Micron Technology, Inc.
Fiscal Q4 2022 Earnings Call Prepared Remarks

Farhan Ahmad, Vice President, Investor Relations
Thank you, and welcome to Micron Technology's fiscal fourth-quarter 2022 financial conference call. On
the call with me today are Sanjay Mehrotra, our president and CEO, and Mark Murphy, our CFO. Today’s
call is being webcast from our Investor Relations site at investors.micron.com, including audio and slides.
In addition, the press release detailing our quarterly results has been posted on the website, along withthe prepared remarks for this call.
Today’s discussion of financial results is presented on a non-GAAP financial basis unless otherwise
specified. A reconciliation of GAAP to non-GAAP financial measures may be found on our website. We
encourage you to visit our website at micron.com throughout the quarter for the most current
information on the company, including information on financial conferences that we may be attending.
You can also follow us on Twitter at MicronTech.
As a reminder, the matters we are discussing today include forward-looking statements regarding market
demand and supply, our expected results, and other matters. These forward-looking statements are
subject to risks and uncertainties that may cause actual results to differ materially from statements madetoday. We refer you to the documents we file with the SEC, including our most recent Form 10-K and 10Q, for a discussion of risks that may affect our future results. Although we believe that the expectations
reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels ofactivity, performance, or achievements. We are under no duty to update any of the forward-looking
statements to conform these statements to actual results.
I'll now turn the call over to Sanjay.
Sanjay Mehrotra, President and Chief Executive Officer
Thank you, Farhan.
Good afternoon, everyone.
Intro/FQ4 Highlights
Micron delivered record annual revenue in fiscal 2022 with solid profitability and free cash flow despite achallenging environment in the latter part of the year. In 2022, we ramped our industry-leading 1α(1-alpha) DRAM and 176-layer NAND nodes across our portfolio and returned a record amount of cash toshareholders. We strengthened our product portfolio significantly during the year, as evidenced by record
revenue in mobile, auto, industrial, and networking end markets. Our share gains in client and data center© 2022 Micron Technology, Inc.

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Fiscal Q4 2022 Earnings Call Prepared Remarks

SSDs contributed to record revenue in SSDs and also in our consolidated NAND business. We also
ramped new product categories like high-bandwidth HBM2e memory and GDDR6X. In addition, a record
number of customers recognized Micron as the industry leader in product quality.
Our fiscal Q4 financial results were impacted by rapidly weakening consumer demand and significant
customer inventory adjustments across all end markets. We are responding decisively to this weakenvironment by decreasing supply growth through significant cuts to fiscal 2023 capital expenditures(capex) and by reducing utilization in our fabs. We are confident that the memory industry supplydemand balance will be restored as a result of reduced industry supply growth combined with the longterm demand growth drivers for memory. Micron’s technology and manufacturing leadership, deep
customer relationships, diverse product portfolio and strong balance sheet put us on solid footing tonavigate this industry downcycle and position the company for strong long-term growth.
Technology and Operations
Our industry-leading 1α DRAM and 176-layer NAND nodes drove strong cost reductions in fiscal 2022. In
fiscal Q4, we led the industry again in introducing our 232-layer NAND, becoming the first company toenter volume production on a node with more than 200 layers. We also remain on track to begin theramp of our 1ß (1-beta) DRAM node in manufacturing by the end of calendar 2022. Both the 1ß DRAM
node and 232-layer NAND node will provide us with robust cost reduction when they ramp in highvolume.
Greenfield/CHIPS
Artificial intelligence, cloud computing, electric vehicles and the ubiquitous connectivity offered by 5G arestrong long-term demand drivers for memory and storage. As we have discussed previously, to support
memory demand in the second half of the decade and beyond, we will need to add new DRAM wafer
capacity. The recently passed CHIPS and Science Act will help to reduce the memory manufacturing costdisparities that exist between the U.S. and Asia. Following passage of the CHIPS Act, Micron announced
our intent to invest $40 billion through the end of the decade in leading-edge memory manufacturing in
the U.S., contingent on CHIPS Act support. These investments will ultimately create tens of thousands ofAmerican jobs, strengthen U.S. supply chain resiliency, and further diversify our global fab footprint.
Earlier this month, we announced that we have chosen Boise as one of two leading-edge DRAM
manufacturing fab sites that we are planning in the U.S., and we expect to invest approximately $15 billion
at this site through the end of the decade. The co-location of this new manufacturing facility with ourexisting R&D site at our headquarters in Boise provides multiple strategic benefits, including improving
efficiency across both R&D and manufacturing, simplifying technology transfer, and reducing time tomarket for leading-edge products. We will soon announce a second high-volume U.S. DRAM
manufacturing site. These new fabs will fulfill our requirements for additional wafer capacity starting in the© 2022 Micron Technology, Inc.

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Fiscal Q4 2022 Earnings Call Prepared Remarks

second half of the decade and beyond. We plan to build these sites in stages: Tool installation andproduction output will be ramped in line with industry demand growth, which is consistent with our goal
to maintain stable bit supply share as well as supply discipline.
End Markets
Now turning to our end markets.
Micron’s product portfolio has become significantly stronger and contributed to our momentum in themost attractive markets. In fiscal 2022, data center and graphics revenue grew approximately 35% andauto, industrial and networking revenue grew approximately 40%. The combined revenue mix of theseimportant markets grew from approximately 45% of our total revenue in fiscal 2021 to 52% in fiscal 2022,
putting us on track to hit our target of 62% by fiscal 2025, as outlined at our investor day earlier this year.
This portfolio transformation will increase our exposure to the most attractive and stable profit pools in
the industry.
Data CenterIn fiscal Q4, data center revenue was down both sequentially and year over year, driven primarily by
declines in ASP. In fiscal 2022, we set a new revenue record for our cloud revenues, which grew more than
30% year over year. Cloud end demand remains healthy, driven by secular growth in AI and the digital
economy. However, the data center market, including both cloud and enterprise, continues to face some
supply constraints that are limiting server builds, and customers are reducing memory and storage
inventory due to macroeconomic uncertainties. With a diverse set of products across DDR4, DDR5,graphics memory, high-bandwidth memory and data center SSDs, Micron offers a wide portfolio of
solutions targeting this market, with industry-leading quality. Building on our recent momentum of
market share gains in data center SSDs in the first half of calendar 2022, we continue to make solid
progress in ongoing qualifications of our 176-layer NVMe data center SSDs at hyperscalers and OEMs
around the world.
PC
Fiscal Q4 client revenue was down both sequentially and year over year, as PC unit end-demand declined
and customers reduced inventory. We now forecast calendar 2022 PC unit sales to decline by anapproximately mid-teens percentage year over year.
In fiscal Q4, we began ramping 16Gb DDR5 in high-volume production ahead of anticipated client
platform launches. We also commenced volume production of Gen4 QLC NVMe client SSDs and are theonly company with a full portfolio of 176-layer TLC and Gen4 QLC NVMe SSDs qualified and shipping to
PC OEMs.

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Fiscal Q4 2022 Earnings Call Prepared Remarks

Graphics
In fiscal Q4, graphics revenue declined both sequentially and year over year. Micron continues to hold anexcellent position as the performance leader in the graphics market. In fiscal Q4, we began shipping theindustry's fastest graphics memory, with 24Gbps GDDR6X shipping in high-volume production. We are
excited to see our proprietary GDDR6X memory featured in the recent launch of NVIDIA’s GeForce RTX
4090 and 4080 GPUs.
MobileFiscal Q4 mobile revenue declined both sequentially and year over year. Despite the weakness in end unit
sales, we achieved two consecutive years of record mobile revenue in fiscal 2021 and 2022. We now
project calendar 2022 smartphone unit volume to decline by a high single-digit percentage year overyear. 5G continues to drive greater content per device, and we project 5G penetration to exceed 50% of
the smartphone unit total addressable market (TAM) in calendar 2022.
We continued to execute well on our mobile product roadmap. In fiscal Q4, 1α comprised over 70% of our
LPDRAM mobile bit shipments, and 176-layer made up approximately 95% of our mobile NAND bit
shipments.
Auto & Industrial
Micron is exceptionally well-positioned as the leader in automotive and industrial markets, which are
attractive because of strong long-term growth and relatively stable margins.
In fiscal Q4, our automotive business delivered another record revenue quarter, and fiscal 2022 auto
revenues grew 30% year over year, setting a new all-time high. In fiscal Q1, we see some slowdown in our
automotive demand as our customers rebalance DRAM and NAND inventory levels as they deal with nonmemory semiconductor shortages and production challenges. However, we see continued strong growthin our second half of fiscal 2023, with volume ramp of advanced next-generation in-vehicle infotainment
systems as well as the broader adoption of more advanced driver-assistance systems. We are extremely
excited by the long-term prospects for memory and storage in the automotive market and expect longterm CAGR for DRAM and NAND in autos to be at about twice the rate of the overall DRAM and NAND
markets.
While long-term fundamentals remain strong, our industrial IoT business saw sequential and year-overyear revenue declines in fiscal Q4. Softening macroeconomic conditions have led some customers to
reduce overall purchases of DRAM and NAND. Nevertheless, our long-term outlook remains strong forour industrial business, driven by the proliferation of factory automation and digitization.

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Fiscal Q4 2022 Earnings Call Prepared Remarks

Market Outlook
Turning to the market outlook.
The memory and storage industry environment has deteriorated sharply since our last earnings call.
Calendar 2022 industry bit demand growth for DRAM is now expected to be in the low-to-mid singledigit percentage range, and for NAND, slightly higher than 10%. An unprecedented confluence of events
has affected overall demand, including COVID-related lockdowns in China, the Ukraine war, theinflationary environment impacting consumer spending, and the macroeconomic environment influencing
customers’ buying behavior in multiple segments. In addition, inventory adjustments at customers acrossall end markets are also contributing to demand weakness.
These factors are depressing demand for DRAM and NAND to well below end market consumption levels.
We are also seeing an extremely aggressive pricing environment.
Due to the sharp decline in near-term demand, we expect supply growth to be significantly above
demand growth in calendar 2022, contributing to very high supplier inventories for both DRAM and
NAND.
Looking ahead in calendar 2023, while macroeconomic uncertainty is high and visibility is low, we
currently expect demand growth to be closer to the long-term growth rates of both DRAM and NAND,
bouncing back from very weak levels in calendar 2022. We expect the inventory at our customers to
improve in early calendar 2023, causing demand to rebound starting from the second quarter of calendar
2023. We expect calendar 2023 industry DRAM supply to grow well below demand growth. We aremodeling a mid-single-digit percentage growth in DRAM industry supply in 2023, which would represent
the lowest-ever industry supply growth. NAND supply growth in calendar 2023 is also expected to fall
below demand growth.
Given the elevated supplier inventories entering calendar 2023, we expect industry profitability to remainchallenging in 2023. Following a weak first half of fiscal 2023, we expect strong revenue growth in thesecond half of fiscal 2023 as bit demand rebounds, following substantial improvement in customer
inventories.
Projections for long-term demand trends remain strong across multiple end markets. We expect longterm DRAM bit growth to be in the mid-teens percentage, slightly lower than our prior expectation of
mid-to-high teens due to a moderation in expectation of long-term PC unit sales. We continue to expect
the NAND market, which benefits from elasticity, to grow around 28% over the long term.
Turning to our supply: Given the change in market conditions, we have been taking immediate action to
reduce our supply growth trajectory and align it to market demand.

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Fiscal Q4 2022 Earnings Call Prepared Remarks

We made significant reductions to capex and now expect fiscal 2023 capex to be around $8 billion, down
more than 30% year over year. Capex would be lower if it were not for more than doubling ourconstruction capex year over year to support the supply growth required to meet demand for the second
half of this decade as well as investment for EUV (extreme ultraviolet) lithography systems to support 1γ(1-gamma) node development. Wafer fab equipment (WFE) capex will decline nearly 50% year over year
and reflects a much slower ramp of our 1ß DRAM and 232-layer NAND versus prior expectations. Fiscal
2023 WFE capex is focused on developing the technology capability of our leading nodes and new
product introduction. To immediately address our inventory situation and reduce supply growth, we are
reducing utilization in select areas in both DRAM and NAND.
Our capex and utilization actions will have an adverse impact on our fiscal 2023 costs, but they arenecessary to bring our supply and inventory closer to industry demand. We will aim to grow our DRAM
and NAND supply in line with demand over time, while continuing to optimize our costs and portfolio toimprove our profitability.
Before passing it over to Mark, I want to reflect on the tremendous progress that the Micron team has
made over the last few years. Today we are the technology leader in both DRAM and NAND, with a very
competitive cost structure. We have leadership products and a strong portfolio that is transitioning
toward high-value solutions, and we are gaining share in products that represent a more attractive profit
pool in our industry. Our balance sheet is strong and allows us to invest appropriately to maintaintechnology, product and manufacturing leadership going forward. Our world-class quality andmanufacturing expertise is recognized by our customers worldwide. We have delivered record revenues in
multiple end markets in fiscal 2022 while returning record levels of cash to our shareholders. While thenear-term environment is challenging, we are confident in our ability to emerge stronger and deliver
financial performance in line with our long-term financial model. The long-term manufacturing
investments we are making will further strengthen our diversified fab footprint and position us tocapitalize on the exciting long-term opportunities ahead of us.
I will now turn it over to Mark.
Mark Murphy, Executive Vice President and Chief Financial Officer
Thanks, Sanjay.
Opening
Our fiscal Q4 revenues came in consistent with our Aug. 9 update, while earnings per share (EPS) was
within the original guidance range. Fiscal Q4 capped off a strong fiscal year in which we set a record for
total revenue, generated substantial free cash flow, and returned $2.9 billion to shareholders.

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Fiscal Q4 2022 Earnings Call Prepared Remarks

Revenue
Total fiscal Q4 revenue was $6.6 billion, down 23% sequentially and down 20% year over year. Fiscal 2022
total revenue was a record at $30.8 billion, up 11% year over year.
DRAM
Fiscal Q4 DRAM revenue was $4.8 billion, representing 72% of total revenue. DRAM revenue declined 23%
sequentially and was down 21% year over year. Sequentially, bit shipments decreased by roughly 10%
while average selling prices (ASPs) declined in the low-teens percentage range.
For the fiscal year, DRAM revenue increased 12% year over year to $22.4 billion, representing 73% of total
fiscal year revenue.
NAND
Fiscal Q4 NAND revenue was $1.7 billion, representing 25% of Micron’s total revenue. NAND revenue
declined 26% sequentially and was down 14% year over year. Sequential bit shipments declined in thelow-20s percentage range, and ASPs declined in the mid-to-high single-digit percentage range.
For the fiscal year, NAND revenue increased 11% year over year to a record $7.8 billion, representing 25%
of total fiscal year revenue.
Revenue by Business Unit
Turning to our fiscal Q4 revenue trends by business unit.
Revenue for the Compute and Networking Business Unit was $2.9 billion, down 25% sequentially anddown 23% year over year. The sequential decline was primarily driven by client, while declines in server
and graphics were less pronounced. Networking revenue hit a new record in fiscal 2022.
Revenue for the Mobile Business Unit was approximately $1.5 billion, down 23% sequentially and down
20% year over year. Mobile revenue for fiscal 2022 set a new record.
Revenue for the Storage Business Unit was $891 million, down 34% sequentially and down 26% year overyear. For the fiscal year, NAND revenue in the Storage Business Unit was its highest ever, with share gains
in both client and data center SSDs.
Finally, revenue for the Embedded Business Unit was $1.3 billion, down 9% sequentially and down 4% year
over year. For fiscal 2022, the Embedded Business Unit delivered $5.2 billion of revenue supported byrevenue records in automotive and industrial markets.

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Fiscal Q4 2022 Earnings Call Prepared Remarks

Operating Results
Gross Margin
The consolidated gross margin for fiscal Q4 was 40.3%, down approximately seven percentage points
sequentially. Lower pricing was the primary driver of the decline.
For the fiscal year, the consolidated gross margin was 45.9%, up approximately six percentage points year
over year.
Opex
Operating expenses in fiscal Q4 were approximately $1 billion, below the guidance range provided on ourlast earnings call due in part to lower variable compensation in the quarter. Sequentially, opex was up
approximately $60 million due primarily to the timing of technology development spend. For the fiscal
year, operating expenses were $3.8 billion, up approximately $500 million year over year, driven by R&D
to support our product and technology roadmaps.
Operating Income
Fiscal Q4 operating income was $1.7 billion, resulting in an operating margin of 25%, down approximately
11 percentage points sequentially and down 12 points from the prior year.
Fiscal 2022 operating income was $10.3 billion, resulting in an operating margin of 33.4%, up
approximately six percentage points from the prior year.
Fiscal Q4 adjusted EBITDA was $3.6 billion, resulting in an EBITDA margin of 53.5%, down 390 basis points
sequentially. For the fiscal year, adjusted EBITDA was $17.4 billion, resulting in an EBITDA margin of 56.7%.
Taxes
Fiscal Q4 taxes were $74 million or over 4% of pretax income. For fiscal 2022, total taxes were $793 million
or approximately 8% of pretax income.
Earnings Per Share
Non-GAAP earnings per share (EPS) in fiscal Q4 was $1.45, down from $2.59 in fiscal Q3 and $2.42 in the
year-ago quarter.
Non-GAAP EPS was $8.35 for the fiscal year, up from $6.06 in the prior year.

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Fiscal Q4 2022 Earnings Call Prepared Remarks

Operating Cash Flow
Turning to cash flows and capital spending, we generated $3.8 billion in cash from operations in fiscal Q4,
representing 57% of revenue. For the fiscal year, we generated $15.2 billion of cash from operations
representing 49% of revenue.
Capital Allocation
Capital expenditures were $3.6 billion during the quarter and $12 billion for the fiscal year. We generated$196 million of free cash flow in fiscal Q4 and $3.2 billion for the fiscal year. Fiscal 2022 was the sixth
consecutive year of positive free cash flow for Micron.
During the quarter, we completed share repurchases of $784 million or 13.2 million shares. For the fiscal
year, we completed share repurchases of $2.4 billion, representing 35.4 million shares. Including ourdividend payments, we returned $2.9 billion to shareholders in fiscal 2022, representing 90% of free cash
flow. We remain committed to returning 100% of free cash flow across the cycle through a combination ofshare repurchases and dividends.
Inventory
Our ending fiscal Q4 inventory was $6.7 billion, and average days of inventory for the quarter was 139
days, reflecting weaker market conditions during the quarter.
Total Cash/Debt
Our balance sheet is rock-solid with strong liquidity, low leverage ratio, and a net cash position. We ended
fiscal 2022 with $13.6 billion of liquidity, exceeding our mid-30s percentage of revenue target. Fiscal Q4
ending cash and investments were $11.1 billion, and total debt was $6.9 billion.
OutlookNow turning to our outlook for the fiscal first quarter. As a result of the demand challenges described by
Sanjay earlier, we expect fiscal Q1 bit shipments and pricing to decline in both DRAM and NAND. We
expect that inflationary pressure will continue to be a headwind to costs in Q1 and in fiscal 2023. We
remain disciplined in our expense management and have taken specific actions, with more planned. As welook ahead, macroeconomic uncertainty is high, and visibility is low. In fiscal Q2, we currently expect
revenue to be in a similar range as fiscal Q1, with bit shipments up but still weak for both DRAM and
NAND. We also expect a recovery in volumes and revenues in the second half of the fiscal year. We expect
our inventory to increase in the fiscal first half of 2023 and days of inventory to improve as demand
recovers in the second half of the fiscal year.

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Fiscal Q4 2022 Earnings Call Prepared Remarks

As Sanjay mentioned, we expect our fiscal 2023 capital spending to be around $8 billion, down more than
30% year over year, driven by a near 50% decline in wafer fab equipment capex. We expect capitalspending to be weighted toward the first half of the fiscal year, and as a result, we project to be over $1.5
billion negative free cash flow in the November quarter. We continue to evaluate ways to improve free
cash flow, including reducing capex, lowering expenses, and managing working capital, as we respond tomarket conditions.
In fiscal 2023, we expect our tax rate to be elevated. Unless Congress repeals or delays recent changes to
R&D deductibility, recent legislation requires that, for tax purposes, we capitalize and amortize R&D
expense this fiscal year. In addition, based on our income mix and U.S. and foreign tax rules, our taxes
become more fixed at these lower profitability levels. These factors result in an estimated tax ofapproximately $300 million at a minimum. Beyond this level, the actual tax expense will depend on thelevel of operating income through the year. So, in this lower pretax profitability fiscal year 2023, we expect
a materially higher tax rate. Long term, as our profitability normalizes, we expect our tax rate to be in the
low to mid-teens percentage range.
Non-GAAP GuidanceWith all these factors in mind, our non-GAAP guidance for fiscal Q1 is as follows.
We expect revenue to be $4.25 billion, plus or minus $250 million; gross margin to be in the range of
26.0% plus or minus 200 basis points; and operating expenses to be $1 billion, plus or minus $25 million.
Based on a share count of approximately 1.12 billion fully diluted shares, we expect EPS to be $0.04, plus
or minus $0.10.
Closing
In closing, we had many meaningful accomplishments in fiscal 2022, including delivering record revenue,
achieving clear technology leadership in both DRAM and NAND, increasing share in client and data center
SSDs, further strengthening our balance sheet and returning a record amount of capital to ourshareholders.
While the near-term environment is challenging, the Micron of today is extremely well prepared tonavigate it with our competitive cost structure, strong product portfolio and rock-solid balance sheet.
Beyond fiscal 2023, a year starting out with a challenging set of external events, we are confident in ourability to deliver financial performance consistent with our long-term cross-cycle financial model,
including revenue growth of high single digits, operating margins of 30%, and free cash flow margin ofover 10%.
I will now turn it back to Sanjay.

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Micron Technology, Inc.
Fiscal Q4 2022 Earnings Call Prepared Remarks

Sanjay Mehrotra, President and Chief Executive Officer
Thank you, Mark.
The current macroeconomic environment presents an unprecedented challenge for the industry. Our
rapid actions to both moderate utilization and sharply reduce capex illustrate our commitment to supply
discipline and our focus on bringing our supply and demand back into balance. The Micron teamcontinues to execute with agility to changing business conditions. We remain committed to our strategy
of maintaining stable bit share and growing profitability with a portfolio of higher-value solutions, and weare confident in the long-term technology drivers for memory. New data-centric applications andtechnologies will drive long-term memory demand on a trajectory that outpaces growth in othersemiconductor categories. Our strategic investments underscore this confidence and will ensure Micron isable to capitalize on these long-term trends in the decade ahead.
Thanks for joining us today. We will now open for questions.

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