for) investing activities(5,876)
(922)
893
631
172
66
(140)
(5,176)(5,756)(1,349)
—
746
178
176
31
(5,974)

Cash flows from financing activities
Repayments of debt
Repurchases of common stock - repurchase program
Payments of dividends to shareholders
Repurchases of common stock - withholdings on employee equity awards
Payments on equipment purchase contracts
Proceeds from issuance of debt
Other
Net cash provided by (used for) financing activities(1,981)
(667)
(224)
(112)
(105)
2,000
110
(979)

(103)
—
—
(78)
(123)
—
95
(209)

(16)

43

Effect of changes in currency exchange rates on cash, cash equivalents, and restricted cash
Net increase (decrease) in cash, cash equivalents, and restricted cash
Cash, cash equivalents, and restricted cash at beginning of period
Cash, cash equivalents, and restricted cash at end of period

See accompanying notes to consolidated financial statements.

10 | 2022 Q2 10-Q

$

1,395
7,829
9,224 $

(1,116)
7,690
6,574

Table of Contents

Micron Technology, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(All tabular amounts in millions, except per share amounts)(Unaudited)

Significant Accounting Policies
For a discussion of our significant accounting policies, see “Part II – Item 8. Financial Statements and Supplementary Data – Notes toConsolidated Financial Statements – Significant Accounting Policies” of our Annual Report on Form 10-K for the year ended September 2,
2021. There have been no changes to our significant accounting policies since our Annual Report on Form 10-K for the year ended
September 2, 2021.

Basis of Presentation
The accompanying consolidated financial statements include the accounts of Micron and our consolidated subsidiaries and have been
prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) consistent in allmaterial respects with those applied in our Annual Report on Form 10-K for the year ended September 2, 2021.
In the opinion of our management, the accompanying unaudited consolidated financial statements contain all necessary adjustments,
consisting of a normal recurring nature, to fairly state the financial information set forth herein. Certain reclassifications have been made toprior period amounts to conform to current period presentation.
Our fiscal year is the 52 or 53-week period ending on the Thursday closest to August 31. Fiscal years 2022 and 2021 each contain 52 weeks.
All period references are to our fiscal periods unless otherwise indicated. These interim financial statements should be read in conjunction
with the consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended
September 2, 2021.

Lehi, Utah Fab and 3D XPoint
In the second quarter of 2021, we updated our portfolio strategy to further strengthen our focus on memory and storage innovations for thedata center market. In connection therewith, we determined that there was insufficient market validation to justify the ongoing investments
required to commercialize 3D XPoint at scale. Accordingly, we ceased development of 3D XPoint technology and engaged in discussions
with potential buyers for the sale of our facility located in Lehi, Utah that was dedicated to 3D XPoint production. As a result, we classified theproperty, plant, and equipment as held for sale as of the second quarter of 2021 and ceased depreciating the assets. On June 30, 2021, we
announced a definitive agreement to sell our Lehi facility to TI and closed the sale on October 22, 2021.
In the first quarter of 2022, we received $893 million from TI for the sale of the Lehi facility and disposed of $918 million of net assets,consisting primarily of property, plant, and equipment of $921 million; $55 million of other assets, consisting primarily of a receivable forreimbursement of property taxes, equipment spare parts, and raw materials; and $58 million of liabilities, consisting primarily of a financelease obligation. As a result of the disposition of the Lehi facility and other related adjustments, we recognized a loss of $23 million included
in restructure and asset impairments in the first quarter of 2022.
In the third quarter of 2021, we recognized a charge of $435 million included in restructure and asset impairments in connection with thedefinitive agreement with TI (and a tax benefit of $104 million included in income tax (provision) benefit) to write down the assets held for saleto the expected consideration, net of estimated selling costs. In the second quarter of 2021, we also recognized a charge of $49 million incost of goods sold to write down 3D XPoint inventory in connection with our decision to cease further development of this technology.

11

Table of Contents

Cash and Investments
Substantially all of our marketable debt investments were classified as available-for-sale as of the dates noted below. Cash and equivalents
and the fair values of our available-for-sale investments, which approximated amortized costs, were as follows:
March 3, 2022
September 2, 2021
Long-termLong-term
Cash and
Short-termMarketable Total Fair
Cash and
Short-termMarketable Total Fair
As of
Equivalents Investments Investments(1)Value
Equivalents Investments Investments(1)
Value
Cash
$
Level 1(2)Money market funds
Level 2(3)Corporate bonds
Certificates of deposits
Asset-backed
securities
Government securities
Commercial paper(4)

Restricted cash
Cash, cash equivalents,$
and restricted cash

7,810 $

— $

— $

7,810

103

—

—

—
1,158

616
54

1,126
—

—
9
36

72
183
81
1,006 $

9,116 $
108
9,224

$

5,796 $

— $

— $

5,796

103

38

—

—

38

1,742
1,212

9
1,907

429
69

1,134
—

1,572
1,976

504
576
87
279
—
117
1,717 $ 11,839

8
1
4

95
190
87
870 $

509
612
122
313
—
91
1,765 $ 10,398

7,763 $
66
$

7,829

(1)

The maturities of long-term marketable securities primarily range from one to four years.
The fair value of Level 1 securities is measured based on quoted prices in active markets for identical assets.
(3)
The fair value of Level 2 securities is measured using information obtained from pricing services, which obtain quoted market prices for
similar instruments, non-binding market consensus prices that are corroborated by observable market data, or various othermethodologies, to determine the appropriate value at the measurement date. We perform supplemental analysis to validate information
obtained from these pricing services. No adjustments were made to the fair values indicated by such pricing information as of March 3,2022 or September 2, 2021.
(4)
Restricted cash is included in other current assets and other noncurrent assets and primarily relates to certain government incentives
received prior to being earned and for which restrictions lapse upon achieving certain performance conditions.
(2)

Gross realized gains and losses from sales of available-for-sale securities were not significant for any period presented.
In addition to the amounts included in the table above, we had $196 million and $153 million of non-marketable equity investments without areadily determinable fair value that were included in other noncurrent assets as of March 3, 2022 and September 2, 2021, respectively.

Receivables
March 3,
2022

As of
Trade receivables
Income and other taxes
Other

$

$

12 | 2022 Q2 10-Q

5,061 $
189
134
5,384 $

September 2,
2021
4,920
264
127
5,311

Table of Contents

Inventories
March 3,
2022

As of
Finished goods
Work in process
Raw materials and supplies

$

$

540 $
4,222
621
5,383 $

September 2,
2021
513
3,469
505
4,487

Effective as of the beginning of the second quarter of 2021, we changed our method of inventory costing from average cost to FIFO. Thechange to FIFO was not material to any prior periods, and as such, prior periods were not retrospectively adjusted.

Property, Plant, and Equipment
March 3,
2022

As of
Land
Buildings
Equipment(1)Construction in progress(2)Software$Accumulated depreciation
$
(1)
(2)

280 $
15,701
56,5781,740
1,115
75,414(39,243)
36,171 $September 2,
2021
280
14,77651,902
1,517
987
69,462(36,249)
33,213

Includes costs related to equipment not placed into service of $2.69 billion as of March 3, 2022 and $1.99 billion as of September 2, 2021.
Includes building-related construction, tool installation, and software costs for assets not placed into service.

Intangible Assets and Goodwill
March 3, 2022
Gross
Accumulated
AmountAmortization

As of
Product and process technology
Goodwill

$

718 $
1,228

(304) $

September 2, 2021
Gross
Accumulated
AmountAmortization
633 $
1,228

(284)

In the first six months of 2022 and 2021, we capitalized $105 million and $49 million, respectively, for product and process technology withweighted-average useful lives of 7 years and 9 years, respectively. Amortization expense was $40 million and $41 million for the first six
months of 2022 and 2021, respectively. Expected amortization expense is $42 million for the remainder of 2022, $75 million for 2023, $67
million for 2024, $47 million for 2025, and $38 million for 2026.

13

Table of Contents

Leases
The components of lease expense are presented below:
Quarter ended
March 3,
March 4,2022
2021
Finance lease cost
Amortization of right-of-use asset
Interest on lease liability
Operating lease cost

$

$

27 $
6
30
63 $

Six months ended
March 3,
March 4,
2022
2021
17
5
27
49

$

52 $
12
59
123 $

$

33
10
54
97

Supplemental cash flow information related to leases was as follows:
March 3,2022

Six months ended
Cash flows used for operating activities
Finance leases
Operating leases
Cash flows used for financing activities from financing leases
Noncash acquisitions of right-of-use assets
Finance leases
Operating leases$

March 4,
2021
11 $
56
52

11
53
41

304
68

68
21

Supplemental balance sheet information related to leases was as follows:
March 3,
2022

As of
Finance lease right-of-use assets (included in property, plant, and equipment and assets held forsale)
Current operating lease liabilities (included in accounts payable and accrued expenses)$

Weighted-average remaining lease term (in years)
Finance leases
Operating leases
Weighted-average discount rate
Finance leases
Operating leases

September 2,
2021
968 $
58

766
55

12
12

11
12

2.65 %
2.62 %

3.14 %
2.63 %

As of March 3, 2022, maturities of lease liabilities were as follows:
For the year ending

Finance Leases

Remainder of 2022
2023
2024
2025
2026
2027 and thereafterLess imputed interest$$

14 | 2022 Q2 10-Q

74 $
131
106
91
91
649
(147)
995 $

Operating
Leases
34
62
68
56
53
440
(120)
593

Table of Contents

The table above excludes any lease liabilities for leases that have been executed but have not yet commenced. As of March 3, 2022, we hadsuch lease liabilities relating to (1) operating lease payment obligations of $148 million for the initial 10-year lease term for a building, and (2)finance lease obligations of $218 million over a weighted-average period of 14 years for gas supply arrangements deemed to containembedded leases. We will recognize right-of-use assets and associated lease liabilities at the time such assets become available for our use.

Accounts Payable and Accrued Expenses
March 3,
2022

As of
Accounts payable
Property, plant, and equipment
Salaries, wages, and benefits
Income and other taxes
Other

$

September 2,
2021

1,924 $
2,300
705
367
354
5,650 $

$

1,744
1,887
984
364
346
5,325

Debt
March 3, 2022
Net Carrying Amount
As ofStatedRate

2024 Term Loan A
2026 Notes
2027 Notes(1)2029 Notes
2030 Notes
2032 Green Bonds
2041 Notes
2051 Notes
Finance lease obligations
2023 Notes
2024 Notes

0.920 %
4.975 %
4.185 %
5.327 %
4.663 %
2.703 %
3.366 %
3.477 %
N/A
N/A
N/A

(1)

Effective
Rate
0.96 % $5.07 %
4.27 %
5.40 %
4.73 %
2.77 %
3.41 %
3.52 %
2.65 %
N/A
N/A$

Current

Long-Term

— $
—
—
—
—
—
—
—
123
—
—
123 $

1,186 $
498
868
697
846
994
496
496
872
—
—
6,953 $

September 2, 2021
Net Carrying Amount

Total
1,186
498
868
697
846
994
496
496
995
—
—
7,076

Current$$

Long-Term

— $
—
—
—
—
—
—
—
155
—
—
155 $

1,186 $
498
901
696
846
—
—
—
649
1,247
598
6,621 $

Total
1,186
498
901
696
846
—
—
—
804
1,247
598
6,776

In 2021, we entered into fixed-to-floating interest rate swaps on the 2027 Notes with an aggregate $900 million notional amount equal tothe principal amount of the 2027 Notes. The resulting variable interest paid is at a rate equal to SOFR plus approximately 3.33%. The
fixed-to-floating interest rate swaps are accounted for as fair value hedges, as a result, the carrying value of our 2027 Notes reflects
adjustments in fair value.

15

Table of Contents

Debt Activity
The table below presents the effects of issuances and prepayments of debt in the first quarter of 2022:
Increase
Increase(Decrease) in(Decrease) in
Principal
Carrying Value
Issuances2032 Green Bonds
2041 Notes
2051 Notes
Prepayments
2023 Notes
2024 Notes$$

Increase(Decrease) in
CashGain (Loss)

1,000 $
500
500

994 $
496
496

994 $
496
496

—
—
—

(1,250)
(600)
150 $

(1,247)
(598)
141 $

(1,281)
(647)
58 $

(34)
(49)
(83)

Senior Unsecured Notes
On November 1, 2021, we issued $2.00 billion aggregate principal amount of unsecured 2032 Green Bonds, 2041 Notes, and 2051 Notes ina public offering. Issuance costs for these notes were $14 million.
We may redeem our 2026 Notes, 2027 Notes, 2029 Notes, 2030 Notes, 2032 Green Bonds, 2041 Notes, and 2051 Notes (the “Senior
Unsecured Notes”), in whole or in part, at our option prior to their respective maturity date at a redemption price equal to the greater of (i)100% of the principal amount of the notes to be redeemed and (ii) the present value of the remaining scheduled payments of principal, ineach case plus accrued interest. We may also redeem any series of our Senior Unsecured Notes, in whole or in part, at a price equal to par
between two and six months prior to maturity in accordance with the respective terms of such series.
Each series of Senior Unsecured Notes contains covenants that, among other things, limit, in certain circumstances, our ability and/or theability of our restricted subsidiaries (which are generally domestic subsidiaries in which we own at least 80% of the voting stock and which
own principal property, as defined in the indenture governing such notes) to (1) create or incur certain liens; (2) enter into certain sale andlease-back transactions; and (3) consolidate with or merge with or into, or convey, transfer, or lease all or substantially all of our properties
and assets, to another entity. These covenants are subject to a number of limitations and exceptions. Additionally, if a change of control
triggering event occurs, as defined in the indentures governing our Senior Unsecured Notes, we will be required to offer to purchase such
notes at 101% of the outstanding aggregate principal amount plus accrued interest up to the purchase date.

Revolving Credit Facility
As of March 3, 2022, $2.50 billion was available to us under the Revolving Credit Facility and no amounts were outstanding. Any amounts
outstanding under the Revolving Credit Facility would mature in May 2026 and amounts borrowed may be prepaid any time without penalty.
Any amounts drawn under the Revolving Credit Facility would generally bear interest at a rate equal to LIBOR plus 1.00% to 1.75%,
depending on our corporate credit ratings.

16 | 2022 Q2 10-Q

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Maturities of Notes Payable
As of March 3, 2022, maturities of notes payable by fiscal year were as follows:
Remainder of 2022
2023
2024
2025
2026
2027 and thereafter
Unamortized discounts
Hedge accounting fair value adjustment

$

$

—
—
—
1,188
500
4,450
(29)
(28)
6,081

Contingencies
Patent Matters
As is typical in the semiconductor and other high-tech industries, from time to time, others have asserted, and may in the future assert, thatour products or manufacturing processes infringe upon their intellectual property rights.
On December 15, 2014, Innovative Memory Solutions, Inc. filed a patent infringement action against Micron in the U.S. District Court for theDistrict of Delaware. The complaint alleges that a variety of our NAND products infringe eight U.S. patents and seeks damages, attorneys’
fees, and costs. Subsequently, six patents were invalidated or withdrawn, leaving two asserted patents in the District Court.
On March 19, 2018, Micron Semiconductor (Xi’an) Co., Ltd. (“MXA”) was served with a patent infringement complaint filed by Fujian Jinhua
Integrated Circuit Co., Ltd. (“Jinhua”) in the Fuzhou Intermediate People’s Court in Fujian Province, China (the “Fuzhou Court”). On April 3,
2018, Micron Semiconductor (Shanghai) Co. Ltd. (“MSS”) was served with the same complaint. The complaint alleges that MXA and MSS
infringe a Chinese patent by manufacturing and selling certain Crucial DDR4 DRAM modules. The complaint seeks an order requiring MXA
and MSS to destroy inventory of the accused products and equipment for manufacturing the accused products in China; to stop
manufacturing, using, selling, and offering for sale the accused products in China; and to pay damages of 98 million Chinese yuan plus court
fees incurred.
On March 21, 2018, MXA was served with a patent infringement complaint filed by United Microelectronics Corporation (“UMC”) in the
Fuzhou Court. On April 3, 2018, MSS was served with the same complaint. The complaint alleges that MXA and MSS infringe a Chinese
patent by manufacturing and selling certain Crucial DDR4 DRAM modules. The complaint seeks an order requiring MXA and MSS to destroy
inventory of the accused products and equipment for manufacturing the accused products in China; to stop manufacturing, using, selling, andoffering for sale the accused products in China; and to pay damages of 90 million Chinese yuan plus court fees incurred. On November 26,
2021, pursuant to a settlement agreement between UMC and Micron, UMC filed an application to the Fuzhou Court to withdraw its
complaints against MXA and MSS.
On April 3, 2018, MSS was served with another patent infringement complaint filed by Jinhua and an additional complaint filed by UMC in the
Fuzhou Court. The additional complaints allege that MSS infringes two Chinese patents by manufacturing and selling certain Crucial MX300
SSDs. The complaint filed by UMC seeks an order requiring MSS to destroy inventory of the accused products and equipment for
manufacturing the accused products in China; to stop manufacturing, using, selling, and offering for sale the accused products in China; andto pay damages of 90 million Chinese yuan plus court fees incurred. The complaint filed by Jinhua seeks an order requiring MSS to destroy
inventory of the accused products and equipment for manufacturing the accused products in China; to stop manufacturing, using, selling, andoffering for sale the accused products in China; and to pay damages of 98 million Chinese yuan plus court fees incurred. On November 26,
2021, pursuant to a settlement agreement between UMC and Micron, UMC filed an application to the Fuzhou Court to withdraw its complaint
against MSS.

17

Table of Contents

On July 5, 2018, MXA and MSS were notified that the Fuzhou Court granted a preliminary injunction against those entities that enjoins themfrom manufacturing, selling, or importing certain Crucial and Ballistix-branded DRAM modules and solid-state drives in China. The affected
products made up slightly more than 1% of our annualized revenue in 2018. We are complying with the ruling and have requested the
Fuzhou Court to reconsider or stay its decision.
On May 4, 2020, Flash-Control, LLC filed a patent infringement action against Micron in the U.S. District Court for the Western District ofTexas. The complaint alleges that four U.S. patents are infringed by unspecified DDR4 SDRAM, NVRDIMM, NVDIMM, 3D XPoint, and/or
SSD products that incorporate memory controllers and flash memory. The complaint seeks damages, attorneys’ fees, and costs. On July 21,
2020, in a separate matter, the District Court ruled that two of the four asserted patents are invalid, and on July 14, 2021, the U.S. Court ofAppeals for the Federal Circuit affirmed the ruling of invalidity.
On April 28, 2021, Netlist, Inc. filed two patent infringement actions against Micron, Micron Semiconductor Products, Inc. and Micron
Technology Texas, LLC in the U.S. District Court for the Western District of Texas. The first complaint alleges that a single U.S. patent isinfringed by certain of our non-volatile dual in-line memory modules. The second complaint alleges that three U.S. patents are infringed bycertain of our load-reduced dual in-line memory modules. Each complaint seeks injunctive relief, damages, attorneys’ fees, and costs.
On May 10, 2021, Vervain, LLC filed a patent infringement action against Micron, Micron Semiconductor Products, Inc., and Micron
Technology Texas, LLC in the U.S. District Court for the Western District of Texas. The complaint alleges that four U.S. patents are infringed
by certain SSD products. The complaint seeks injunctive relief, damages, attorneys’ fees, and costs.
Among other things, the above lawsuits pertain to substantially all of our DRAM, NAND, and other memory and storage products wemanufacture, which account for substantially all of our revenue.

QimondaOn January 20, 2011, Dr. Michael Jaffé, administrator for Qimonda’s insolvency proceedings, filed suit against Micron and Micron
Semiconductor B.V. (“Micron B.V.”), in the District Court of Munich, Civil Chamber. The complaint seeks to void, under Section 133 of theGerman Insolvency Act, a share purchase agreement between Micron B.V. and Qimonda signed in fall 2008, pursuant to which Micron B.V.
purchased substantially all of Qimonda’s shares of Inotera (the “Inotera Shares”), representing approximately 18% of Inotera’s outstanding
shares at that time, and seeks an order requiring us to re-transfer those shares to the Qimonda estate. The complaint also seeks, among
other things, to recover damages for the alleged value of the joint venture relationship with Inotera and to terminate, under Sections 103 or
133 of the German Insolvency Code, a patent cross-license between us and Qimonda entered into at the same time as the share purchaseagreement.
Following a series of hearings with pleadings, arguments, and witnesses on behalf of the Qimonda estate, on March 13, 2014, the court
issued judgments: (1) ordering Micron B.V. to pay approximately $1 million in respect of certain Inotera Shares sold in connection with theoriginal share purchase; (2) ordering Micron B.V. to disclose certain information with respect to any Inotera Shares sold by it to third parties;(3) ordering Micron B.V. to disclose the benefits derived by it from ownership of the Inotera Shares, including in particular, any profits
distributed on the Inotera Shares and all other benefits; (4) denying Qimonda’s claims against Micron for any damages relating to the joint
venture relationship with Inotera; and (5) determining that Qimonda’s obligations under the patent cross-license agreement are canceled. In
addition, the court issued interlocutory judgments ordering, among other things: (1) that Micron B.V. transfer to the Qimonda estate theInotera Shares still owned by Micron B.V. and pay to the Qimonda estate compensation in an amount to be specified for any Inotera Shares
sold to third parties; and (2) that Micron B.V. pay the Qimonda estate as compensation an amount to be specified for benefits derived byMicron B.V. from ownership of the Inotera Shares. The interlocutory judgments had no immediate, enforceable effect and Micron,accordingly, has been able to continue to operate with full control of the Inotera Shares subject to further developments in the case. On April
17, 2014, Micron and Micron B.V. filed a notice of appeal with the German Appeals Court challenging the District Court’s decision. After
opening briefs, the Appeals Court held a hearing on the matter on July 9, 2015, and thereafter appointed an independent expert to perform
an evaluation of Dr. Jaffé’s claims that the amount Micron paid for Qimonda was less than fair market value. On January 25, 2018, the courtappointed expert issued a report concluding that the amount paid by Micron was within an acceptable fair-value

18 | 2022 Q2 10-Q

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range. The Appeals Court held a subsequent hearing on April 30, 2019, and on May 28, 2019, the Appeals Court remanded the case to theexpert for supplemental expert opinion. On March 31, 2020, the expert presented a revised opinion to the Appeals Court which reaffirmed theearlier view that the amount paid by Micron was still within an acceptable range of fair value. On March 4, 2021, the Appeals Court issued anorder setting forth a new legal view that whether the 2008 sale of Inotera Shares is voidable depends on the question whether, in October
2008, Qimonda had a restructuring plan in place, and whether Micron was aware of and reasonably relied on that restructuring plan sufficient
to form a belief that Qimonda was not imminently illiquid.

Antitrust Matters
On April 27, 2018, a complaint was filed against Micron and other DRAM suppliers in the U.S. District Court for the Northern District ofCalifornia. Subsequently, two substantially identical cases were filed in the same court. The lawsuits purported to be on behalf of anationwide class of indirect purchasers of DRAM products. On September 3, 2019, the District Court granted Micron’s motion to dismiss andallowed the plaintiffs the opportunity to file a consolidated, amended complaint. On October 28, 2019, the plaintiffs filed a consolidated,
amended complaint that purported to be on behalf of a nationwide class of indirect purchasers of DRAM products. The amended complaint
asserted claims based on alleged price-fixing of DRAM products under federal and state law during the period from June 1, 2016 to at least
February 1, 2018, and sought treble monetary damages, costs, interest, attorneys’ fees, and other injunctive and equitable relief. On
December 21, 2020, the District Court dismissed the plaintiffs’ claims and entered judgment against them. On January 19, 2021, the plaintiffs
filed a notice of appeal to the U.S. Court of Appeals for the Ninth Circuit. On March 7, 2022, the Court of Appeals affirmed the District Court’s
ruling dismissing plaintiffs’ claims. On May 3, 2021, several plaintiffs filed a substantially identical complaint in the U.S. District Court for the
Northern District of California purportedly on behalf of a nationwide class of indirect purchasers of DRAM products. On July 19, 2021, theDistrict Court dismissed the May 3, 2021 complaint pursuant to an agreement between the plaintiffs and Micron providing that the plaintiffs
could refile the complaint if the District Court’s December 21, 2020 dismissal order were not affirmed on appeal.
On June 26, 2018, a complaint was filed against Micron and other DRAM suppliers in the U.S. District Court for the Northern District ofCalifornia. Subsequently, four substantially identical cases were filed in the same court. On October 28, 2019, the plaintiffs filed aconsolidated, amended complaint. The consolidated complaint purported to be on behalf of a nationwide class of direct purchasers of DRAM
products. The consolidated complaint asserted claims based on alleged price-fixing of DRAM products under federal and state law during theperiod from June 1, 2016 through at least February 1, 2018, and sought treble monetary damages, costs, interest, attorneys’ fees, and otherinjunctive and equitable relief. On December 21, 2020, the District Court granted Micron’s motion to dismiss and granted the plaintiffs
permission to file a further amended complaint. On January 11, 2021, the plaintiffs filed a further amended complaint asserting substantiallythe same claims and seeking the same relief. On September 3, 2021, the District Court granted Micron’s motion to dismiss the further
amended complaint with prejudice. On October 1, 2021, the plaintiffs filed a notice of appeal to the U.S. Court of Appeals for the Ninth
Circuit.
Additionally, six cases have been filed in the following Canadian courts on the dates indicated: Superior Court of Quebec (April 30, 2018 and
May 3, 2018), the Federal Court of Canada (May 2, 2018), the Ontario Superior Court of Justice (May 15, 2018), and the Supreme Court ofBritish Columbia (May 10, 2018). The plaintiffs in these cases are individuals seeking certification of class actions on behalf of direct andindirect purchasers of DRAM in Canada (or regions of Canada) between June 1, 2016 and February 1, 2018. The substantive allegations inthese cases are similar to those asserted in the cases filed in the United States.
On May 15, 2018, the Chinese State Administration for Market Regulation (“SAMR”) notified Micron that it was investigating potential
collusion and other anticompetitive conduct by DRAM suppliers in China. On May 31, 2018, SAMR made unannounced visits to our sales
offices in Beijing, Shanghai, and Shenzhen to seek certain information as part of its investigation. We are cooperating with SAMR in its
investigation.

Securities Matters
On March 5, 2019, a derivative complaint was filed by a shareholder against certain current and former officers and directors of Micron,allegedly on behalf of and for the benefit of Micron, in the U.S. District Court for the District of Delaware alleging securities fraud, breaches offiduciary duties, and other violations of law involving misrepresentations about purported anticompetitive behavior in the DRAM industry. The
complaint seeks damages, fees, interest, costs, and other appropriate relief.

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On February 9, 2021, a derivative complaint was filed by a shareholder against Sanjay Mehrotra and other current and former directors ofMicron, allegedly on behalf of and for the benefit of Micron, in the U.S. District Court for the District of Delaware alleging violations of
securities laws, breaches of fiduciary duties, and other violations of law involving allegedly false and misleading statements about Micron’scommitment to diversity and progress in diversifying its workforce, executive leadership, and Board of Directors. The complaint seeks
damages, fees, interest, costs, and an order requiring Micron to take various actions to allegedly improve its corporate governance andinternal procedures.

Other Matters
On June 13, 2019, current Micron employee, Chris Manning, filed a putative class action lawsuit on behalf of Micron employees subject tothe Idaho Wage Claim Act who earned a performance-based bonus after the conclusion of 2018 whose performance rating was calculated
based upon a mandatory percentage distribution range of performance ratings. On July 12, 2019, Manning and three other Company
employees filed an amended complaint as putative class action representatives. On behalf of themselves and the putative class, Manningand the three other plaintiffs assert claims for violation of the Idaho Wage Claim Act, breach of contract, breach of the covenant of good faithand fair dealing, and fraud. On June 24, 2020, the court entered judgment in favor of Micron based on the statute of limitations, and theplaintiffs filed a notice of appeal on July 23, 2020. On March 9, 2022, the Supreme Court of Idaho affirmed the judgment in favor of Micron.
On July 31, 2020, Micron and Intel entered into a binding arbitration agreement under which the parties agreed to present to an arbitral panel
various financial disputes related to the former IMFT joint venture between Micron and Intel, which ended October 31, 2019, and to otheragreements related to the joint development, production, and sale of non-volatile memory products. We expect the arbitration process to becompleted in the third quarter of 2022.
On July 13, 2015, Allied Telesis, Inc. and Allied Telesis International (Asia) Pte Ltd. filed a complaint against Micron in the Superior Court ofCalifornia in Santa Clara alleging breach of implied and express warranties and fraudulent inducement to contract arising from plaintiffs’purchase of certain allegedly defective DDR1 products between 2008 and 2010. Through subsequent amendments to the complaint, theplaintiffs substituted Allied Telesis K.K. as plaintiff, withdrew the warranty claims, and added claims of fraudulent concealment, negligent
misrepresentation, negligence, and strict products liability. On January 28, 2022, the plaintiff dismissed its complaint against Micron pursuant
to a settlement agreement.
In the normal course of business, we are a party to a variety of agreements pursuant to which we may be obligated to indemnify anotherparty. It is not possible to predict the maximum potential amount of future payments under these types of agreements due to the conditional
nature of our obligations and the unique facts and circumstances involved in each particular agreement. Historically, our payments underthese types of agreements have not had a material adverse effect on our business, results of operations, or financial condition.

Contingency Assessment
We are unable to predict the outcome of the matters noted above and cannot make a reasonable estimate of the potential loss or range ofpossible losses. A determination that our products or manufacturing processes infringe the intellectual property rights of others or entering
into a license agreement covering such intellectual property could result in significant liability and/or require us to make material changes toour products and/or manufacturing processes. Any of the foregoing, as well as the resolution of any other legal matter noted above, could
have a material adverse effect on our business, results of operations, or financial condition.
We are currently a party to legal actions other than those described in this note arising from the normal course of business, none of which are
expected to have a material adverse effect on our business, results of operations, or financial condition.

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EquityMicron Shareholders’ Equity
Common Stock Repurchases: Our Board of Directors has authorized the discretionary repurchase of up to $10 billion of our outstanding
common stock through open-market purchases, block trades, privately-negotiated transactions, derivative transactions, and/or pursuant toRule 10b5-1 trading plans. The repurchase authorization has no expiration date, does not obligate us to acquire any common stock, and issubject to market conditions and our ongoing determination of the best use of available cash. In the second quarter and first six months of2022, we repurchased 4.8 million shares of our common stock for $408 million, and 8.4 million shares of our common stock for $667 million,
respectively. Through March 3, 2022, we had repurchased an aggregate of $4.70 billion under the authorization. The shares repurchased
were recorded as treasury stock.
Dividends: In the second quarter of 2022, we declared and paid dividends of $112 million ($0.10 per share) to shareholders of record as ofJanuary 3, 2022. In the first quarter of 2022, we paid dividends of $112 million ($0.10 per share) that were declared in the fourth quarter of2021. On March 29, 2022, our Board of Directors declared a quarterly dividend of $0.10 per share, payable in cash on April 26, 2022, toshareholders of record as of the close of business on April 11, 2022.
Accumulated Other Comprehensive Income (Loss): Changes in accumulated other comprehensive income (loss) by component for thesix months ended March 3, 2022 were as follows:
Cumulative
Unrealized
Foreign
Gains (Losses)
PensionGains (Losses)
Currency
on Derivative
LiabilityonTranslation
Instruments
Adjustments Investments
Adjustment
Total
As of September 2, 2021
Other comprehensive income (loss) before
reclassifications
Amount reclassified out of accumulated othercomprehensive income (loss)
Tax effects
Other comprehensive income (loss)$

As of March 3, 2022$

(22) $

22 $

(157)

—

4
33
(120)
(142) $

(1)
—
(1)
21 $

1 $

1 $

2

(27)

1

(183)

1
6
(20)
(19) $

—
—
1
2 $

4
39
(140)
(138)

Fair Value Measurements
The estimated fair values and carrying values of our outstanding debt instruments were as follows:
March 3, 2022
Fair
Carrying
As of
Value
Value
Notes

$

6,193 $

6,081

September 2, 2021
Fair
Carrying
Value
Value
$

6,584 $

5,973

The fair values of our debt instruments were estimated based on Level 2 inputs, including the trading price of our notes when available,
discounted cash flows, and interest rates based on similar debt issued by parties with credit ratings similar to ours.

21

Table of Contents

Derivative Instruments
Notional orContractual
AmountAs of March 3, 2022
Derivative instruments with hedge accounting designation
Cash flow currency hedges
Cash flow commodity hedges
Fair value interest rate hedges$

Derivative instruments without hedge accounting designation
Non-designated currency hedges

As of September 2, 2021
Derivative instruments with hedge accounting designation
Cash flow currency hedges
Cash flow commodity hedges
Fair value interest rate hedges$

Derivative instruments without hedge accounting designation
Non-designated currency hedges

Fair Value ofAssets(1)4,743 $
56
900

2 $
7
—

(122)
—
(28)

1,348
$

6
15 $

(4)
(154)

3,601 $
45
900

10 $
2
5

(66)
—
—

996

3
20 $

(2)
(68)

$
(1)
(2)

Liabilities(2)Included in receivables and other noncurrent assets.
Included in accounts payable and accrued expenses and other noncurrent liabilities.

Derivative Instruments with Hedge Accounting Designation
Cash Flow Hedges: We utilize forward and swap contracts that generally mature within two years designated as cash flow hedges tominimize our exposure to changes in currency exchange rates or commodity prices for certain capital expenditures and manufacturing costs.
Forward and swap contracts are measured at fair value based on market-based observable inputs including market spot and forward rates,interest rates, and credit-risk spreads (Level 2). We do not use derivative instruments for speculative purposes. We recognized losses of $70
million and $170 million for the second quarter and first six months of 2022, respectively, and losses of $30 million for the second quarter of2021 in accumulated other comprehensive income from cash flow hedges. The amounts recognized for the first six months of 2021 were notsignificant. As of March 3, 2022, we expect to reclassify $75 million of pre-tax losses related to cash flow hedges from accumulated othercomprehensive income into earnings in the next 12 months.
Fair Value Hedges: We utilize fixed-to-floating interest rate swaps designated as fair value hedges to minimize certain exposures to changes
in the fair value of fixed-rate debt that result from fluctuations in benchmark interest rates. Interest rate swaps are measured at fair value
based on market-based observable inputs including interest rates and credit-risk spreads (Level 2). The changes in the fair values ofderivatives designated as fair value hedges and the offsetting changes in the underlying fair values of the hedged items are both recognizedin earnings. When a derivative is no longer designated as a fair value hedge for any reason, including termination and maturity, the remaining
unamortized difference between the carrying value of the hedged item at that time and the face value of the hedged item is amortized toearnings over the remaining life of the hedged item, or immediately if the hedged item has matured or been extinguished. The effects of fairvalue hedges on our consolidated statements of operations, recognized in interest expense, were not significant for the periods presented.

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Derivative Instruments without Hedge Accounting Designation
Currency Derivatives: We generally utilize a rolling hedge strategy with currency forward contracts that mature within three months tohedge our exposures of monetary assets and liabilities from changes in currency exchange rates. At the end of each reporting period,
monetary assets and liabilities denominated in currencies other than the U.S. dollar are remeasured into U.S. dollars and the associatedoutstanding forward contracts are marked to market. Currency forward contracts are valued at fair values based on the middle of bid and ask
prices of dealers or exchange quotations (Level 2). Realized and unrealized gains and losses on derivative instruments without hedge
accounting designation as well as the changes in the underlying monetary assets and liabilities from changes in currency exchange rates areincluded in other non-operating income (expense), net. The amounts recognized for derivative instruments without hedge accounting
designation were not significant for the periods presented.

Equity Plans
As of March 3, 2022, 97 million shares of our common stock were available for future awards under our equity plans.

Restricted Stock and Restricted Stock Units (“Restricted Stock Awards”)
Restricted Stock Awards activity is summarized as follows:
March 3,2022

Six months ended
Restricted stock award shares granted
Weighted-average grant-date fair value per share

$

10
71.31

March 4,
2021
$

10
52.02

In the first quarter of 2022, our Board of Directors approved dividend equivalent rights for unvested restricted stock units awarded on or after
October 13, 2021.

Employee Stock Purchase Plan (“ESPP”)
For each six month period ended March 3, 2022 and March 4, 2021, we issued 2 million shares at a per share price of $65.94 and $42.55,
respectively.

23

Table of Contents

Stock-based Compensation Expense
Stock based compensation expense recognized in our statements of operations is presented below. Stock-based compensation expense of$46 million and $30 million was capitalized and remained in inventory as of March 3, 2022 and September 2, 2021, respectively.
Quarter ended
Six months ended
March 3,
March 4,
March 3,
March 4,
2022
2021
2022
2021
Stock-based compensation expense by caption
Cost of goods soldResearch and development
Selling, general, and administrative
Restructure$$
Stock-based compensation expense by type of award
Restricted stock awards
ESPP
Stock options

$

$

45 $
45
30
—
120 $

57
29
26
—
112

$

104 $
16
—
120 $

94
15
3
112

$

$

$

88 $
83
65
(5)
231 $

98
53
53
—
204

200 $
30
1
231 $

171
27
6
204

As of March 3, 2022, $1.12 billion of total unrecognized compensation costs for unvested awards, before the effect of any future forfeitures,
was expected to be recognized through the second quarter of 2026, resulting in a weighted-average period of 1.4 years.

Revenue and Customer Contract Liabilities
Revenue by Technology
Quarter ended
March 3,
March 4,
2022
2021
DRAM
NAND
Other (primarily 3D XPoint memory and NOR)$$

5,719 $
1,957
110
7,786 $

4,444
1,650
142
6,236

Six months ended
March 3,
March 4,
2022
2021
$

$

11,306 $3,835
332
15,473 $

8,500
3,224
285
12,009See “Segment and Other Information” for disclosure of disaggregated revenue by market segment.

Customer Contract Liabilities
As of March 3, 2022 and September 2, 2021, other current liabilities included $78 million and $74 million, respectively, of advance payments
received from our customers to secure product in future periods. Revenue for the first six months of 2022 included $74 million recognized asa result of satisfying our performance obligation to ship product against customer advances that existed as of September 2, 2021.

24 | 2022 Q2 10-Q

Table of Contents

Revenue is primarily recognized at a point in time when control of the promised goods is transferred to our customers in an amount thatreflects the consideration we expect to be entitled to in exchange for those goods. Substantially all contracts with our customers are shortterm in duration at fixed, negotiated prices with payment generally due shortly after delivery. From time to time, we have contracts with initial
terms that include performance obligations that extend beyond one year. As of March 3, 2022, our future performance obligations beyond
one year were not significant.
As of March 3, 2022 and September 2, 2021, other current liabilities included $1.02 billion and $846 million, respectively, for estimates ofconsideration payable to customers, including estimates for pricing adjustments and returns.

Restructure and Asset Impairments
Quarter ended
March 3,
March 4,
2022
2021
Restructure and asset impairments$

5 $Six months ended
March 3,
March 4,
2022
2021
5

$

43 $

13

Restructure and asset impairments for the first six months of 2022 primarily related to the sale of our Lehi, Utah facility. See “Lehi, Utah Faband 3D XPoint.”

Other Operating (Income) Expense, Net
Patent license charges
Other

$
$

Quarter ended
March 3,
March 4,2022
2021

Six months ended
March 3,
March 4,
2022
2021

— $
70
70 $

— $
(5)
(5) $

128 $
(2)
126 $

128
(1)
127

Other Non-Operating Income (Expense), Net
Quarter ended
March 3,
March 4,
2022
2021
Gain (loss) on debt repurchases and conversions
Other

$
$

— $
6
6 $

Six months ended
March 3,
March 4,
2022
2021
—
4
4

$
$

(83) $
14(69) $

—
17
17

25

Table of Contents

Income Taxes
Our income tax (provision) benefit consisted of the following:
Quarter ended
March 3,
March 4,
2022
2021
Income before taxes
Income tax (provision) benefit
Effective tax rate$

2,509 $
(255)
10.2 %

Six months ended
March 3,
March 4,
2022
2021

635
$
(48)
7.6 %

5,030 $
(474)
9.4 %

1,476
(99)
6.7 %

We operate in a number of jurisdictions outside the United States, including Singapore, where we have tax incentive arrangements. These
incentives expire, in whole or in part, at various dates through 2034 and are conditional, in part, upon meeting certain business operations
and employment thresholds. The effect of tax incentive arrangements reduced our tax provision by $304 million (benefiting our diluted
earnings per share by $0.27) and $594 million ($0.53 per diluted share) for the second quarter and first six months of 2022, respectively, andby $45 million ($0.04 per diluted share) and $101 million ($0.09 per diluted share) for the second quarter and first six months of 2021,
respectively.
As of March 3, 2022, gross unrecognized tax benefits were $700 million, substantially all of which would affect our effective tax rate in the
future, if recognized. Amounts accrued for interest and penalties related to uncertain tax positions were not significant for any period
presented. We are currently under audit by the U.S. Internal Revenue Service for our 2018 and 2019 tax years. We believe that adequate
amounts of taxes and related interest and penalties have been provided.
On March 16, 2022, the Idaho governor signed a new law that is expected to reduce our Idaho taxable income and as a result, we do not
expect to utilize our tax credits in Idaho for the foreseeable future. We are in the process of assessing the impact of the new law but currently
estimate it to result in a valuation allowance against Idaho’s net deferred tax assets and an increase to tax expense of approximately $200
million in the third quarter of 2022.

Earnings Per Share
Quarter ended
March 3,
March 4,
2022
2021
Net income – Basic and Diluted$

Weighted-average common shares outstanding – Basic
Dilutive effect of equity plans and convertible notes
Weighted-average common shares outstanding – Diluted
Earnings per share
Basic
Diluted

$2,263 $

603

1,119
11
1,130

1,120
24
1,144

2.02 $
2.00

0.54
0.53

Six months ended
March 3,
March 4,
2022
2021
$

$

4,569 $

1,406

1,119
11
1,130

1,118
21
1,139

4.08 $
4.04

1.26
1.23

Antidilutive potential common stock shares that could dilute basic earnings per share in the future were 2 million in each period presented
above.

26 | 2022 Q2 10-Q

Table of Contents

Segment and Other Information
Segment information reported herein is consistent with how it is reviewed and evaluated by our chief operating decision maker. We have thefollowing four business units, which are our reportable segments:
Compute and Networking Business Unit (“CNBU”): Includes memory products sold into client, cloud server, enterprise, graphics, andnetworking markets.
Mobile Business Unit (“MBU”): Includes memory and storage products sold into smartphone and other mobile-device markets.
Storage Business Unit (“SBU”): Includes SSDs and component-level solutions sold into enterprise and cloud, client, and consumer storage
markets, and other discrete storage products sold in component and wafer form.
Embedded Business Unit (“EBU”): Includes memory and storage products sold into automotive, industrial, and consumer markets.
Certain operating expenses directly associated with the activities of a specific segment are charged to that segment. Other indirect operating
income and expenses are generally allocated to segments based on their respective percentage of cost of goods sold or forecasted wafer
production. We do not identify or report internally our assets (other than goodwill) or capital expenditures by segment, nor do we allocate
gains and losses from equity method investments, interest, other non-operating income or expense items, or taxes to segments.
Quarter ended
March 3,
March 4,
2022
2021
Revenue
CNBU
MBU
SBU
EBU
All Other$$
Operating income (loss)
CNBU
MBU
SBU
EBU
All Other$

Unallocated
Stock-based compensation
Inventory accounting policy change to FIFO
Change in inventory cost absorption
3D XPoint inventory write-down
Patent license charges
Restructure and asset impairments
Other

Operating income$

3,461 $
1,875
1,171
1,277
2
7,786 $

2,636
1,811
850
935
4
6,236

Six months ended
March 3,
March 4,
2022
2021
$

$

6,867 $
3,782
2,321
2,497
6
15,473 $

5,182
3,312
1,761
1,744
10
12,0091,562 $
588
178
421
1
2,750

709 $
464
(59)
141
2
1,257

3,086 $
1,212
330
843
4
5,475

1,192
834
(55)
257
2
2,230

(119)
—
—
—
—
(5)
(80)
(204)

(112)
(133)
(160)
(49)
(128)
(5)
(7)
(594)

(235)
—
—
—
—
(43)
(20)
(298)

(204)
(133)
(160)
(49)
(128)
(13)
(14)
(701)

2,546 $

663

5,177 $

1,529

$

27

Table of Contents

Certain Concentrations
For the first six months of 2022, revenues from WPG Holdings Limited and Kingston Technology Company, Inc. were each 11% of total
revenue.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONSThis discussion should be read in conjunction with the consolidated financial statements and accompanying notes included in our Annual
Report on Form 10-K for the year ended September 2, 2021. All period references are to our fiscal periods unless otherwise indicated. Our
fiscal year is the 52 or 53-week period ending on the Thursday closest to August 31. Fiscal years 2022 and 2021 each contain 52 weeks. Alltabular dollar amounts are in millions, except per share amounts.

Overview
Micron Technology, Inc., including its consolidated subsidiaries, is an industry leader in innovative memory and storage solutionstransforming how the world uses information to enrich life for all. With a relentless focus on our customers, technology leadership, andmanufacturing and operational excellence, Micron delivers a rich portfolio of high-performance DRAM, NAND, and NOR memory and storage
products through our Micron® and Crucial® brands. Every day, the innovations that our people create fuel the data economy, enablingadvances in artificial intelligence and 5G applications that unleash opportunities — from the data center to the intelligent edge and across theclient and mobile user experience.
We manufacture our products at wholly-owned facilities and also utilize subcontractors for certain manufacturing processes. We makesignificant investments to develop proprietary product and process technology, which generally increases bit density per wafer and reduces
per-bit manufacturing costs of each generation of product. We continue to introduce new generations of products that offer improved
performance characteristics, including higher data transfer rates, advanced packaging solutions, lower power consumption, improved
read/write reliability, and increased memory density.
The ramp of 176-layer NAND and 1α (1-alpha) DRAM across our product portfolio delivers major technology breakthroughs to customers
across markets. For the first time in our history, we achieved industry leadership across these two flagship technologies. We delivered initial
products based on these process technologies to the market in 2021. In the second quarter of 2022, we expanded our 176-layer NANDbased SSD portfolio with the introduction of the Micron 7450 SSD with NVMe, the world’s first vertically-integrated 176-layer NAND SSD forthe data center. An increasing portion of our SSDs incorporate vertical integration with proprietary controllers and firmware that we havedeveloped. This new SSD joins our full portfolio of new product entries across memory and storage which have been well received by themarket. In the second quarter of 2022, we achieved the first qualification of our 1α LPDDR5 DRAM, which delivers more than a 15% power
improvement over the previous generation. We are leading the industry’s client DDR5 transition and are well positioned to lead the industry’s
data center transition as platforms come to market later this year. We have partnered with customers to provide value-added innovation, andspeed market adoption of our new solutions. Development of advanced technologies enables us to diversify our product portfolio toward aricher mix of differentiated, high-value solutions and to target high-growth markets and specific customer requirements across data center,
intelligent edge, client, and mobile environments.
We face intense competition in the semiconductor memory and storage markets and to remain competitive we must continuously develop
and implement new products and technologies and decrease manufacturing costs. Our success is largely dependent on obtaining returns on
our research and development (“R&D”) investments, efficient utilization of our manufacturing infrastructure, development and integration ofadvanced product and process technologies, market acceptance of our diversified portfolio of semiconductor-based memory and storage
solutions, and efficient capital spending.

28 | 2022 Q2 10-Q

Table of Contents

Lehi, Utah Fab and 3D XPoint
In the second quarter of 2021, we updated our portfolio strategy to further strengthen our focus on memory and storage innovations for thedata center market. In connection therewith, we determined that there was insufficient market validation to justify the ongoing investments
required to commercialize 3D XPoint at scale. Accordingly, we ceased development of 3D XPoint technology and engaged in discussions
with potential buyers for the sale of our facility located in Lehi, Utah that was dedicated to 3D XPoint production. As a result, we classified theproperty, plant, and equipment as held for sale as of the second quarter of 2021 and ceased depreciating the assets. On June 30, 2021, we
announced a definitive agreement to sell our Lehi facility to TI and closed the sale on October 22, 2021.
In the first quarter of 2022, we received $893 million from TI for the sale of the Lehi facility and disposed of $918 million of net assets,consisting primarily of property, plant, and equipment of $921 million; $55 million of other assets, consisting primarily of a receivable forreimbursement of property taxes, equipment spare parts, and raw materials; and $58 million of liabilities, consisting primarily of a financelease obligation. As a result of the disposition of the Lehi facility and other related adjustments, we recognized a loss of $23 million included
in restructure and asset impairments in the first quarter of 2022.
In the third quarter of 2021, we recognized a charge of $435 million included in restructure and asset impairments in connection with thedefinitive agreement with TI (and a tax benefit of $104 million included in income tax (provision) benefit) to write down the assets held for saleto the expected consideration, net of estimated selling costs. In the second quarter of 2021, we also recognized a charge of $49 million incost of goods sold to write down 3D XPoint inventory in connection with our decision to cease further development of this technology.

Impact of COVID-19 on Our Business
Events surrounding the COVID-19 pandemic and their impact on economic activity have been unpredictable. As a result, we haveexperienced volatility in the markets in which we sell our products. The ultimate extent to which COVID-19 will impact our business depends
on future developments, which are highly uncertain and very difficult to predict, including the effectiveness and utilization of vaccines for
COVID-19 and its variants, the severity of COVID-19 and its variants, and the effectiveness of the actions to contain or limit their spread.
From the start of the COVID-19 pandemic, we proactively implemented preventative protocols, which we continuously assess and update forchanges in conditions and emerging trends. These preventative protocols are intended to safeguard our team members, contractors,
suppliers, customers, distributors, and communities, and to ensure business continuity. Government restrictions or severe outbreaks canimpact our operations at certain sites. For example, some of our facilities and some of our subcontractors’ facilities at times have beenrequired to operate at reduced staffing and capacity levels due to COVID-19 quarantines and other public health protocols. While our global
manufacturing sites are currently operating with close to full staff and at normal capacity levels, our facilities or those of our subcontractors
could be required to temporarily curtail production levels or temporarily cease operations based on government mandates or our health andsafety protocols. We may be required, or deem it to be in the best interest of our employees, customers, partners, suppliers, andstakeholders, to alter our business operations in order to maintain a healthy and safe environment. It is not clear what potential effects any
such alterations or modifications may have on our business, including effects on our customers, employees, or on our financial results. We
are following government policies and recommendations designed to slow the spread of COVID-19 and remain committed to the health andsafety of our team members, contractors, suppliers, customers, distributors, and communities.
We continuously assess our efforts to respond to the COVID-19 pandemic, which have included the following:•••

In each of our locations, we implement health and safety protocols based on applicable regulations and local conditions and, where
possible, make testing and vaccination available and implement health and safety enhancements.
We require that all U.S. employees and, in addition, contractors that enter our U.S. buildings and certain other locations, be fully
vaccinated against COVID-19, subject to disability and religious exemptions.
We continue to work closely with our customer base to best match our supply to changing market conditions.

29

Table of Contents

•
•
•
•

We evaluate our supply chain and communicate with our suppliers to identify supply gaps and have taken steps to provide continuity,
to the extent possible. In some cases, we have added alternative suppliers, executed long-term supply agreements, and increased
our on-hand inventory of raw materials needed in our operations.
We have added assembly and test capacity to provide redundant manufacturing capability through our network of captive operations
and external partners.
We have evaluated all our construction projects across our global manufacturing operations and enacted protocols to enhance thesafety of our team members, suppliers, and contractors.
We are working with government authorities in the jurisdictions where we operate and continuing to monitor our operations in aneffort to ensure we follow government requirements, relevant regulations, industry standards, and best practices to help safeguard
our team members, while safely continuing operations at our sites across the globe.

We believe these actions are appropriate and prudent to safeguard our team members, contractors, suppliers, customers, and communities,
while allowing us to safely continue operations. We cannot predict how the steps we, our team members, government entities, suppliers, or
customers take in response to the COVID-19 pandemic will ultimately impact our business, outlook, or results of operations.

Product Technologies
Our product portfolio of memory and storage solutions, is based on our high-performance semiconductor memory and storage technologies,
including DRAM, NAND, and NOR. We sell our products into various markets through our business units in numerous forms, including
wafers, components, modules, SSDs, managed NAND, and MCP products. Our system-level solutions, including SSDs and managed
NAND, combine NAND, a controller, firmware, and in some cases DRAM.
DRAM: DRAM products are dynamic random access memory semiconductor devices with low latency that provide high-speed data retrieval
with a variety of performance characteristics. DRAM products lose content when power is turned off (“volatile”) and are most commonly usedin client, cloud server, enterprise, networking, graphics, industrial, and automotive markets. LPDRAM products, which are engineered to meetstandards for performance and power consumption, are sold into smartphone and other mobile-device markets (including client markets for
Chromebooks and notebook PCs), as well as into the automotive, industrial, and consumer markets.
NAND: NAND products are non-volatile, re-writeable semiconductor storage devices that provide high-capacity, low-cost storage with avariety of performance characteristics. NAND is used in SSDs for the enterprise and cloud, client, and consumer markets and in removablestorage markets. Managed NAND is used in smartphones and other mobile devices, and in consumer, automotive, and embedded markets.
Low-density NAND is ideal for applications like automotive, surveillance, machine-to-machine, automation, printer, and home networking.
NOR: NOR products are non-volatile re-writable semiconductor memory devices that provide fast read speeds. NOR is most commonly used
for reliable code storage (e.g., boot, application, operating system, and execute-in-place code in an embedded system) and for frequently
changing small data storage and is ideal for automotive, industrial, and consumer applications.

30 | 2022 Q2 10-Q

Table of Contents

Results of Operations
Consolidated Results
Second Quarter
2022
Revenue
Cost of goods sold
Gross margin$

Research and development
Selling, general, and administrative
Restructure and asset impairments
Other operating (income) expense,
net
Operating income
Interest income (expense), net
Other non-operating income(expense), net
Income tax (provision) benefit
Equity in net income (loss) of equity
method investees
Net income

$

7,786
4,110
3,676

First Quarter2022

100% $
53%
47%

7,687
4,122
3,565

Second Quarter
2021

100% $
54%
46%

6,236
4,587
1,649

Six months ended
2022
2021

100% $ 15,473
74%
8,232
26%
7,241

100% $ 12,009
53%
8,624
47%
3,385

100%
72%
28%

792
263
5

10%
3%
—%

712
259
38

9%
3%
—%

641
214
5

10%
3%
—%

1,504
522
43

10%
3%
—%

1,288
428
13

11%
4%
—%

70
2,546

1%
33%

(75)
2,631

(1)%
34%

126
663

2%
11%

(5)
5,177

—%
33%

127
1,529

1%
13%

(43)

(1)%

(35)

—%

(32)

(1)%

(78)

(1)%

(70)

(1)%

6
(255)

—%
(3)%

(75)
(219)

(1)%
(3)%

4
(48)

—%
(1)%

(69)
(474)

—%
(3)%

17
(99)

—%
(1)%

9
2,263

4
2,306

30%

16
603

10%

13
4,569

—%

29%

30%

29
$ 1,406

12%

—%
$

—%
$

—%
$

—%

Total Revenue: Total revenue for the second quarter of 2022 increased 1% as compared to the first quarter of 2022 primarily due toincreases in both DRAM and NAND sales partially offset by decreases in 3D XPoint sales, which ceased in the first quarter of 2022.
••

Sales of DRAM products increased 2% primarily due to a high-single-digit percent increase in bit shipments partially offset by a midsingle-digit percent decline in average selling prices.
Sales of NAND products increased 4% primarily due to a mid-single-digit percent increase in average selling prices.

Total revenue for the second quarter of 2022 increased 25% as compared to the second quarter of 2021 primarily due to increases in both
DRAM and NAND sales.
••

Sales of DRAM products increased 29% primarily due to a mid-10% increase in average selling prices and increases in bit shipmentsin the low-10% range.
Sales of NAND products increased 19% primarily due to a low-10% increase in average selling prices and increases in bit shipmentsin the mid-single-digit percentage range.

Total revenue for the first six months of 2022 increased 29% as compared to the first six months of 2021 primarily due to increases in both
DRAM and NAND sales.
••

Sales of DRAM products increased 33% primarily due to a low-20% increase in average selling prices and increases in bit shipmentsin the low-10% range.
Sales of NAND products increased 19% primarily due to increases in bit shipments in the low-10% range and a high-single-digit
percent increase in average selling prices.

Overall Gross Margin: Our overall gross margin percentage increased to 47% for the second quarter of 2022 from 46% for the first quarterof 2022, primarily due to higher NAND margins resulting from higher average selling prices and manufacturing cost reductions partially offset
by lower DRAM margins resulting from declines in average selling prices.

31

Table of Contents

Our overall gross margin percentage increased to 47% for the second quarter of 2022 from 26% for the second quarter of 2021, primarily due
to increases in average selling prices and manufacturing cost reductions resulting from strong execution in delivering products featuring
advanced technologies. Our overall gross margin percentage increased to 47% for the first six months of 2022 from 28% for the first six
months of 2021, primarily due to increases in average selling prices and manufacturing cost reductions. Effective as of the beginning of thesecond quarter of 2021, we changed our method of inventory costing from average cost to FIFO. Concurrently, as of the beginning of thesecond quarter of 2021, we modified our inventory cost-absorption processes used to estimate inventory values, which affects the timing ofwhen costs are recognized. These changes resulted in a one-time increase to cost of goods sold of approximately $293 million in the second
quarter of 2021.

Revenue by Business Unit
Second Quarter
2022
CNBU
MBU
SBU
EBU
All Other

$

$

3,461
1,875
1,171
1,277
2
7,786

44%
24%
15%
16%
—%

First Quarter
2022
$

$

3,406
1,907
1,150
1,220
4
7,687

44%
25%
15%
16%
—%

Second Quarter
2021
$

$

2,636
1,811
850
935
4
6,236

42%
29%
14%
15%
—%

Six months ended
2022
2021
$

6,867
3,782
2,321
2,497
6
$ 15,473

44%
24%
15%
16%
—%

$

5,182
3,312
1,761
1,744
10
$ 12,009

43%
28%
15%
15%
—%

Percentages of total revenue may not total 100% due to rounding.
Changes in revenue for each business unit for the second quarter of 2022 as compared to the first quarter of 2022 were as follows:••••

CNBU revenue increased 2% primarily due to increases in bit shipments to client, cloud, and networking markets, partially offset by
declines in DRAM average selling prices.
MBU revenue decreased 2% primarily due to declines in mobile DRAM average selling prices partially offset by increases in bit
shipments.
SBU revenue increased 2% primarily due to increases in bit shipments of SSDs partially offset by decreases in sales of component
products.
EBU revenue increased 5% primarily due to increases in bit shipments to automotive and industrial markets, partially offset by
declines in bit shipments to consumer markets.

Changes in revenue for each business unit for the second quarter and first six months of 2022 as compared to the corresponding periods of2021 were as follows:••••

CNBU revenue increased 31% and 33%, respectively, primarily due to increases in bit shipments to cloud and networking markets
combined with higher average selling prices for DRAM.
MBU revenue increased 4% and 14%, respectively, primarily due to higher average selling prices for mobile DRAM partially offset by
declines in NAND bit shipments due to a mix shift in supply to SSDs.
SBU revenue increased 38% and 32%, respectively, primarily due to increases in bit shipments for NAND products and higher
average selling prices for NAND.
EBU revenue increased 37% and 43%, respectively, primarily due to increases in bit shipments driven by strong demand growth inautomotive and industrial markets combined with improved pricing for DRAM.

32 | 2022 Q2 10-Q

Table of Contents

Operating Income (Loss) by Business Unit
Second Quarter
2022
CNBU
MBU
SBU
EBU
All Other

$

$

1,562
588
178
421
1
2,750

45%
31%
15%
33%
50%

First Quarter
2022
$

$

1,524
624
152
422
3
2,725

45%
33%
13%
35%
75%

Second Quarter
2021
$

$

709
464
(59)
141
2
1,257

27%
26%
(7)%
15%
50%

Six months ended
2022
2021
$

$

3,086
1,212
330
843
4
5,475

45%
32%
14%
34%
67%

$

$

1,192
834
(55)
257
2
2,230

23%
25%
(3)%
15%
20%

Percentages reflect operating income (loss) as a percentage of revenue for each business unit.
Changes in operating income or loss for each business unit for the second quarter of 2022 as compared to the first quarter of 2022 were as
follows:••••

CNBU operating income increased primarily due to higher bit shipments and manufacturing cost reductions partially offset by
declines in DRAM average selling prices and higher R&D expenses.
MBU operating income decreased primarily due to declines in mobile DRAM average selling prices and higher R&D expenses,
partially offset by manufacturing cost reductions.
SBU operating income increased primarily due to higher margins on SSDs.
EBU operating income was relatively unchanged.

Changes in operating income or loss for each business unit for the second quarter and first six months of 2022 as compared to thecorresponding periods of 2021 were as follows:••••

CNBU operating income increased primarily due to higher average selling prices, increases in bit shipments, and manufacturing cost
reductions.
MBU operating income increased primarily due to increases in mobile DRAM average selling prices and NAND cost reductions,partially offset by higher R&D expenses.
SBU operating income increased primarily due to increases in average selling prices, manufacturing cost reductions, and increases
in bit shipments, partially offset by higher R&D expenses.
EBU operating income increased primarily due to manufacturing cost reductions from an increasing mix of leading edge bits, higher
bit shipments, and improved DRAM pricing in industrial and consumer markets.

Operating Expenses and Other
Research and Development: R&D expenses vary primarily with the number of development and pre-qualification wafers processed, thecost of advanced equipment dedicated to new product and process development, and personnel costs. Because of the lead times necessary
to manufacture our products, we typically begin to process wafers before completion of performance and reliability testing. Development of a
product is deemed complete when it is qualified through internal reviews and tests for performance and reliability. R&D expenses can varysignificantly depending on the timing of product qualification.
R&D expenses for the second quarter of 2022 were 11% higher as compared to the first quarter of 2022 primarily due to higher employeecompensation as a result of increases in headcount and variable pay. R&D expenses for the second quarter and first six months of 2022
were 24% and 17% higher, respectively, as compared to the corresponding periods of 2021, primarily due to increases in employeecompensation and higher volumes of development and prequalification wafers.
Selling, General, and Administrative: SG&A expenses for the second quarter of 2022 were relatively unchanged as compared to the firstquarter of 2022. SG&A expenses for the second quarter and first six months of 2022 increased 23% and 22%, respectively, as compared tothe corresponding periods of 2021, primarily due to increases in employee compensation, legal fees, professional services, and advertising.

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Income Taxes: Our income tax (provision) benefit consisted of the following:
Second Quarter
First Quarter
2022
2022
Income before taxes
Income tax (provision) benefit
Effective tax rate$

2,509 $
(255)
10.2 %

Second Quarter
2021

2,521 $
(219)
8.7 %

635 $
(48)
7.6 %

Six months ended
2022
2021
5,030 $
(474)
9.4 %

1,476
(99)
6.7 %

Changes to our effective tax rate in the periods presented were primarily due to the geographic mix of our earnings.
We operate in a number of jurisdictions outside the United States, including Singapore, where we have tax incentive arrangements. These
incentives expire, in whole or in part, at various dates through 2034 and are conditional, in part, upon meeting certain business operations
and employment thresholds. The effect of tax incentive arrangements reduced our tax provision by $304 million (benefiting our diluted
earnings per share by $0.27) for the second quarter of 2022, $290 million ($0.26 per diluted share) for the first quarter of 2022, $45 million($0.04 per diluted share) for the second quarter of 2021, $594 million ($0.53 per diluted share) for the first six months of 2022, and$101 million ($0.09 per diluted share) for the first six months of 2021.
On March 16, 2022, the Idaho governor signed a new law that is expected to reduce our Idaho taxable income and as a result, we do not
expect to utilize our tax credits in Idaho for the foreseeable future. We are in the process of assessing the impact of the new law but currently
estimate it to result in a valuation allowance against Idaho’s net deferred tax assets and an increase to tax expense of approximately $200
million in the third quarter of 2022.
Beginning in 2023, provisions in the Tax Cuts and Jobs Act of 2017 will require us to capitalize and amortize R&D expenditures rather thandeducting the costs as incurred. Unless the effective date is deferred or the law is repealed, we expect a low-single-digit increase to oureffective tax rate for several years.
Various tax reforms are being considered in multiple jurisdictions that, if enacted, contain provisions that could increase our tax expense. We
continue to monitor the potential impact of these various tax reform proposals to our overall global effective tax rate and financial statements.
See “Item 1. Financial Statements – Notes to Consolidated Financial Statements – Income Taxes.”
Other: Further discussion of other items can be found in “Item 1. Financial Statements – Notes to Consolidated Financial Statements.”

Liquidity and Capital Resources
Our primary sources of liquidity are cash generated from operations and financing obtained from capital markets and financial institutions.
Cash generated from operations is highly dependent on selling prices for our products, which can vary significantly from period to period. We
are continuously evaluating alternatives for efficiently funding our capital expenditures and ongoing operations. We expect, from time to time,to engage in a variety of financing transactions for such purposes, including the issuance of securities. As of March 3, 2022, $2.50 billion wasavailable to draw under our Revolving Credit Facility.
Cash and marketable investments totaled $11.84 billion as of March 3, 2022 and $10.40 billion as of September 2, 2021. Our cash andinvestments consist primarily of bank deposits, money market funds, and liquid investment-grade, fixed-income securities, which arediversified among industries and individual issuers. To mitigate credit risk, we invest through high-credit-quality financial institutions and by
policy generally limit the concentration of credit exposure by restricting the amount of investments with any single obligor. As of March 3,2022, $5.27 billion of our cash and marketable investments was held by our foreign subsidiaries.

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To develop new product and process technology, support future growth, achieve operating efficiencies, and maintain product quality, we must
continue to invest in manufacturing technologies, facilities and equipment, and R&D. We estimate capital expenditures in 2022 for property,
plant, and equipment, net of partner contributions, to be between $11 billion and $12 billion. Capital expenditures for 2022 are driven by ourcontinued 176-layer NAND transition, pilot line enablement for next generation NAND and DRAM, and continued infrastructure andprepayments to support the introduction of EUV lithography. Actual amounts for 2022 will vary depending on market conditions. As of
March 3, 2022, we had purchase obligations of approximately $2.96 billion for the acquisition of property, plant, and equipment, of whichapproximately $2.55 billion is expected to be paid within one year. For a description of other contractual obligations, such as debt and leases,
see “Item 1. Financial Statements – Notes to Consolidated Financial Statements – Leases” and “– Debt.”
On November 1, 2021, we issued $1 billion in aggregate principal amount of unsecured 2032 Green Bonds. Over time, we intend to allocate
an amount equal to the net proceeds to fund eligible sustainability-focused projects involving renewable energy, green buildings, energy
efficiency, water management, pollution control, and a circular economy.
Our Board of Directors has authorized the discretionary repurchase of up to $10 billion of our outstanding common stock through openmarket purchases, block trades, privately-negotiated transactions, derivative transactions, and/or pursuant to Rule 10b5-1 trading plans. The
repurchase authorization has no expiration date, does not obligate us to acquire any common stock, and is subject to market conditions andour ongoing determination of the best use of available cash. Through March 3, 2022, we have repurchased an aggregate of $4.70 billion of
the authorized amount. See “Item 1. Financial Statements – Notes to Consolidated Financial Statements – Equity.”
On March 29, 2022, our Board of Directors declared a quarterly dividend of $0.10 per share, payable in cash on April 26, 2022, toshareholders of record as of the close of business on April 11, 2022. The declaration and payment of any future cash dividends are at thediscretion and subject to the approval of our Board of Directors. Our Board of Directors' decisions regarding the amount and payment ofdividends will depend on many factors, including, but not limited to, our financial condition, results of operations, capital requirements,
business conditions, debt service obligations, contractual restrictions, industry practice, legal requirements, regulatory constraints, and otherfactors that our Board of Directors may deem relevant.
We expect that our cash and investments, cash flows from operations, and available financing will be sufficient to meet our requirements atleast through the next 12 months and thereafter for the foreseeable future.

Cash FlowsSix months ended
2022
2021
Net cash provided by operating activities
Net cash provided by (used for) investing activities
Net cash provided by (used for) financing activities
Effect of changes in currency exchange rates on cash, cash equivalents, and restricted cash$

Net increase (decrease) in cash, cash equivalents, and restricted cash$

7,566 $
(5,176)(979)(16)
1,395 $

5,024
(5,974)(209)
43(1,116)

Operating Activities: Cash provided by operating activities reflects net income adjusted for certain non-cash items, including depreciation
expense, amortization of intangible assets, asset impairments, and stock-based compensation, and the effects of changes in operating
assets and liabilities. The increase in cash provided by operating activities for the first six months of 2022 as compared to the first six monthsof 2021 was primarily due to higher net income adjusted for non-cash items, partially offset by an increase in inventories.
Investing Activities: For the first six months of 2022, net cash used for investing activities consisted primarily of $5.88 billion of expenditures
for property, plant, and equipment; inflows of $66 million of partner contributions for capital expenditures; $893 million of net inflows from thesale of the Lehi, Utah fab; and $119 million of net outflows from purchases, sales, and maturities of available-for-sale securities.

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For the first six months of 2021, net cash used for investing activities consisted primarily of $5.76 billion of expenditures for property, plant,
and equipment; inflows of $183 million of partner contributions for capital expenditures; and $425 million of net outflows from purchases,
sales, and maturities of available-for-sale securities.
Financing Activities: For the first six months of 2022, net cash used for financing activities included $1.98 billion of repayments of debt
primarily to redeem the 2023 Notes and 2024 Notes, $667 million for the acquisition of 8.4 million shares of our common stock under our $10
billion share repurchase authorization, $224 million of cash payments of dividends to shareholders, $112 million used for stock repurchases
related to tax withholdings for employee equity awards, and $105 million of payments on equipment purchase contracts. Cash used forfinancing activities was partially offset by aggregate proceeds of $2.00 billion from the issuance of the unsecured 2032 Green Bonds, 2041
Notes, and 2051 Notes. See “Item 1. Financial Statements – Notes to Consolidated Financial Statements – Debt.”
For the first six months of 2021, net cash used for financing activities consisted primarily of $123 million for payments on equipment purchase
contracts and $103 million for repayments of debt.

Critical Accounting Estimates
For a discussion of our critical accounting estimates, see “Part II – Item 7. Management’s Discussion and Analysis of Financial Condition and
Results of Operations – Critical Accounting Estimates” of our Annual Report on Form 10-K for the year ended September 2, 2021. There
have been no changes to our critical accounting estimates since our Annual Report on Form 10-K for the year ended September 2, 2021.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKWe are affected by changes in currency exchange and interest rates. We are exposed to interest rate risk related to our indebtedness andour investment portfolio. As of March 3, 2022 and September 2, 2021, we had fixed-rate debt of $4.0 billion and $3.9 billion, respectively, andas a result, the fair value of our debt fluctuates with changes in market interest rates. In the first quarter of 2022, we issued new debt andrepaid other debt, which significantly increased the average remaining maturity of our fixed-rate debt resulting in increased variability of its
fair value from interest rate changes. We estimate that, as of March 3, 2022 and September 2, 2021, a decrease in market interest rates of
1% would increase the fair value of our fixed-rate debt by approximately $375 million and $200 million, respectively.
For further discussion about market risk and sensitivity analysis related to changes in currency exchange rates and interest rates, see “Part II– Item 7A. Quantitative and Qualitative Disclosures About Market Risk” in our Annual Report on Form 10-K for the year ended September 2,
2021.

ITEM 4. CONTROLS AND PROCEDURES
An evaluation was carried out under the supervision and with the participation of our management, including our principal executive officer
and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules
13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period coveredby this report. Based upon that evaluation, the principal executive officer and principal financial officer concluded that those disclosure
controls and procedures were effective to ensure that information required to be disclosed by us in the reports that we file or submit under the
Exchange Act are recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and thatsuch information is accumulated and communicated to our management, including the principal executive officer and principal financial
officer, to allow timely decisions regarding disclosure.
During the second quarter of 2022, there were no changes in our internal control over financial reporting that have materially affected, or arereasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATIONITEM 1. LEGAL PROCEEDINGSFor a discussion of legal proceedings, see “Part I – Item 3. Legal Proceedings” of our Annual Report on Form 10-K for the year ended
September 2, 2021 and the sections titled “Part I. Financial Information – Item 1. Financial Statements – Notes to Consolidated Financial
Statements – Contingencies” and “Item 1A. Risk Factors” in this Quarterly Report on Form 10-Q, as well as in our Quarterly Report on Form
10-Q for the first quarter of 2022.
SEC regulations require disclosure of certain proceedings related to environmental matters unless we reasonably believe that the relatedmonetary sanctions, if any, will be less than a specified threshold. We use a threshold of $1 million for this purpose.

ITEM 1A. RISK FACTORSIn addition to the factors discussed elsewhere in this Form 10-Q, this section discusses important factors which could cause actual results orevents to differ materially from those contained in any forward-looking statements made by us. The order of presentation is not necessarily
indicative of the level of risk that each factor poses to us. Any of these factors could have a material adverse effect on our business, resultsof operations, financial condition, or stock price. Our operations could also be affected by other factors that are presently unknown to us or
not considered significant.

Risk Factor Summary
Risks Related to Our Business, Operations, and Industry• the effects of the COVID-19 pandemic;• volatility in average selling prices of our products;• our ability to maintain or improve gross margins;• the highly competitive nature of our industry;• our ability to develop and produce new and competitive memory and storage technologies, products, and markets;• dependency on specific customers, concentration of revenue with a select number of customers, and customers who are locatedinternationally;• our international operations, including geopolitical risks;• limited availability and quality of materials, supplies, and capital equipment and dependency on third-party service providers forourselves and our customers;• products that fail to meet specifications, are defective, or are incompatible with end uses;• disruptions to our manufacturing process from operational issues, natural disasters, or other events;• breaches of our security systems or products, or those of our customers, suppliers, or business partners;• attracting, retaining, and motivating highly skilled employees;• achieving or maintaining certain performance obligations associated with incentives from various governments;• future acquisitions and/or alliances;• restructure charges;• responsible sourcing requirements and related regulations; and• a downturn in the worldwide economy.
Risks Related to Intellectual Property and Litigation• protecting our intellectual property and retaining key employees who are knowledgeable of and develop our intellectual property;• legal proceedings and claims;• allegations of anticompetitive conduct;• claims that our products or manufacturing processes infringe or otherwise violate the intellectual property rights of others or failure toobtain or renew license agreements covering such intellectual property; and• alleged patent infringement complaints in Chinese courts.

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Risks Related to Laws and Regulations• compliance with tariffs, trade restrictions, and/or trade regulations;• tax expense and tax laws in key jurisdictions; and• compliance with laws, regulations, or industry standards, including environmental, social, and governance (“ESG”) considerations.
Risks Related to Capitalization and Financial Markets• our ability to generate sufficient cash flows or obtain access to external financing;• our debt obligations;• changes in foreign currency exchange rates;• counterparty default risk;• volatility in the trading price of our common stock; and• fluctuations in the amount and timing of our common stock repurchases and payment of cash dividends and resulting impacts.

Risks Related to Our Business, Operations, and Industry
The effects of the COVID-19 pandemic could adversely affect our business, results of operations, and financial condition.
The effects of the public health crisis caused by the COVID-19 pandemic and the measures being taken to limit COVID-19’s spread are
uncertain and difficult to predict, but may include, and in some cases, have included and may continue to include:••

A decrease in short-term and/or long-term demand and/or pricing for our products and global economic volatility that could reducedemand and/or pricing for our products, resulting from the spread of COVID-19 and/or the actions taken by governments,
businesses, and/or the general public in an effort to limit exposure to and the spread of COVID-19, such as travel restrictions,
quarantines, and business shutdowns or slowdowns;
Negative impacts to our operations, including:◦ reductions in production levels, R&D activities, product development, technology transitions, yield enhancement activities,
and qualification activities with our customers, resulting from our efforts to mitigate the impact of COVID-19 throughmeasures we have enacted at our locations around the world in an effort to protect our employees’ and contractors’ healthand well-being, including working from home, limiting the number of meeting attendees, reducing the number of people incertain of our sites at any one time, quarantines of team members, contractors, or vendors who are at risk of contracting, or
have contracted, COVID-19, and limiting employee travel;◦ increased costs resulting from our efforts to mitigate the impact of COVID-19 through physical-distancing measures, working
from home, upgrades to our sites, COVID-19 testing and vaccination, enhanced cleaning measures, and the increased useof personal protective equipment at our sites;◦ increased costs for, or unavailability of, transportation, raw materials, components, electricity and/or other energy sources, orother inputs necessary for the operation of our business;◦ reductions in, or cessation of operations at any site or in any jurisdiction resulting from government restrictions on movement
and/or business operations or our measures to prevent and/or mitigate the spread of COVID-19 at one or more of our sites,such as we have experienced at some of our facilities from time to time since the start of the COVID-19 pandemic;◦ our inability to continue, or increased costs of, construction projects due to delays in obtaining materials, equipment, labor,
engineering services, government permits, or any other essential aspect of projects, which could impact our ability tointroduce new technologies, reduce costs, or meet customer demand; and◦ disruptions to our supply chain in connection with the sourcing and transportation of materials, components, equipment andengineering support, and services from or in geographic areas that have been impacted by COVID-19, by efforts to containthe spread of COVID-19, or by follow-on effects on the worldwide supply chain;

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Deterioration of worldwide credit and financial markets that could: limit our ability to obtain external financing to fund our operations
and capital expenditures; result in losses on our holdings of cash and investments due to failures of financial institutions and otherparties; or result in a higher rate of losses on our accounts receivable due to credit defaults.

While several COVID-19 vaccines have been approved and are available for use in the United States and certain other countries, we areunable to predict how widely utilized the vaccines ultimately will be, whether they will be effective in preventing the symptoms and spread of
COVID-19 (including its variant strains), and when or if normal economic activity and business operations will resume.
These effects, alone or taken together, could have a material adverse effect on our business, results of operations, or financial condition. The
continuation of the pandemic or expanded or recurring outbreaks could exacerbate the adverse impact of such measures.
Volatility in average selling prices for our semiconductor memory and storage products may adversely affect our business.
We have experienced significant volatility in our average selling prices, including dramatic declines as noted in the table below, and may
continue to experience such volatility in the future. In some prior periods, average selling prices for our products have been below our
manufacturing costs and we may experience such circumstances in the future. Average selling prices for our products that decline faster thanour costs could have a material adverse effect on our business, results of operations, or financial condition.
DRAM
NAND
(percentage change in average selling prices)
2021 from 2020
2020 from 20192019 from 20182018 from 20172017 from 2016

8%
(34)%
(30)%
36 %
18 %

(12)%
(9)%
(47)%
(13)%
(10)%

We may be unable to maintain or improve gross margins.
Our gross margins are dependent, in part, upon continuing decreases in per gigabit manufacturing costs achieved through improvements in
our manufacturing processes and product designs, including, but not limited to, process line-width, additional 3D memory layers, additional
bits per cell (i.e., cell levels), architecture, number of mask layers, number of fabrication steps, and yield. In future periods, we may be unable
to reduce our per gigabit manufacturing costs at sufficient levels to maintain or improve gross margins. Factors that may limit our ability tomaintain or reduce costs include, but are not limited to, strategic product diversification decisions affecting product mix, the increasing
complexity of manufacturing processes, difficulties in transitioning to smaller line-width process technologies or additional 3D memory layers
or NAND cell levels, process complexity including number of mask layers and fabrication steps, manufacturing yield, technological barriers,changes in process technologies, new products that may require relatively larger die sizes, start-up or other costs associated with capacity
expansion, and higher costs of goods and services due to inflationary pressures or market conditions.
Many factors may result in a reduction of our output or a delay in ramping production, which could lead to underutilization of our production
assets. These factors may include, among others, a weak demand environment, industry oversupply, inventory surpluses, difficulties in
ramping emerging technologies, declining selling prices, supply chain disruptions, and delays from equipment suppliers. A significant portionof our manufacturing costs are fixed and do not vary proportionally with changes in production output. As a result, lower utilization andcorresponding increases in our per gigabit manufacturing costs may adversely affect our gross margins, business, results of operations, or
financial condition.

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Per gigabit manufacturing costs may also be affected by a broader product portfolio, which may have smaller production quantities andshorter product lifecycles. Our business and the markets we serve are subject to rapid technological changes and material fluctuations indemand based on end-user preferences. As a result, we may have work in process or finished goods inventories that could become obsolete
or in amounts that are in excess of our customers’ demand. Consequently, we may incur charges in connection with obsolete or excess
inventories. In addition, due to the customized nature of certain of the products we manufacture, we may be unable to sell certain finishedgoods inventories to alternative customers or manufacture in-process inventory to different specifications, which may result in excess andobsolescence charges in future periods.
In addition, if we are unable to supply sufficient quantities of products that meet customer design and performance specifications, we may berequired to sell such products at lower average selling prices, which may reduce our gross margins. Our gross margins may also be
impacted by shifts in product mix, including due to market dynamics.
Our inability to maintain or improve gross margins could have a material adverse effect on our business, results of operations, or financial
condition.
The semiconductor memory and storage markets are highly competitive.
We face intense competition in the semiconductor memory and storage markets from a number of companies, including Intel; Kioxia
Holdings Corporation; Samsung Electronics Co., Ltd.; SK hynix Inc.; and Western Digital Corporation. Our competitors may use aggressive
pricing to obtain market share or take business of our key customers. Some of our competitors are large corporations or conglomerates that
may have greater resources to invest in technology, capitalize on growth opportunities, and withstand downturns in the semiconductor
markets in which we compete. Consolidation of industry competitors could put us at a competitive disadvantage as our competitors may
benefit from increased manufacturing scale and a stronger product portfolio.
In addition, some governments may provide, or have provided and may continue to provide, significant assistance, financial or otherwise, tosome of our competitors or to new entrants and may intervene in support of national industries and/or competitors. In particular, we face thethreat of increasing competition as a result of significant investment in the semiconductor industry by the Chinese government and various
state-owned or affiliated entities, such as Yangtze Memory Technologies Co., Ltd. (“YMTC”) and ChangXin Memory Technologies, Inc.
(“CXMT”), that is intended to advance China’s stated national policy objectives. In addition, the Chinese government may restrict us fromparticipating in the China market or may prevent us from competing effectively with Chinese companies.
We and our competitors generally seek to increase wafer capacity, improve yields, and reduce die size in our and their product designs which
may result in significant increases in worldwide supply and downward pressure on prices. Increases in worldwide supply of semiconductor
memory and storage also result from fabrication capacity expansions, either by way of new facilities, increased capacity utilization, or
reallocation of other semiconductor production to semiconductor memory and storage production. Our competitors may increase capital
expenditures resulting in future increases in worldwide supply. We, and some of our competitors, have plans to ramp, or are constructing or
ramping, production at new fabrication facilities. Increases in worldwide supply of semiconductor memory and storage, if not accompanied bycommensurate increases in demand, could lead to declines in average selling prices for our products and could materially adversely affectour business, results of operations, or financial condition. If competitors are more successful at developing or implementing new product orprocess technology, their products could have cost or performance advantages.
The competitive nature of our industry could have a material adverse effect on our business, results of operations, or financial condition.
Our future success depends on our ability to develop and produce new and competitive memory and storage technologies.
Our key semiconductor memory and storage products and technologies face technological barriers to continue to meet long-term customer
needs. These barriers include potential limitations on stacking additional 3D memory layers, increasing bits per cell (i.e., cell levels), meeting
higher density requirements, and improving power consumption and reliability. We may face technological barriers to continue to shrink our
products at our current or historical rate, which has generally reduced per-unit cost. We have invested and expect to continue to invest in
R&D for new and existing products and process technologies, such as EUV lithography, to continue to deliver advanced

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product requirements. Such new technologies can add complexity and risk to our schedule and may affect our costs and production output.
We may be unable to recover our investment in R&D or otherwise realize the economic benefits of reducing die size or increasing memoryand storage densities. Our competitors are working to develop new memory and storage technologies that may offer performance and/or
cost advantages to existing technologies and render existing technologies obsolete. Accordingly, our future success may depend on ourability to develop and produce viable and competitive new memory and storage technologies. There can be no assurance of the following:••••that we will be successful in developing competitive new semiconductor memory and storage technologies;that we will be able to cost-effectively manufacture new products;that we will be able to successfully market these technologies; andthat margins generated from sales of these products will allow us to recover costs of development efforts.

We develop and produce advanced memory and storage technologies and there can be no assurance that our efforts to develop and market
new product technologies will be successful. Unsuccessful efforts to develop new memory and storage technologies could have a material
adverse effect on our business, results of operations, or financial condition.
A significant portion of our revenue is concentrated with a select number of customers.
In each of the last three years, approximately one-half of our total revenue was from our top ten customers. A disruption in our relationshipwith any of these customers could adversely affect our business. We could experience fluctuations in our customer base or the mix ofrevenue by customer as markets and strategies evolve. Our customers’ demand for our products may fluctuate due to factors beyond ourcontrol. In addition, any consolidation of our customers could reduce the number of customers to whom our products may be sold. Ourinability to meet our customers’ requirements or to qualify our products with them could adversely impact our revenue. A meaningful change
in the inventory strategy of our customers could impact our industry bit demand growth outlook. The loss of, or restrictions on our ability tosell to, one or more of our major customers, such as occurred with our former customer, Huawei Technologies, Co. Ltd. (“Huawei”), or any
significant reduction in orders from, or a shift in product mix by, customers could have a material adverse effect on our business, results ofoperations, or financial condition.
We face geopolitical and other risks associated with our international sales and operations that could materially adversely affectour business, results of operations, or financial condition.
In 2021, 56% of our revenue was from sales to customers who have headquarters located outside the United States. We ship our products tothe locations specified by our customers. Customers with global supply chains and operations may request we deliver products to countries
where they own or operate production facilities or to countries where they utilize third-party subcontractors or warehouses. As a result, 89%of our revenue in 2021 was from products shipped to customer locations outside the United States.
A substantial portion of our operations are conducted in Taiwan, Singapore, Japan, Malaysia, China, and India, and many of our customers,
suppliers, and vendors also operate internationally. Our operations, and the global supply chain of the technology industry, are subject to anumber of risks, including the effects of actions and policies of various governments across our global operations and supply chain. For
example, political, economic, or other actions may adversely affect our operations in Taiwan. A majority of our DRAM production output in
2021 was from our fabrication facilities in Taiwan and any loss of output could have a material adverse effect on us. Any political, economic,
or other actions may also adversely affect our customers and the technology industry supply chain, for which Taiwan is a central hub, and as
a result, could have a material adverse impact on us.
In addition, the U.S. government has in the past restricted American firms from selling products and software to certain of our customers andmay in the future impose similar bans or other restrictions on sales to one or more of our significant customers. These restrictions may notprohibit our competitors from selling similar products to our customers, which may result in our loss of sales and market share. Even whensuch restrictions are lifted, financial or other penalties or continuing export restrictions imposed with respect to our customers could have acontinuing negative impact on our future revenue and results of operations, and we may not be able to recover any customers or market
share we lose while complying with such restrictions.

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Our international sales and operations are subject to a variety of risks, including:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•

export and import duties, changes to import and export regulations, customs regulations and processes, and restrictions on thetransfer of funds, including currency controls in China, which could negatively affect the amount and timing of payments from certainof our customers and, as a result, our cash flows;
imposition of bans on sales of goods or services to one or more of our significant foreign customers;
public health issues (for example, an outbreak of a contagious disease such as COVID-19, Severe Acute Respiratory Syndrome(“SARS-CoV”), avian and swine influenza, measles, or Ebola);compliance with U.S. and international laws involving international operations, including the Foreign Corrupt Practices Act of 1977,
as amended, export and import laws, and similar rules and regulations;
theft of intellectual property;
political and economic instability, including the effects of disputes between China and Taiwan and Russia’s invasion of Ukraine;
government actions or civil unrest preventing the flow of products and materials, including delays in shipping and obtaining products
and materials, cancellation of orders, or loss or damage of products;
problems with the transportation or delivery of products and materials;
issues arising from cultural or language differences and labor unrest;
longer payment cycles and greater difficulty in collecting accounts receivable;
compliance with trade, technical standards, and other laws in a variety of jurisdictions;contractual and regulatory limitations on the ability to maintain flexibility with staffing levels;
disruptions to manufacturing or R&D activities as a result of actions imposed by foreign governments;changes in economic policies of foreign governments; anddifficulties in staffing and managing international operations.

If we or our customers, suppliers, or vendors are impacted by any of these risks, it could have a material adverse effect on our business,
results of operations, or financial condition.
Our business, results of operations, or financial condition could be adversely affected by the limited availability and quality ofmaterials, supplies, and capital equipment, or dependency on third-party service providers.
Our supply chain and operations are dependent on the availability of materials that meet exacting standards and the use of third parties toprovide us with components and services. We generally have multiple sources of supply for our materials and services. However, only alimited number of suppliers are capable of delivering certain materials, components, and services that meet our standards and, in somecases, materials, components, or services are provided by a single or sole source, and we may be unable to qualify new suppliers on atimely basis. Various factors could impact the availability of materials or components such as chemicals, silicon wafers, gases, photoresist,
controllers, substrates, lead frames, printed circuit boards, targets, and reticle glass blanks. These factors could include a shortage of raw
materials or a disruption in the processing or purification of those raw materials into finished goods. Shortages or increases in lead times
have occurred in the past, are currently occurring with respect to some materials and components, and may occur from time to time in the
future. Constraints within our supply chain for certain materials and integrated circuit components could limit our bit shipments, which could
have a material adverse effect on our business, results of operations, or financial condition.
Our manufacturing processes are also dependent on our relationships with third-party manufacturers of controllers, analog integrated circuits,
and other components used in some of our products and with outsourced semiconductor foundries, assembly and test providers, contract
manufacturers, logistic carriers, and other service providers. Although we have certain long-term contracts with some of our suppliers, manyof these contracts do not provide for long-term capacity commitments. To the extent we do not have firm commitments from our third-party
suppliers over a specific time period or for any specific capacity and/or quantity, our suppliers may allocate capacity to their other customers
and capacity and/or materials may not be available when we need it or at reasonable prices. Inflationary pressures and shortages haveincreased, and may continue to increase, costs for materials, supplies, and services. Regardless of contract structure, large swings indemand may exceed our contracted supply and/or our suppliers’ capacity to meet those demand changes resulting in a shortage of parts,
materials, or capacity needed to manufacture our products.
Certain materials are primarily available in a limited number of countries, including rare earth elements, minerals, and metals. Trade disputes,
geopolitical tensions, economic circumstances, political conditions, or public health issues, such as COVID-19, may limit our ability to obtainsuch materials. Although these rare earth and other42 | 2022 Q2 10-Q

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materials are generally available from multiple suppliers, China is the predominant producer of certain of these materials. If China were to
restrict or stop exporting these materials, our suppliers’ ability to obtain such supply may be constrained and we may be unable to obtainsufficient quantities, or obtain supply in a timely manner, or at a commercially reasonable cost. Constrained supply of rare earth elements,
minerals, and metals may restrict our ability to manufacture certain of our products and make it difficult or impossible to compete with othersemiconductor memory manufacturers who are able to obtain sufficient quantities of these materials from China.
We and/or our suppliers and service providers could be affected by regional conflicts, sanctions, tariffs, embargoes, or other trade
restrictions, as well as laws and regulations enacted in response to concerns regarding climate change, conflict minerals, responsible
sourcing practices, public health crises, contagious disease outbreaks, or other matters, which could limit the supply of our materials and/or
increase the cost. For example, Russia’s invasion of Ukraine as well as sanctions against Russia could result in higher costs or reduced
availability of supplies, materials, components, or services. Environmental regulations could limit our ability to procure or use certain
chemicals or materials in our operations or products. In addition, disruptions in transportation lines could delay our receipt of materials. Ourability to procure components to repair equipment essential for our manufacturing processes could also be negatively impacted by various
restrictions or disruptions in supply chains, among other items. The disruption of our supply of materials, components, or services, or theextension of our lead times could have a material adverse effect on our business, results of operations, or financial condition.
Similarly, if our customers experience disruptions to their supplies, materials, components, or services, or the extension of their lead times,
they may reduce, cancel, or alter the timing of their purchases with us. For example, recently some PC customers adjusted their memory andstorage purchases due to shortages of non-memory components that are needed to complete PC builds. In addition, recently several
automotive manufacturers have experienced shortages of non-memory semiconductor-based components from other suppliers, forcing acurtailment of their production lines and a reduction in memory and storage purchases from us. Reduction, cancellation, or alteration of thetiming of customer purchases could have a material adverse effect on our business, results of operations, or financial condition.
Our operations are dependent on our ability to procure advanced semiconductor manufacturing equipment that enables the transition tolower cost manufacturing processes. For certain key types of equipment, including photolithography tools, we are sometimes dependent on asingle supplier. From time to time, we have experienced difficulties in obtaining some equipment on a timely basis due to suppliers’ limited
capacity. Our inability to obtain equipment on a timely basis could adversely affect our ability to transition to next generation manufacturing
processes and reduce our costs. Delays in obtaining equipment could also impede our ability to ramp production at new facilities and could
increase our overall costs of a ramp. Our inability to obtain advanced semiconductor manufacturing equipment in a timely manner could havea material adverse effect on our business, results of operations, or financial condition.
Our construction projects to expand production and R&D capacity are highly dependent on available sources of labor, materials, equipment,
and services. Increasing demand, supply constraints, inflation, and other market conditions could result in increasing shortages and higher
costs for these items. Difficulties in obtaining these resources could result in significant delays in completion of our construction projects andcost increases, which could have a material adverse effect on our business, results of operations, or financial condition.
Our inability to source materials, supplies, capital equipment, or third-party services could affect our overall production output and our ability
to fulfill customer demand. Significant or prolonged shortages of our products could halt customer manufacturing and damage ourrelationships with these customers. Any damage to our customer relationships as a result of a shortage of our products could have a material
adverse effect on our business, results of operations, or financial condition.
New product and market development may be unsuccessful.
We are developing new products, including system-level memory and storage products and solutions, which complement our traditional
products or leverage their underlying design or process technology. We have made significant investments in product and process
technology and anticipate expending significant resources for new semiconductor product and system-level solution development over the
next several years. Additionally, we are increasingly differentiating our products and solutions to meet the specific demands of our customers,
which increases our reliance on our customers’ ability to accurately forecast the needs and preferences of their customers. As a result, ourproduct demand forecasts may be impacted significantly by the strategic actions of our customers.

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In addition, our ability to successfully introduce new products often requires us to make product specification decisions multiple years inadvance of when new products enter the market.
It is important that we deliver products in a timely manner with increasingly advanced performance characteristics at the time our customers
are designing and evaluating samples for their products. If we do not meet their product design schedules, our customers may exclude us
from further consideration as a supplier for those products. The process to develop new products requires us to demonstrate advanced
functionality, performance, and reliability, often well in advance of a planned ramp of production, in order to secure design wins with ourcustomers. Many factors may negatively impact our ability to meet anticipated timelines and/or expected or required quality standards withrespect to the development of certain of our products. Such factors have included, and may include in the future, the effects of the publichealth crisis caused by the COVID-19 pandemic and the measures being taken to limit COVID-19’s spread. In addition, some of ourcomponents have long lead-times, requiring us to place orders up to a year in advance of anticipated demand. Such long lead-times increase
the risk of excess inventory or loss of sales in the event our forecasts vary substantially from actual demand. There can be no assurance
that:
•
•
•
•
•
•
•

our product development efforts will be successful;we will be able to cost-effectively manufacture new products;
we will be able to successfully market these products;
we will be able to establish or maintain key relationships with customers, or that we will not be prohibited from working with certain
customers, for specific chip set or design requirements;
we will accurately predict and design products that meet our customers' specifications;
we will be able to introduce new products into the market and qualify them with our customers on a timely basis; ormargins generated from sales of these products will allow us to recover costs of development efforts.

Our unsuccessful efforts to develop new products and solutions could have a material adverse effect on our business, results of operations,or financial condition.
Increases in sales of system solutions may increase our dependency upon specific customers and our costs to develop, qualify,
and manufacture our system solutions.
Our development of system-level memory and storage products is dependent, in part, upon successfully identifying and meeting ourcustomers’ specifications for those products. Developing and manufacturing system-level products with specifications unique to a customer
increases our reliance upon that customer for purchasing our products at sufficient volumes and prices in a timely manner. If we fail to
identify or develop products on a timely basis, or at all, that comply with our customers’ specifications or achieve design wins with ourcustomers, we may experience a significant adverse impact on our revenue and margins. Even if our products meet customer specifications,
our sales of system-level solutions are dependent upon our customers choosing our products over those of our competitors and purchasing
our products at sufficient volumes and prices. Our competitors’ products may be less costly, provide better performance, or include additionalfeatures when compared to our products. Our long-term ability to sell system-level memory and storage products is reliant upon ourcustomers’ ability to create, market, and sell their products containing our system-level solutions at sufficient volumes and prices in a timely
manner. If we fail to successfully develop and market system-level products, our business, results of operations, or financial condition may bematerially adversely affected.
Manufacturing system-level solutions, such as SSDs and managed NAND, typically results in higher per-unit manufacturing costs ascompared to other products. Even if we are successful in selling system-level solutions to our customers in sufficient volume, we may beunable to generate sufficient profit if our per-unit manufacturing costs exceed our per-unit selling prices. Manufacturing system-level solutions
to customer specifications requires a longer development cycle, as compared to discrete products, to design, test, and qualify, which may
increase our costs. Some of our system solutions are increasingly dependent on sophisticated firmware that may require significant
customization to meet customer specifications, which increases our costs and time to market. Additionally, we may need to update ourcontroller and hardware design as well as our firmware or develop new firmware as a result of new product introductions or changes incustomer specifications and/or industry standards, which increases our costs. System complexities and extended warranties for system-levelproducts could also increase our warranty costs. Our failure to cost-effectively manufacture system-level solutions and/or controller, hardware
design, and firmware in a timely manner may result in reduced demand for our system-level products and could have a material adverse
effect on our business, results of operations, or financial condition.

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Products that fail to meet specifications, are defective, or are otherwise incompatible with end uses could impose significant costs
on us.
Products that do not meet specifications or that contain, or are perceived by our customers to contain, defects or that are otherwise
incompatible with end uses could impose significant costs on us or otherwise materially adversely affect our business, results of operations,or financial condition. From time to time, we experience problems with nonconforming, defective, or incompatible products after we haveshipped such products. In recent periods, we have further diversified and expanded our product offerings, which could potentially increase
the chance that one or more of our products could fail to meet specifications in a particular application. Our products and solutions may bedeemed fully or partially responsible for functionality in our customers’ products and may result in sharing or shifting of product or financial
liability from our customers to us for costs incurred by the end user as a result of our customers’ products failing to perform as specified. In
addition, if our products and solutions perform critical functions in our customers’ products or are used in high-risk consumer end products,
such as autonomous driver assistance programs, home and enterprise security, smoke and noxious gas detectors, medical monitoring
equipment, or wearables for child and elderly safety, our potential liability may increase. We could be adversely affected in several ways,
including the following:•••

we may be required or agree to compensate customers for costs incurred or damages caused by defective or incompatible products
and to replace products;
we could incur a decrease in revenue or adjustment to pricing commensurate with the reimbursement of such costs or allegeddamages; andwe may encounter adverse publicity, which could cause a decrease in sales of our products or harm our reputation or relationships
with existing or potential customers.

Any of the foregoing items could have a material adverse effect on our business, results of operations, or financial condition.
If our manufacturing process is disrupted by operational issues, natural disasters, or other events, our business, results ofoperations, or financial condition could be materially adversely affected.
We and our subcontractors manufacture products using highly complex processes that require technologically advanced equipment andcontinuous modification to improve yields and performance. Difficulties in the manufacturing process or the effects from a shift in product mix
can reduce yields or disrupt production and may increase our per gigabit manufacturing costs. We and our subcontractors maintain
operations and continuously implement new product and process technology at manufacturing facilities, which are widely dispersed in
multiple locations in several countries including the United States, Singapore, Taiwan, Japan, Malaysia, and China. As a result of thenecessary interdependence within our network of manufacturing facilities, an operational disruption at one of our or a subcontractor’sfacilities may have a disproportionate impact on our ability to produce many of our products.
From time to time, there have been disruptions in our manufacturing operations as a result of power outages, improperly functioning
equipment, disruptions in supply of raw materials or components, or equipment failures. We have manufacturing and other operations inlocations subject to natural occurrences and possible climate changes, such as severe and variable weather and geological events, including
droughts, earthquakes, tsunamis, or other occurrences, such as the drought that occurred in Taiwan in 2021, that could disrupt operations,
resulting in increased costs, or disruptions to our or our suppliers’ or customers’ manufacturing operations. In addition, our suppliers andcustomers also have operations in such locations. Other events, including political or public health crises, such as an outbreak of contagious
diseases like COVID-19, SARS-CoV, avian and swine influenza, measles, or Ebola, may also affect our production capabilities or that of our
suppliers, including as a result of quarantines, closures of production facilities, lack of supplies, or delays caused by restrictions on travel orshipping. For example, since the start of the COVID-19 pandemic, some of our facilities and some of our subcontractors’ facilities at times
have been required to operate at reduced staffing and capacity levels due to COVID-19 quarantines and other public health protocols, which
temporarily reduced output levels from those facilities. In addition, climate change may pose physical risks to our manufacturing facilities or
our suppliers’ facilities, including increased extreme weather events that could result in supply delays or disruptions. The events noted above
have occurred from time to time and may occur in the future. As a result, in addition to disruptions to operations, our insurance premiums
may increase or we may not be able to fully recover any sustained losses through insurance.

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If production is disrupted for any reason, manufacturing yields may be adversely affected, or we may be unable to meet our customers’
requirements and they may purchase products from other suppliers. This could result in a significant increase in manufacturing costs, loss ofrevenue, or damage to customer relationships, any of which could have a material adverse effect on our business, results of operations, or
financial condition.
Breaches of our security systems or products, or those of our customers, suppliers, or business partners, could expose us tolosses.
We maintain a system of controls over the physical security of our facilities. We also manage and store various proprietary information andsensitive or confidential data relating to our operations. In addition, we process, store, and transmit large amounts of data relating to ourcustomers and employees, including sensitive personal information. Unauthorized persons or employees may gain access to our facilities or
network systems to steal trade secrets or other proprietary information, compromise confidential information, create system disruptions, orcause shutdowns. Through cyberattacks of varying degrees on technology infrastructure and systems, unauthorized parties may obtain
access to computer systems, networks, and data, including cloud-based platforms. The technology infrastructure and systems of our
suppliers, vendors, service providers, cloud solution providers, and partners have in the past experienced, and may in the future experience,such attacks, which could impact our operations. Cyberattacks can include ransomware, computer denial-of-service attacks, worms, supply
chain attacks, social engineering, and other malicious software programs or other attacks, including those using techniques that change
frequently or may be disguised or difficult to detect, or designed to remain dormant until a triggering event, impersonation of authorizedusers, and efforts to discover and exploit any design flaws, “bugs,” security vulnerabilities, as well as intentional or unintentional acts byemployees or other insiders with access privileges. Globally, cyberattacks are increasing in number and the attackers are increasingly
organized and well-financed, or supported by state actors, and are developing increasingly sophisticated systems to not only attack, but also
to evade detection. In addition, geopolitical tensions or conflicts, such as Russia’s invasion of Ukraine, may create a heightened risk ofcyberattacks. Breaches of our physical security, attacks on our network systems, or breaches or attacks on our customers, suppliers, orbusiness partners who have confidential or sensitive information regarding us and our customers and suppliers, could result in significant
losses and damage our reputation with customers and suppliers and may expose us to litigation if the confidential information of ourcustomers, suppliers, or employees is compromised.
Our products are also targets for cyberattacks, including those products utilized in cloud-based environments. While some of our products
contain encryption or security algorithms to protect third-party content or user-generated data stored on our products, these products could
still be hacked or the encryption schemes could be compromised, breached, or circumvented by motivated and sophisticated attackers.
Further, our products contain sophisticated hardware and firmware and applications that may contain security vulnerabilities or defects indesign or manufacture, including “bugs” and other problems that could interfere with the intended operation of our products. To the extent our
products are hacked, or the encryption schemes are compromised or breached, this could harm our business by requiring us to employ
additional resources to fix the errors or defects, exposing us to litigation, claims, and harm to our reputation.
Any of the foregoing cybersecurity risks could have a material adverse effect on our business, results of operations, or financial condition.
We must attract, retain, and motivate highly skilled employees.
To remain competitive, we must attract, retain, and motivate executives and other highly skilled, diverse employees, as well as effectively
manage or plan for succession for key employees. Competition for experienced employees in our industry continues to be intense. Hiring andretaining qualified executives, engineers, technical staff, sales representatives, and other employees is critical to our business. If other
employers are perceived as offering a greater degree of workplace flexibility, greater compensation, or other employment benefits toemployees than us, we may experience difficulty in attracting, retaining, and motivating the employees needed for our business operations. If
our total compensation programs and workplace culture cease to be viewed as competitive and inclusive, our ability to attract, retain, andmotivate employees could be compromised.

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Like many others in our industry, we are experiencing an increase in undesired attrition and increasing compensation costs due to a variety
of factors that are influencing a very tight labor market and competition for talent across our industry. To the extent we experience significant
attrition and are unable to timely replace employees, we could experience a loss of critical skills and reduced employee morale, potentiallyresulting in business disruptions or increased expenses to address any disruptions. Additionally, changes to immigration policies in the
numerous countries in which we operate, including the United States, as well as restrictions on global travel as a result of local or global
public health crises requiring quarantines, lockdowns, or other precautions to limit exposure to infectious diseases, may limit our ability to hire
and/or retain talent in, or transfer talent to, specific locations.
Our inability to attract, retain, and motivate executives and other employees or effectively manage or plan for succession of key roles may
inhibit our ability to maintain or expand our business operations.
Our incentives from various governments are conditional upon achieving or maintaining certain performance obligations and are
subject to reduction, termination, or clawback.
We have received, and may in the future continue to receive, benefits and incentives from national, state, and local governments in various
regions of the world designed to encourage us to establish, maintain, or increase investment, workforce, or production in those regions.
These incentives may take various forms, including grants, loan subsidies, and tax arrangements, and typically require us to perform or
maintain certain levels of investment, capital spending, employment, technology deployment, or research and development activities toqualify for such incentives. We may be unable to obtain significant future incentives to continue to fund a portion of our capital expendituresand operating costs, without which our cost structure would be adversely impacted. We also cannot guarantee that we will successfully
achieve performance obligations required to qualify for these incentives or that the granting agencies will provide such funding. These
incentive arrangements typically provide the granting agencies with rights to audit our compliance with their terms and obligations. Suchaudits could result in modifications to, or termination of, the applicable incentive program. The incentives we receive could be subject toreduction, termination, or clawback, and any decrease or clawback of government incentives could have a material adverse effect on ourbusiness, results of operations, or financial condition.
We may make future acquisitions and/or alliances, which involve numerous risks.
Acquisitions and the formation or operation of alliances, such as joint ventures and other partnering arrangements, involve numerous risks,
including the following:
•
•
•
•
•
•
•
•
•
•
•
•
•

integrating the operations, technologies, and products of acquired or newly formed entities into our operations;increasing capital expenditures to upgrade and maintain facilities;
increased debt levels;
the assumption of unknown or underestimated liabilities;
the use of cash to finance a transaction, which may reduce the availability of cash to fund working capital, capital expenditures, R&D
expenditures, and other business activities;
diverting management’s attention from daily operations;managing larger or more complex operations and facilities and employees in separate and diverse geographic areas;hiring and retaining key employees;
requirements imposed by government authorities in connection with the regulatory review of a transaction, which may include,
among other things, divestitures or restrictions on the conduct of our business or the acquired business;inability to realize synergies or other expected benefits;
failure to maintain customer, vendor, and other relationships;
inadequacy or ineffectiveness of an acquired company’s internal financial controls, disclosure controls and procedures, complianceprograms, and/or environmental, health and safety, anti-corruption, human resource, or other policies or practices; andimpairment of acquired intangible assets, goodwill, or other assets as a result of changing business conditions, technologicaladvancements, or worse-than-expected performance of the acquired business.

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The global memory and storage industry has experienced consolidation and may continue to consolidate. We engage, from time to time, indiscussions regarding potential acquisitions and similar opportunities. To the extent we are successful in completing any such transactions,
we could be subject to some or all of the risks described above, including the risks pertaining to funding, assumption of liabilities, integration
challenges, and increases in debt that may accompany such transactions. Acquisitions of, or alliances with, technology companies are
inherently risky and may not be successful and could have a material adverse effect on our business, results of operations, or financial
condition.
We may incur restructure charges in future periods and may not realize expected savings or other benefits from restructure
activities.
From time to time, we have, and may in the future, enter into restructure initiatives in order to, among other items, streamline our operations,
respond to changes in business conditions, our markets, or product offerings, or to centralize certain key functions. We may not realize
expected savings or other benefits from our restructure activities and may incur additional restructure charges or other losses in future
periods associated with other initiatives. For example, we recognized significant restructure charges in connection with the sale of our Lehi
facility. See “Part I. Financial Information – Item 1. Financial Statements – Notes to Consolidated Financial Statements – Lehi, Utah Fab and3D XPoint.” In connection with any restructure initiatives, we could incur restructure charges, loss of production output, loss of key personnel,
disruptions in our operations, and difficulties in the timely delivery of products, which could have a material adverse effect on our business,
results of operations, or financial condition.
Compliance with responsible sourcing requirements and any related regulations could increase our operating costs, or limit the
supply and increase the cost of certain materials, supplies, and services, and if we fail to comply, customers may reducepurchases from us or disqualify us as a supplier.
We and many of our customers have adopted responsible sourcing programs that require us to meet certain environmental, social, andgovernance criteria, and to periodically report on our performance against these requirements, including that we source the materials,
supplies, and services we use and incorporate into the products we sell as prescribed by these programs. Many customer programs require
us to remove a supplier within a prescribed period if such supplier ceases to comply with prescribed criteria, and our supply chain may at any
time contain suppliers at risk of being removed due to non-compliance with responsible sourcing requirements. Some of our customers may
elect to disqualify us as a supplier (resulting in a permanent or temporary loss of sales to such customer) or reduce purchases from us if weare unable to verify that our performance or products (including the underlying supply chain) meet the specifications of our customers’
responsible sourcing programs on a continuous basis. Meeting responsible sourcing requirements may increase operating requirements andcosts or limit the sourcing and availability of some of the materials, supplies, and services we use, particularly when the availability of suchmaterials, supplies, and services is concentrated to a limited number of suppliers. From time to time we remove suppliers or require our
suppliers to remove suppliers from their supply chains based on our responsible sourcing requirements or customer requirements, and we or
our suppliers may be unable to replace such removed suppliers in a timely or cost effective manner. Any inability to replace removed
suppliers in a timely or cost effective manner may affect our ability and/or the cost to obtain sufficient quantities of materials, supplies, andservices necessary for the manufacture of our products. Our inability to replace suppliers we have removed in a timely or cost effective
manner or comply with customers’ responsible sourcing requirements or with any related regulations could have a material adverse effect on
our business, results of operations, or financial condition.
A downturn in the worldwide economy may harm our business.
Downturns in the worldwide economy, due to inflation, geopolitics, public health crises, or other factors, have harmed our business in the pastand future downturns could also adversely affect our business. Adverse economic conditions affect demand for devices that incorporate our
products, such as personal computers, smartphones, automobiles, and servers. Reduced demand for these or other products could result insignificant decreases in our average selling prices and product sales. In addition, to the extent our customers or distributors have elevatedinventory levels, we may experience a decrease in short-term and/or long-term demand and/or pricing for our products.

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A deterioration of conditions in worldwide credit markets could limit our ability to obtain external financing to fund our operations and capital
expenditures. In addition, we may experience losses on our holdings of cash and investments due to failures of financial institutions andother parties. Difficult economic conditions may also result in a higher rate of losses on our accounts receivable due to credit defaults. As aresult, downturns in the worldwide economy could have a material adverse effect on our business, results of operations, or financial
condition.

Risks Related to Intellectual Property and Litigation
We may be unable to protect our intellectual property or retain key employees who are knowledgeable of and develop our
intellectual property.
We maintain a system of controls over our intellectual property, including U.S. and foreign patents, trademarks, copyrights, trade secrets,
licensing arrangements, confidentiality procedures, non-disclosure agreements with employees, consultants, and vendors, and a generalsystem of internal controls. Despite our system of controls over our intellectual property, it may be possible for our current or futurecompetitors to obtain, copy, use, or disclose, illegally or otherwise, our product and process technology or other proprietary information. The
laws of some foreign countries may not protect our intellectual property to the same degree as do U.S. laws, and our confidentiality, nondisclosure, and non-compete agreements may be unenforceable or difficult and costly to enforce.
Additionally, our ability to maintain and develop intellectual property is dependent upon our ability to attract, develop, and retain highly skilledemployees. Global competition for such skilled employees in our industry is intense. A decline in our operating results and/or stock price may
adversely affect our ability to retain key employees whose compensation is dependent, in part, upon the market price of our common stock,achieving certain performance metrics, levels of company profitability, or other financial or company-wide performance. If our competitors or
future entrants into our industry are successful in hiring our employees, they may directly benefit from the knowledge these employees
gained while they were under our employment.
Our inability to protect our intellectual property or retain key employees who are knowledgeable of and develop our intellectual property could
have a material adverse effect on our business, results of operations, or financial condition.
Legal proceedings and claims could have a material adverse effect on our business, results of operations, or financial condition.
From time to time we are subject to various legal proceedings and claims that arise out of the ordinary conduct of our business or otherwise,both domestically and internationally. See “Part I. Financial Information – Item 1. Financial Statements – Notes to Consolidated Financial
Statements – Contingencies.” Any claim, with or without merit, could result in significant legal fees that could negatively impact our financial
results, disrupt our operations, and require significant attention from our management. We may be associated with and subject to litigation,
claims, or arbitration disputes arising from, or as a result of:••••our relationships with vendors or customers, supply agreements, or contractual obligations with our subcontractors or business
partners;
the actions of our vendors, subcontractors, or business partners;
our indemnification obligations, including obligations to defend our customers against third-party claims asserting infringement ofcertain intellectual property rights, which may include patents, trademarks, copyrights, or trade secrets; andthe terms of our product warranties or from product liability claims.

As we continue to focus on developing system solutions with manufacturers of consumer products, including autonomous driving, augmented
reality, and others, we may be exposed to greater potential for personal liability claims against us as a result of consumers’ use of those
products. We, our officers, or our directors could also be subject to claims of alleged violations of securities laws. There can be no assurance
that we are adequately insured to protect against all claims and potential liabilities, and we may elect to self-insure with respect to certain
matters. Exposures to various legal proceedings and claims could lead to significant costs and expenses as we defend claims, are required
to pay damage awards, or enter into settlement agreements, any of which could have a material adverse effect on our business, results ofoperations, or financial condition.

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We are subject to allegations of anticompetitive conduct.
On April 27, 2018, a complaint was filed against Micron and other DRAM suppliers in the U.S. District Court for the Northern District ofCalifornia. Subsequently, two substantially identical cases were filed in the same court. The lawsuits purported to be on behalf of anationwide class of indirect purchasers of DRAM products. On September 3, 2019, the District Court granted Micron’s motion to dismiss andallowed the plaintiffs the opportunity to file a consolidated, amended complaint. On October 28, 2019, the plaintiffs filed a consolidated,
amended complaint that purported to be on behalf of a nationwide class of indirect purchasers of DRAM products. The amended complaint
asserted claims based on alleged price-fixing of DRAM products under federal and state law during the period from June 1, 2016 to at least
February 1, 2018, and sought treble monetary damages, costs, interest, attorneys’ fees, and other injunctive and equitable relief. On
December 21, 2020, the District Court dismissed the plaintiffs’ claims and entered judgment against them. On January 19, 2021, the plaintiffs
filed a notice of appeal to the U.S. Court of Appeals for the Ninth Circuit. On March 7, 2022, the Court of Appeals affirmed the District Court’s
ruling dismissing the plaintiffs’ claims. On May 3, 2021, several plaintiffs filed a substantially identical complaint in the U.S. District Court for
the Northern District of California purportedly on behalf of a nationwide class of indirect purchasers of DRAM products. On July 19, 2021, theDistrict Court dismissed the May 3, 2021 complaint pursuant to an agreement between the plaintiffs and Micron providing that the plaintiffs
could refile the complaint if the District Court’s December 21, 2020 dismissal order had not been affirmed on appeal.
On June 26, 2018, a complaint was filed against Micron and other DRAM suppliers in the U.S. District Court for the Northern District ofCalifornia. Subsequently, four substantially identical cases were filed in the same court. On October 28, 2019, the plaintiffs filed aconsolidated, amended complaint. The consolidated complaint purported to be on behalf of a nationwide class of direct purchasers of DRAM
products. The consolidated complaint asserted claims based on alleged price-fixing of DRAM products under federal and state law during theperiod from June 1, 2016 through at least February 1, 2018, and sought treble monetary damages, costs, interest, attorneys’ fees, and otherinjunctive and equitable relief. On December 21, 2020, the District Court granted Micron’s motion to dismiss and granted the plaintiffs
permission to file a further amended complaint. On January 11, 2021, the plaintiffs filed a further amended complaint asserting substantiallythe same claims and seeking the same relief. On September 3, 2021, the District Court granted Micron’s motion to dismiss the further
amended complaint with prejudice. On October 1, 2021, the plaintiffs filed a notice of appeal to the U.S. Court of Appeals for the Ninth
Circuit.
Additionally, six cases have been filed in the following Canadian courts: Superior Court of Quebec, the Federal Court of Canada, the Ontario
Superior Court of Justice, and the Supreme Court of British Columbia. The substantive allegations in these cases are similar to those
asserted in the cases filed in the United States.
On May 15, 2018, the Chinese State Administration for Market Regulation (“SAMR”) notified Micron that it was investigating potential
collusion and other anticompetitive conduct by DRAM suppliers in China. On May 31, 2018, SAMR made unannounced visits to our sales
offices in Beijing, Shanghai, and Shenzhen to seek certain information as part of its investigation. We are cooperating with SAMR in its
investigation.
We are unable to predict the outcome of these matters and therefore cannot estimate the range of possible loss. The final resolution of thesematters could result in significant liability and could have a material adverse effect on our business, results of operations, or financial
condition.
Claims that our products or manufacturing processes infringe or otherwise violate the intellectual property rights of others, or
failure to obtain or renew license agreements covering such intellectual property, could materially adversely affect our business,
results of operations, or financial condition.
As is typical in the semiconductor and other high technology industries, from time to time others have asserted, and may in the future assert,
that our products or manufacturing processes infringe upon, misappropriate, misuse, or otherwise violate their intellectual property rights. We
are unable to predict the outcome of these assertions made against us. Any of these types of claims, regardless of the merits, could subject
us to significant costs to defend or resolve such claims and may consume a substantial portion of management’s time and attention. As aresult of these claims, we may be required to:••

pay significant monetary damages, fines, royalties, or penalties;
enter into license or settlement agreements covering such intellectual property rights;

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make material changes to or redesign our products and/or manufacturing processes; and/or
cease manufacturing, having made, selling, offering for sale, importing, marketing, or using products and/or manufacturing processes
in certain jurisdictions.

We may not be able to take any of the actions described above on commercially reasonable terms and any of the foregoing results could
have a material adverse effect on our business, results of operations, or financial condition. See “Part I. Financial Information – Item 1.
Financial Statements – Notes to Consolidated Financial Statements – Contingencies.”
We have a number of intellectual property license agreements. Some of these license agreements require us to make one-time or periodic
payments. We may need to obtain additional licenses or renew existing license agreements in the future. We are unable to predict whether
these license agreements can be obtained or renewed on terms acceptable to us. The failure to obtain or renew licenses as necessary could
have a material adverse effect on our business, results of operations, or financial condition.
We have been served with complaints in Chinese courts alleging patent infringement.
We have been served with complaints in Chinese courts alleging that we infringe certain Chinese patents by manufacturing and sellingcertain products in China. The complaints seek orders requiring us to destroy inventory of the accused products and equipment for
manufacturing the accused products in China; to stop manufacturing, using, selling, and offering for sale the accused products in China; andto pay damages plus court fees.
We are unable to predict the outcome of these assertions of infringement made against us and cannot make a reasonable estimate of thepotential loss or range of possible losses. A determination that our products or manufacturing processes infringe the intellectual property
rights of others or entering into a license agreement covering such intellectual property could result in significant liability and/or require us tomake material changes to our operations in China, products, and/or manufacturing processes. Any of the foregoing could have a material
adverse effect on our business, results of operations, or financial condition. See “Part I. Financial Information – Item 1. Financial Statements– Notes to Consolidated Financial Statements – Contingencies.”
The acquisition of our ownership interest in Inotera from Qimonda AG (“Qimonda”) has been challenged by the administrator of
the insolvency proceedings for Qimonda.
In January 2011, Dr. Michael Jaffé, administrator for Qimonda’s insolvency proceedings, filed suit against Micron and Micron Semiconductor
B.V. (“Micron B.V.”), in the District Court of Munich, Civil Chamber. The complaint seeks to void a share purchase agreement between Micron
B.V. and Qimonda signed in 2008, pursuant to which Micron B.V. purchased substantially all of Qimonda’s shares of Inotera, representing
approximately 18% of Inotera’s outstanding shares at that time, and seeks an order requiring us to re-transfer those shares to the Qimonda
estate. The complaint also seeks, among other things, to recover damages for the alleged value of the joint venture relationship with Inotera
and to terminate a patent cross-license between us and Qimonda entered into at the same time as the share purchase agreement. See “PartI. Financial Information – Item 1. Financial Statements – Notes to Consolidated Financial Statements – Contingencies” for further information
regarding the matter.
We are unable to predict the outcome of the matter and cannot make a reasonable estimate of the potential loss or range of possible losses.
The final resolution of this lawsuit could result in the loss of the Inotera shares or monetary damages, unspecified damages based on thebenefits derived by Micron B.V. from the ownership of the Inotera shares, and/or the termination of the patent cross-license, which could
have a material adverse effect on our business, results of operations, or financial condition.

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Risks Related to Laws and Regulations
Increases in tariffs or other trade restrictions or taxes on our or our customers’ products or equipment and supplies could have an
adverse impact on our operations.
In 2021, 89% of our revenue was from products shipped to customer locations outside the United States. We also purchase a significant
portion of equipment and supplies from suppliers outside the United States. Additionally, a significant portion of our facilities are locatedoutside the United States, including in Taiwan, Singapore, Japan, Malaysia, and China.
The United States and other countries have levied tariffs and taxes on certain goods. General trade tensions between the United States andChina have been escalating, with U.S. tariffs on Chinese goods and retaliatory Chinese tariffs on U.S. goods. Some of our products areincluded in these tariffs. Higher duties on existing tariffs and further rounds of tariffs have been announced or threatened by U.S. andChinese leaders. Additionally, the United States has threatened to impose tariffs on goods imported from other countries, which could also
impact certain of our customers’ or our operations. If the United States were to impose current or additional tariffs on components that we or
our suppliers source, our cost for such components would increase. We may also incur increases in manufacturing costs and supply chain
risks due to our efforts to mitigate the impact of tariffs on our customers and our operations. Additionally, tariffs on our customers’ products
could impact their sales of such end products, resulting in lower demand for our products.
We cannot predict what further actions may ultimately be taken with respect to tariffs or trade relations between the United States and othercountries, what products may be subject to such actions, or what actions may be taken by other countries in retaliation. Further changes intrade policy, tariffs, additional taxes, restrictions on exports or other trade barriers, or restrictions on supplies, equipment, and raw materials
including rare earth minerals, may limit our ability to produce products, increase our selling and/or manufacturing costs, decrease margins,
reduce the competitiveness of our products, or inhibit our ability to sell products or purchase necessary equipment and supplies, which could
have a material adverse effect on our business, results of operations, or financial condition.
Trade regulations have restricted our ability to sell our products to several customers, could restrict our ability to sell our products
to other customers or in certain markets, or could otherwise restrict our ability to conduct operations.
International trade disputes have led, and may continue to lead, to new and increasing trade barriers and other protectionist measures that
can increase our manufacturing costs, make our products less competitive, reduce demand for our products, limit our ability to sell to certain
customers or markets, limit our ability to procure components or raw materials, impede or slow the movement of our goods across borders,
impede our ability to perform R&D activities, or otherwise restrict our ability to conduct operations. Increasing protectionism, economic
nationalism, and national security concerns may lead to further changes in trade policy, domestic sourcing initiatives, or other formal andinformal measures that could make it more difficult to sell our products in, or restrict our access to, some markets and/or customers.
Escalating tensions between the United States and China have led to increased trade restrictions and have affected customer ordering
patterns. For example, the U.S. Bureau of Industry and Security (“BIS”) enacted broad trade restrictions with respect to Huawei that prevent
us and many other companies from shipping products to Huawei. We cannot predict whether the BIS or other U.S. or foreign government
entities will enact similar restrictions with respect to other customers, markets, or products. We may not be able to replace the lost revenue
opportunities associated with such restrictions.
The United States has also imposed other restrictions on the export of U.S. regulated products and technology to certain Chinese technology
companies, including certain of our customers. These restrictions reduced our sales to those customers, and continuing or future restrictions
could adversely affect our financial results, result in reputational harm to us due to our relationship with such companies, or lead suchcompanies to develop or adopt technologies that compete with our products. It is difficult to predict what further trade-related actions
governments may take, and we may be unable to quickly and effectively react to such actions. For example, U.S. legislation has expanded
the power of the U.S. Department of Commerce to restrict the export of “emerging and foundational technologies” yet to be identified, which
could impact our current or future products.

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Trade disputes and protectionist measures, or continued uncertainty about such matters, could result in declining consumer confidence andslowing economic growth or recession, and could cause our customers to reduce, cancel, or alter the timing of their purchases with us.
Sustained trade tensions could lead to long-term changes in global trade and technology supply chains, which could adversely affect ourbusiness and growth prospects. Trade restrictions that may be imposed by the United States, China, or other countries may impact ourbusiness in ways we cannot reasonably quantify, including that some of our customers’ products which incorporate our solutions may also be
impacted. In addition, further increases in trade restrictions or barriers may negatively impact our revenue, and any licenses we havereceived or could receive in the future could be rendered ineffective. Any such changes may have an adverse effect on our business, resultsof operations, or financial condition.
The technology industry is subject to intense media, political, and regulatory scrutiny, which can increase our exposure to government
investigations, legal actions, and penalties. Although we have policies, controls, and procedures designed to help ensure compliance withapplicable laws, there can be no assurance that our employees, contractors, suppliers, or agents will not violate such laws or our policies.
Violations of trade laws, restrictions, or regulations can result in fines; criminal sanctions against us or our officers, directors, or employees;
prohibitions on the conduct of our business; and damage to our reputation.
We may incur additional tax expense or become subject to additional tax exposure.
We operate in a number of jurisdictions outside the United States, including Singapore, where we have tax incentive arrangements that areconditional, in part, upon meeting certain business operations and employment thresholds. Our domestic and international taxes are
dependent upon the geographic mix of our earnings among these jurisdictions. Our provision for income taxes and cash tax liabilities in the
future could be adversely affected by numerous factors, including mandatory capitalization of R&D expenses beginning in 2023, challenges
by tax authorities to our tax positions and intercompany transfer pricing arrangements, failure to meet performance obligations with respect to
tax incentive agreements, expanding our operations in various countries, and changes in tax laws and regulations. Additionally, we fileincome tax returns with the U.S. federal government, various U.S. states, and various other jurisdictions throughout the world and certain tax
returns may remain open to examination for several years. The results of audits and examinations of previously filed tax returns andcontinuing assessments of our tax exposures may have an adverse effect on our provision for income taxes and cash tax liability. The
foregoing items could have a material adverse effect on our business, results of operations, or financial condition.
A change in tax laws in key jurisdictions could materially increase our tax expense.
We are subject to income taxes in the United States and many foreign jurisdictions. Changes to income tax laws and regulations, or theinterpretation of such laws, in any of the jurisdictions in which we operate could significantly increase our effective tax rate and ultimately
reduce our cash flows from operating activities and otherwise have a material adverse effect on our financial condition. For example, oureffective tax rate increased from 1.2% for 2018 to 9.8% for 2019 primarily as a result of tax reform by the United States. Additionally, various
levels of government are increasingly focused on tax reform and other legislative actions to increase tax revenue. The United States
government is considering various tax reform proposals that, if enacted, contain provisions that could increase our tax expense. Further
changes in the tax laws of foreign jurisdictions could arise as a result of the base erosion and profit shifting project undertaken by theOrganisation for Economic Co-operation and Development, which represents a coalition of member countries and recommended changes tonumerous long-standing tax principles. If implemented by taxing authorities, such changes, as well as changes in U.S. federal and state tax
laws or in taxing jurisdictions’ administrative interpretations, decisions, policies, and positions, could have a material adverse effect on ourbusiness, results of operations, or financial condition.
We and others are subject to a variety of laws, regulations, or industry standards, including with respect to environmental, social,and governance considerations, that may have a material adverse effect on our business, results of operations, or financial
condition.
The manufacturing of our products requires the use of facilities, equipment, and materials that are subject to a broad array of laws andregulations in numerous jurisdictions in which we operate. Additionally, we are subject to a variety of other laws and regulations relative to theconstruction, maintenance, and operations of our facilities. Any changes in laws, regulations, or industry standards could cause us to incur
additional direct costs, as well as increased indirect costs related to our relationships with our customers and suppliers, and otherwise harm
our53Table of Contents

operations and financial condition. Any failure to comply with laws, regulations, or industry standards could adversely impact our reputationand our financial results. Additionally, we engage various third parties as sales channel partners or to represent us or otherwise act on ourbehalf who are also subject to a broad array of laws, regulations, and industry standards. Our engagement with these third parties may also
expose us to risks associated with their respective compliance with laws and regulations.
New environmental, social, and governance considerations, including those related to climate change and the potential resulting
environmental impact, may result in new laws, regulations, or industry standards that may affect us, our suppliers, and our customers. Suchlaws, regulations, or industry standards could cause us to incur additional direct costs for compliance, as well as increased indirect costs
resulting from our customers, suppliers, or both incurring additional compliance costs that are passed on to us. These costs may adversely
impact our results of operations and financial condition.
As a result of the items detailed in this risk factor, we could experience the following:
•
•
•
•
•

suspension of production or sales of our products;
remediation costs;
alteration of our manufacturing processes;
regulatory penalties, fines, and legal liabilities; andreputational challenges.

Compliance with, or our failure, or the failure of our third-party sales channel partners or agents, to comply with, laws, regulations, or industry
standards could have a material adverse effect on our business, results of operations, or financial condition.

Risks Related to Capitalization and Financial Markets
We may be unable to generate sufficient cash flows or obtain access to external financing necessary to fund our operations, makescheduled debt payments, pay our dividend, and make adequate capital investments.
Our cash flows from operations depend primarily on the volume of semiconductor memory and storage products sold, average selling prices,and manufacturing costs. To develop new product and process technology, support future growth, achieve operating efficiencies, andmaintain product quality, we must make significant capital investments in manufacturing technology, capital equipment, facilities, R&D, andproduct and process technology.
We estimate capital expenditures in 2022 for property, plant, and equipment, net of partner contributions, will be between approximately $11
billion and $12 billion. Investments in capital expenditures may not generate expected returns or cash flows. In addition, we invest our capitalin areas that we believe best align with our business strategy and will yield future profitability. Significant judgment is required to determine
which capital investments will result in optimal returns, and we could invest in projects that are ultimately less profitable than those projects
we do not select. Delays in completion and ramping of new production facilities, or failure to optimize our investment choices, could
significantly impact our ability to realize expected returns on our capital expenditures, which could have a material adverse effect on ourbusiness, results of operations, or financial condition.
In the past we have utilized external sources of financing when needed. As a result of our debt levels, expected debt amortization, andgeneral economic conditions, it may be difficult for us to obtain financing on terms acceptable to us or at all. We have experienced volatility in
our cash flows and operating results and may continue to experience such volatility in the future, which may negatively affect our credit
rating. Our credit rating may also be affected by our liquidity, financial results, economic risk, or other factors, which may increase the cost of
future borrowings and make it difficult for us to obtain financing on terms acceptable to us or at all. There can be no assurance that we will beable to generate sufficient cash flows, access capital or credit markets, or find other sources of financing to fund our operations, make debt
payments, pay our quarterly dividend, and make adequate capital investments to remain competitive in terms of technology development andcost efficiency. Our inability to do any of the foregoing could have a material adverse effect on our business, results of operations, or financial
condition.

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Debt obligations could adversely affect our financial condition.
We have incurred in the past, and expect to incur in the future, debt to finance our capital investments, business acquisitions, and restructureof our capital structure. As of March 3, 2022 we had debt with a carrying value of $7.08 billion and $2.50 billion of our Revolving Credit
Facility was available to us. Our debt obligations could adversely impact us as follows:
•
•
•
•
•
•
•

require us to use a large portion of our cash flow to pay principal and interest on debt, which will reduce the amount of cash flow
available to fund working capital, capital expenditures, acquisitions, R&D expenditures, payment of dividends, and other businessactivities;
result in certain of our debt instruments being accelerated to be immediately due and payable or being deemed to be in default if
certain terms of default are triggered, such as applicable cross payment default and/or cross-acceleration provisions;adversely impact our credit rating, which could increase future borrowing costs;
limit our future ability to raise funds for capital expenditures, strategic acquisitions or business opportunities, R&D, and other general
corporate requirements;
restrict our ability to incur specified indebtedness, create or incur certain liens, and enter into sale-leaseback financing transactions;increase our vulnerability to adverse economic and semiconductor memory and storage industry conditions; andincrease our exposure to interest rate risk from variable rate indebtedness.

Our ability to meet our payment obligations under our debt instruments depends on our ability to generate significant cash flows or obtain
external financing in the future. This, to some extent, is subject to market, economic, financial, competitive, legislative, and regulatory factors
as well as other factors that are beyond our control. There can be no assurance that our business will generate cash flow from operations, orthat additional capital will be available to us, in amounts sufficient to enable us to meet our debt payment obligations and to fund otherliquidity needs. Additionally, events and circumstances may occur which would cause us to not be able to satisfy applicable draw-down
conditions and utilize our Revolving Credit Facility. If we are unable to generate sufficient cash flows to service our debt payment obligations,
we may need to refinance or restructure our debt, sell assets, reduce or delay capital investments, or seek to raise additional capital. If weare unable to implement one or more of these alternatives, we may be unable to meet our debt payment obligations, which could have amaterial adverse effect on our business, results of operations, or financial condition.
Changes in foreign currency exchange rates could materially adversely affect our business, results of operations, or financial
condition.
Across our global operations, significant transactions and balances are denominated in currencies other than the U.S. dollar (our reporting
currency), primarily the euro, Malaysian ringgit, Singapore dollar, New Taiwan dollar, and yen. In addition, a significant portion of ourmanufacturing costs are denominated in foreign currencies. Exchange rates for some of these currencies against the U.S. dollar have beenvolatile and may be volatile in future periods. If these currencies strengthen against the U.S. dollar, our manufacturing costs could
significantly increase. Exchange rates for the U.S. dollar that adversely change against our foreign currency exposures could have a material
adverse effect on our business, results of operations, or financial condition.
We are subject to counterparty default risks.
We have numerous arrangements with financial institutions that subject us to counterparty default risks, including cash deposits,
investments, and derivative instruments. Additionally, we are subject to counterparty default risk from our customers for amounts receivablefrom them. As a result, we are subject to the risk that the counterparty will default on its performance obligations. A counterparty may notcomply with its contractual commitments which could then lead to its defaulting on its obligations with little or no notice to us, which could limit
our ability to mitigate our exposure. Additionally, our ability to mitigate our exposures may be constrained by the terms of our contractual
arrangements or because market conditions prevent us from taking effective action. If one of our counterparties becomes insolvent or files forbankruptcy, our ability to recover any losses suffered as a result of that counterparty’s default may be limited by the liquidity of thecounterparty or the applicable laws governing the bankruptcy proceedings. In the event of such default, we could incur significant losses,
which could have a material adverse effect on our business, results of operations, or financial condition.

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The trading price of our common stock has been and may continue to be volatile.
Our common stock has experienced substantial price volatility in the past and may continue to do so in the future. Additionally, we, thetechnology industry, and the stock market as a whole have on occasion experienced extreme stock price and volume fluctuations that haveaffected stock prices in ways that may have been unrelated to the specific operating performance of individual companies. The trading priceof our common stock may fluctuate widely due to various factors, including, but not limited to, actual or anticipated fluctuations in our financial
condition and operating results, changes in financial estimates by us or financial or other market estimates and ratings by securities andother analysts, changes in our capital structure, including issuance of additional debt or equity to the public, interest rate changes, regulatorychanges, news regarding our products or products of our competitors, and broad market and industry fluctuations.
Our operating results have fluctuated in the past and will continue to do so, sometimes materially. Many of the matters discussed in this Risk
Factors section could impact our operating results in any fiscal quarter or year. If our operating results fall below our forecasts and the
expectations of public market analysts and investors, the trading price of our common stock may decline.
For these reasons, investors should not rely on recent or historical trends to predict future trading prices of our common stock, financial
condition, results of operations, or cash flows. Investors in our common stock may not realize any return on their investment in us and may
lose some or all of their investment. Volatility in the trading price of our common stock could also result in the filing of securities class action
litigation matters, which could result in substantial costs and the diversion of management time and resources.
The amount and frequency of our share repurchases may fluctuate, and we cannot guarantee that we will fully consummate ourshare repurchase authorization, or that it will enhance long-term shareholder value. Share repurchases could also increase thevolatility of the trading price of our stock and will diminish our cash reserves.
The amount, timing, and execution of our share repurchases pursuant to our share repurchase authorization may fluctuate based on ouroperating results, cash flows, and priorities for the use of cash for other purposes. For example, we repurchased 8.4 million shares for $667
million in the first six months of 2022, 15.6 million shares for $1.2 billion in 2021, 3.6 million shares for $176 million in 2020, and 66.4 million
shares for $2.66 billion in 2019. These other purposes include, but are not limited to, operational spending, capital spending, acquisitions,and repayment of debt. Other factors, including changes in tax laws, could also impact our share repurchases. Although our Board of
Directors has authorized share repurchases of up to $10 billion of our outstanding common stock, the authorization does not obligate us torepurchase any common stock.
We cannot guarantee that our share repurchase authorization will be fully consummated or that it will enhance long-term shareholder value.
The repurchase authorization could affect the trading price of our stock and increase volatility, and any announcement of a pause in, or
termination of, this program may result in a decrease in the trading price of our stock. In addition, this program will diminish our cash
reserves.
There can be no assurance that we will continue to declare cash dividends in any particular amounts or at all.
Our Board of Directors has adopted a dividend policy pursuant to which we currently pay a cash dividend on our common shares on aquarterly basis. The declaration and payment of any dividend is subject to the approval of our Board of Directors and our dividend may bediscontinued or reduced at any time. There can be no assurance that we will declare cash dividends in the future in any particular amounts,
or at all.
Future dividends, if any, and their timing and amount, may be affected by, among other factors: our financial condition, results of operations,capital requirements, business conditions, debt service obligations, contractual restrictions, industry practice, legal requirements, regulatory
constraints, and other factors that our Board of Directors may deem relevant. A reduction in or elimination of our dividend payments could
have a negative effect on the trading price of our stock.

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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDSIn May 2018, we announced that our Board of Directors authorized the discretionary repurchase of up to $10 billion of our outstanding
common stock through open-market purchases, block trades, privately-negotiated transactions, derivative transactions, and/or pursuant toRule 10b5-1 trading plans. The repurchase authorization has no expiration date, does not obligate us to acquire any common stock, and issubject to market conditions and our ongoing determination of the best use of available cash.

PeriodDecember 3, 2021 – January 6, 2022
January 7, 2022
– February 3, 2022
February 4, 2022 – March 3, 2022

Total number Averageof shares
price paid
purchased
per share
821,264 $
1,810,240 $2,178,014 $
4,809,518 $

87.67
83.42
84.84
84.79

Total number of sharespurchased as part ofpublicly announcedplans or programs

Approximate dollar value of sharesthat may yet be purchased underpublicly announced plans orprograms (in millions)

821,264
1,810,240
2,178,014
4,809,518$5,296

Shares of common stock withheld as payment of withholding taxes and exercise prices in connection with the vesting or exercise of equity
awards are also treated as common stock repurchases. Those withheld shares of common stock are not required to be disclosed under Item
703 of Regulation S-K and accordingly are excluded from the amounts in the table above.

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ITEM 6. EXHIBITS
Exhibit
Number
31.1
31.2
32.1
32.2
101.INS
101.SCH
101.CAL
101.DEF
101.LAB
101.PRE104

Description of Exhibit
Rule 13a-14(a) Certification of Chief Executive Officer
Rule 13a-14(a) Certification of Interim Chief Financial Officer
Certification of Chief Executive Officer Pursuant to 18 U.S.C. 1350
Certification of Interim Chief Financial Officer Pursuant to 18 U.S.C.
1350
Inline XBRL Instance Document - the instance document does notappear in the Interactive Data File because its XBRL tags areembedded within the Inline XBRL document
Inline XBRL Taxonomy Extension Schema Document
Inline XBRL Taxonomy Extension Calculation Linkbase Document
Inline XBRL Taxonomy Extension Definition Linkbase Document
Inline XBRL Taxonomy Extension Label Linkbase Document
Inline XBRL Taxonomy Extension Presentation Linkbase Document
Cover Page Interactive Data File (formatted as Inline XBRL andcontained in Exhibit 101)

58 | 2022 Q2 10-Q

Filed
Herewith
X
X
X
X
X
X
X
X
X
X
X

Form

PeriodEndingExhibit/Appendix

FilingDate

Table of Contents

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
Micron Technology, Inc.
(Registrant)

Date: March 30, 2022

By:/s/ Sumit Sadana
Sumit Sadana
Executive Vice President, Chief Business Officer and Interim Chief
Financial Officer(Principal Financial Officer)/s/ Scott Allen
Scott Allen
Corporate Vice President and Chief Accounting Officer(Principal Accounting Officer)

59

EXHIBIT 31.1
RULE 13a-14(a) CERTIFICATION OF
CHIEF EXECUTIVE OFFICER
I, Sanjay Mehrotra, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Micron Technology, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to theperiod covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material
respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (asdefined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the period in which this report is being prepared;b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under
our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles;c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about
the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such
evaluation; andd. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's
most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or isreasonably likely to materially affect, the registrant's internal control over financial reporting; and5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalentfunctions):a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; andb. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's
internal control over financial reporting.
Date:

March 30, 2022

/s/ Sanjay Mehrotra
Sanjay Mehrotra
President and Chief Executive Officer and Director

EXHIBIT 31.2
RULE 13a-14(a) CERTIFICATION OF
INTERIM CHIEF FINANCIAL OFFICER
I, Sumit Sadana, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Micron Technology, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to theperiod covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material
respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (asdefined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the period in which this report is being prepared;b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under
our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles;c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about
the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such
evaluation; andd. Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's
most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or isreasonably likely to materially affect, the registrant's internal control over financial reporting; and5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial
reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalentfunctions):a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; andb. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's
internal control over financial reporting.
Date:

March 30, 2022

/s/ Sumit Sadana
Sumit Sadana
Executive Vice President, Chief Business Officer and Interim Chief
Financial Officer

EXHIBIT 32.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. 1350
I, Sanjay Mehrotra, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the
Quarterly Report of Micron Technology, Inc. on Form 10-Q for the period ended March 3, 2022, fully complies with the requirements ofSection 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in the Quarterly Report on Form 10-Q fairly
presents, in all material respects, the financial condition and results of operations of Micron Technology, Inc.
Date:

March 30, 2022

/s/ Sanjay Mehrotra
Sanjay Mehrotra
President and Chief Executive Officer and Director

EXHIBIT 32.2
CERTIFICATION OF INTERIM CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. 1350
I, Sumit Sadana, certify, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the
Quarterly Report of Micron Technology, Inc. on Form 10-Q for the period ended March 3, 2022, fully complies with the requirements ofSection 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in the Quarterly Report on Form 10-Q fairly
presents, in all material respects, the financial condition and results of operations of Micron Technology, Inc.
Date:

March 30, 2022

/s/ Sumit Sadana
Sumit Sadana
Executive Vice President, Chief Business Officer and Interim Chief
Financial Officer