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 May 28, 2020
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)
Delaware75-1618004(State or other jurisdiction of incorporation or organization)(IRS Employer Identification No.)
8000 S. Federal Way, Boise, Idaho
83716-9632(Address of principal executive offices)(Zip Code)(208)
368-4000
Registrant’s telephone number, including area code
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

Securities registered pursuant to Section 12(g) of the Act: None
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 June 23, 2020 was 1,110,998,472.

☐
No ☒MicronCompany
ProfileFounded over 40 years ago
on October 5, 1978
Headquartered in
Boise, Idaho, USA

4th

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

18

Countries**

13

Manufacturing sites and
13 customer labs**

37,000Team members***Gartner Market Share: Semiconductors by End
Market, Worldwide, 2019 (April 2020)**Micron data as of August 29, 2019.

Media Inquiries
mediarelations@micron.com
Government Inquiries
govaffairs@micron.com
Investor Inquiries
investorrelations@micron.com

Redefining
What’s Possible
The world is moving to a new economic model, wheredata is driving value creation in ways nobody had
imagined just a few years ago.

Who We Are
Data is today’s new business currency, and memory and storage are emerging as
strategic differentiators that will redefine how we extract value from data to learn, explore,
communicate, and experience. Our more than 37,000 team members, in 18 different
countries, work with countless customers to innovate every day and pursue the productsthat will shape how we live and work tomorrow.

Our Vision
As a global leader in memory and storage solutions, we are transforming how the world
uses information to enrich life by enabling technologies to collect, store, and manage
data with unprecedented speed and efficiency. We are accelerating the transformation of
information into intelligence – inspiring the world to learn, communicate, and advance
faster than ever.

Our Commitment
Our day-to-day operations wouldn’t be possible without our team members’ commitment
to business integrity and environmental sustainability. Whether it’s adhering to our
professional values or valuing the communities we work in, for us, doing business bettermeans doing business right.

Global Product Portfolio
DRAM | NAND | 3D XPointTM Memory | NOR | Solid-State Drives
High Bandwidth Memory (HBM) | Multichip Packages | Advanced Solutions

Connect with us on micron.com© 2020 Micron Technology, Inc. Micron, the Micron logo, the M orbit logo, Intelligence AcceleratedTM, and other Micron trademarks are the property of Micron Technology, Inc. Allother trademarks are the property of their respective owners. Products and specifications are subject to change without notice. Rev 03/20

Table of Contents
Introduction
Part I. Financial Statements
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

2

3
4
5
6
8
9
27
29
33
35
35
36
36
53
54
55

1

Definitions of Commonly Used Terms
As used herein, “we,” “our,” “us,” and similar terms include Micron Technology, Inc. and our 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

2023 Notes
2024 Notes
2024 Term Loan A

2.497% Senior Notes due 2023
4.640% Senior Notes due 2024
Senior Term Loan A due 2024

2025 Notes
2026 Notes
2027 Notes
2029 Notes
2030 Notes
2032D Notes
2033F Notes

5.500% Senior Notes due 2025
4.975% Senior Notes due 2026
4.185% Senior Notes due 2027
5.327% Senior Notes due 2029
4.663% Senior Notes due 2030
3.125% Convertible Senior Notes due 2032
2.125% Convertible Senior Notes due 2033

DDR
GDDR

Double Data Rate
Graphics Double Data Rate

Term

IMFT
Intel
MCP
Micron
MMJ
MMT
MTTW
MTU
QimondaSSD
Revolving Credit
Facility
VIE

Definition

IM Flash Technologies, LLC
Intel Corporation
Multi-Chip Package
Micron Technology, Inc. (Parent Company)
Micron Memory Japan, G.K.
Micron Memory Taiwan Co., Ltd.
Micron Technology Taiwan, Inc.
Micron Technology Utah, LLC
Qimonda AG
Solid State Drive$2.5 billion Revolving Credit Facility due July
2023
Variable Interest Entity

Micron Technology, Inc., including its consolidated subsidiaries, is an industry leader in innovative memory and storage solutions. Throughour global brands — Micron® and Crucial® — our broad portfolio of high-performance memory and storage technologies, including DRAM,
NAND, 3D XPoint memory, and NOR, is transforming how the world uses information to enrich life. Backed by more than 40 years oftechnology leadership, our memory and storage solutions enable disruptive trends, including artificial intelligence, 5G, machine learning, andautonomous vehicles, in key market segments like mobile, data center, client, consumer, industrial, graphics, automotive, and networking.
Micron and the Micron orbit logo are trademarks of Micron Technology, Inc. 3D XPoint is a trademark of Intel in the United States and/or
other countries. All other trademarks are the property 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), SEC filings, 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, the media, and others interested in our company to review the
information we post on such channels.

Forward-Looking Statements
This Form 10-Q contains trend information and other forward-looking statements that involve a number of risks and uncertainties. Forwardlooking statements include, but are not limited to, statements such as those made regarding the impact of coronavirus disease 2019(“COVID-19”) to our business; the sufficiency of our cash and investments, cash flows from operations, and available financing; and capitalspending in 2020. We are under no obligation to update these forward-looking statements. Our actual results could differ materially from ourhistorical 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.”

2 | 2020 Q3 10-Q

PART I. FINANCIAL INFORMATIONITEM 1. FINANCIAL STATEMENTS

Micron Technology, Inc.
Consolidated Statements of Operations(In millions, except per share amounts)(Unaudited)
Quarter ended
May 28,2020
Revenue
Cost of goods sold

$

4,484

9,307

216
649
10

206
606
6

650
1,970
18

624
1,818
139

888

1,010

1,846

6,726

23
(51)
10

52
(29)
(317)

101
(144)
55

148
(89)
(392)

870

716

1,858

6,393

(68)
3

135
—

(144)
6

(622)
1

805

851

1,720

5,772

(2)

(11)

(21)

(20)

$

803 $

840

$

1,699 $

5,752$

0.72 $
0.71

0.76
0.74

$

1.53 $
1.50

5.15
5.01

1,111
1,129

1,105
1,129

1,110
1,131

1,117
1,148

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
Net income attributable to noncontrolling interests

Number of shares used in per share calculations
Basic
Diluted

4,788
2,960

1,763

$

May 30,
2019

1,828

Operating income

5,438 $
3,675

May 28,2020

18,536
9,229

Selling, general, and administrative
Research and development
Other operating (income) expense, net

Earnings per share
Basic
DilutedMay 30,2019

15,379 $10,895Gross margin

Net income attributable to Micron

Nine months ended

See accompanying notes to consolidated financial statements.

3

Micron Technology, Inc.
Consolidated Statements of Comprehensive Income(In millions)(Unaudited)
Quarter ended
May 28,2020
Net income$

Other comprehensive income (loss), net of tax
Gains (losses) on derivative instruments
Pension liability adjustments
Gains (losses) on investments
Foreign currency translation adjustments
Other comprehensive income (loss)
Total comprehensive income
Comprehensive income attributable to noncontrolling interests
Comprehensive income attributable to Micron$

Nine months ended

May 30,
2019

May 28,
2020

805 $

851

(3)
(1)
2
—

—
(1)
3
—

1,720

5,772

(18)
(2)
—
—

(6)
(1)
6
(1)

(2)

2

(20)

(2)

803
(2)

853
(11)

1,700
(21)

5,770
(20)

801 $

842

1,679 $

5,750

See accompanying notes to consolidated financial statements.

4 | 2020 Q3 10-Q$

May 30,2019$

Micron Technology, Inc.
Consolidated Balance Sheets(In millions, except par value amounts)(Unaudited)
May 28,2020

As ofAssetsCash and equivalents
Short-term investments
Receivables
Inventories
Other current assets$

8,267 $
391
3,603
5,405
233

7,152
803
3,195
5,118
235

17,899577
30,081
332
775
1,228
599
514

16,503
1,164
28,240
340
837
1,228
—
575

$

52,005 $48,887$

5,364 $
330
491

4,626
1,310
454

6,185
6,356
540
553
453

6,390
4,541
—
636
452

14,087

12,019

98

98

119
8,764
32,402(3,454)
(11)

118
8,214
30,761(3,221)
937,820—35,881889

37,82036,77052,005 $48,887

Total current assets
Long-term marketable investments
Property, plant, and equipment
Intangible assets
Deferred tax assets
Goodwill
Operating lease right-of-use assets
Other noncurrent assets
Total assets
Liabilities and equity
Accounts payable and accrued expenses
Current debt
Other current liabilities

August 29,
2019

Total current liabilities
Long-term debt
Noncurrent operating lease liabilities
Noncurrent unearned government incentives
Other noncurrent liabilities
Total liabilities
Commitments and contingencies
Redeemable noncontrolling interest
Micron shareholders’ equity
Common stock, $0.10 par value, 3,000 shares authorized, 1,192 shares issued and 1,112 outstanding(1,182 shares issued and 1,106 outstanding as of August 29, 2019)
Additional capital
Retained earnings
Treasury stock, 80 shares held (76 shares as of August 29, 2019)
Accumulated other comprehensive income (loss)
Total Micron shareholders’ equity
Noncontrolling interest in subsidiary
Total equity$

Total liabilities and equity
See accompanying notes to consolidated financial statements.

5

Micron Technology, Inc.
Consolidated Statements of Changes in Equity(In millions)(Unaudited)
Micron Shareholders
Common Stock
Numberof
Additional Retained
Shares Amount Capital
Earnings
Balance at August 29, 2019
Net income
Other comprehensive income (loss),net
Stock issued under stock plans
Stock-based compensation expense
Repurchase of stock
Acquisition of noncontrolling interest
Conversion of convertible notes
Balance at November 28, 2019
Net income
Other comprehensive income (loss),net
Stock issued under stock plans
Stock-based compensation expense
Repurchase of stock
Settlement of capped calls
Conversion of convertible notes
Balance at February 27, 2020
Net income
Other comprehensive income (loss),net
Stock issued under stock plans
Stock-based compensation expense
Repurchase of stock
Conversion of convertible notes
Balance at May 28, 2020

Accumulated
Other
Total Micron Noncontrolling
Treasury Comprehensive Shareholders’Interest in
Stock
Income (Loss)
EquitySubsidiary

1,182 $ 118 $ 8,214 $ 30,761 $ (3,221) $
—
—
—
491
—
—
3
—
—
—
—

—
1
—
—
—
—

—
31
72
(6)
123
(6)

—
—
—
(34)
—
—

—
—
—
(50)
—
—

1,185 $ 119 $ 8,428 $ 31,218 $ (3,271) $
—
—
—
405
—
—
7
—
(1)
—
—

—
—
—
—
—
—

—
121
85
(4)
98
(3)

—
—
—
(21)
—
—

—
—
—
(45)
(98)
—

1,191 $ 119 $ 8,725 $ 31,602 $ (3,414) $
—
—
—
803
—
—
1
—
—
—

—
—
—
—
—

—
4
82
—
(47)

—
—
—
(3)
—

—
—
—
(40)
—

1,192 $ 119 $ 8,764 $ 32,402 $ (3,454) $9 $—35,881 $
491

(3)
—
—
—
—
—

(3)
32
72
(90)
123
(6)

6 $
—

36,500 $
405

(15)
—
—
—
—
—
(9) $
—

37,023 $
803

(2)
—
—
—
—

(2)
4
82
(43)
(47)

(11) $

37,820 $See accompanying notes to consolidated financial statements.

6 | 2020 Q3 10-Q

(15)
121
85
(70)
—
(3)

Total
Equity889 $ 36,770
15
506
—
—
—
—
(904)
—

(3)
32
72
(90)
(781)
(6)

— $ 36,500
—
405
—
—
—
—
—
—

(15)
121
85
(70)
—
(3)

— $ 37,023
—
803
—
—
—
—
—

(2)
4
82
(43)
(47)

— $ 37,820

Micron Technology, Inc.
Consolidated Statements of Changes in Equity(In millions)(Unaudited)

Micron Shareholders
Common Stock
Numberof
Additional Retained
Shares Amount Capital
Earnings
Balance at August 30, 2018
Cumulative effect from adoption of
new accounting standard
Net income
Other comprehensive income (loss),net
Stock issued under stock plans
Stock-based compensation expense
Repurchase of stock
Reclassification of redeemableconvertible notes, net
Conversion of convertible notes
Balance at November 29, 2018
Net income
Other comprehensive income (loss),net
Stock issued under stock plans
Stock-based compensation expense
Repurchase of stock
Acquisition of noncontrolling interest
Reclassification of redeemableconvertible notes, net
Conversion of convertible notes
Balance at February 28, 2019
Net income
Other comprehensive income (loss),net
Stock issued under stock plans
Stock-based compensation expense
Repurchase of stock
Acquisition of noncontrolling interest
Conversion of convertible notes
Balance at May 30, 2019

Accumulated
Other
Total Micron Noncontrolling
Treasury Comprehensive Shareholders’Interest in
Stock
Income (Loss)
EquitySubsidiary

1,170 $ 117 $ 8,201 $ 24,395 $(429) $

Total
Equity10 $32,294 $870 $ 33,164

—
—

—
—

—
—

92
3,293

—
—

—
—

92
3,293

—
—

92
3,293

—
3
—
(1)

—
—
—
—

—
15
61
108

—
—
—
(11)

—
—
—
(1,933)

(15)
—
—
—

(15)
15
61
(1,836)

—
—
—
—

(15)
15
61
(1,836)

—
—

—
—

1
(36)

—
—

—
—

—
—

1
(36)

—
—

1
(36)

1,172 $ 117 $ 8,350 $ 27,769 $ (2,362) $
—
—
—
1,619
—

(5) $
—

33,869 $1,619

870 $ 34,739
5
1,624

—
7
—
(1)
—

—
1
—
—
—

—
76
57
(5)
—

—
—
—
(24)
—

—
—
—
(702)
—

11
—
—
—
—

11
77
57
(731)
—

—
—
—
—
(12)

11
77
57
(731)
(12)

—
—

—
—

1
(336)

—
—

—
—

—
—

1
(336)

—
—

1
(336)

1,178 $ 118 $ 8,143 $ 29,364 $ (3,064) $
—
—
—
840
—
—
2
—
—
—
—

—
—
—
—
—
—

—
20
58
—
1
(5)

—
—
—
(3)
—
—

—
—
—
(157)
—
—

1,180 $ 118 $ 8,217 $ 30,201 $ (3,221) $

6 $
—
2
—
—
—
—
—
8 $

34,567 $
840
2
20
58
(160)
1
(5)
35,323 $863 $ 35,430
9
849
—
—
—
—
(5)
—

2
20
58
(160)
(4)
(5)

867 $ 36,190

See accompanying notes to consolidated financial statements.

7

Micron Technology, Inc.
Consolidated Statements of Cash Flows(In millions)(Unaudited)
May 28,2020

Nine months ended
Cash flows from operating activities
Net income$

May 30,2019

1,720 $

5,772

4,083
20
239
(40)

4,008
39
176
386

Change in operating assets and liabilities
Receivables
Inventories
Accounts payable and accrued expenses
Deferred income taxes, net
Other

(461)
(286)
700
26
34

2,373
(1,315)
(703)
195
25

Net cash provided by operating activities

6,035

10,956

Cash flows from investing activities
Expenditures for property, plant, and equipment
Purchases of available-for-sale securities
Proceeds from sales of available-for-sale securities
Proceeds from maturities of available-for-sale securities
Proceeds from government incentives
Other(5,943)
(793)
1,157
636
140
(48)

(7,752)(3,814)
1,271
626
668
16

Net cash provided by (used for) investing activities(4,851)(8,985)

Cash flows from financing activities
Repayments of debt
Acquisition of noncontrolling interest in IMFT
Payments to acquire treasury stock
Payments on equipment purchase contracts
Proceeds from issuance of debt
Other

(4,286)
(744)
(203)
(49)
5,000
147

(2,376)—(2,727)
(54)
1,800
27

(135)

(3,330)

(8)

6

1,041
7,279

(1,353)
6,587

8,320 $

5,234

Adjustments to reconcile net income to net cash provided by operating activities
Depreciation expense and amortization of intangible assets
Amortization of debt discount and other costs
Stock-based compensation(Gains) losses on debt prepayments and conversions

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
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.

8 | 2020 Q3 10-Q

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

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 consistent in all material respects withthose applied in our Annual Report on Form 10-K for the year ended August 29, 2019, except for changes related to recently adopted
accounting standards. See “Recently Adopted Accounting Standards.” Prior year information is presented in accordance with the accounting
guidance in effect during that period and has not been recast for recently adopted accounting standards. In the opinion of our management,
the accompanying unaudited consolidated financial statements contain all necessary adjustments, consisting of a normal recurring nature, tofairly state the financial information set forth herein. Certain reclassifications have been made to prior 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 year 2020 contains 53 weeks and the fourth
quarter of 2020 will contain 14 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 Reporton Form 10-K for the year ended August 29, 2019.

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 August 29,
2019. Except for the significant accounting policy associated with leases as discussed below, there have been no material changes to oursignificant accounting policies since our Annual Report on Form 10-K for the year ended August 29, 2019.

LeasesIn the first quarter of 2020, we elected new accounting policies in connection with the adoption of ASC 842 – Leases. We do not recognize aright-of-use asset or lease liability for leases with a term of 12 months or less. For real estate and gas plant leases entered into after
adoption, we do not separate lease and non-lease components. Sublease income is presented within lease expense.

Variable Interest Entities
We have interests in entities that are VIEs. If we are the primary beneficiary of a VIE, we are required to consolidate it. To determine if we are
the primary beneficiary, we evaluate whether we have the power to direct the activities that most significantly impact the VIE’s economic
performance and the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE. Ourevaluation includes identification of significant activities and an assessment of our ability to direct those activities based on governanceprovisions and arrangements to provide or receive product and process technology, product supply, operations services, equity funding,financing, and other applicable agreements and circumstances. Our assessments of whether we are the primary beneficiary of our VIEs
require significant assumptions and judgments.

9Unconsolidated VIE
PTI Xi’an: Powertech Technology Inc. Xi’an (“PTI Xi’an”) is a wholly-owned subsidiary of Powertech Technology Inc. (“PTI”) and was created
to provide assembly services to us at our manufacturing site in Xi’an, China. We do not have an equity interest in PTI Xi’an. PTI Xi’an is a
VIE because of the terms of its service agreement with us and its dependency on PTI to finance its operations. We do not have the power todirect the activities of PTI Xi’an that most significantly impact its economic performance, primarily because we do not have governance rights.
Therefore, we do not consolidate PTI Xi’an. In connection with our assembly services with PTI, as of May 28, 2020 and August 29, 2019, we
had net property, plant, and equipment of $41 million and $50 million, respectively, and finance lease obligations of $37 million and $47
million, respectively.

Consolidated VIE
IMFT: Through the date we acquired Intel’s noncontrolling interest in IMFT, IMFT was a VIE because all of its costs were passed to us and its
other member, Intel, through product purchase agreements and because IMFT was dependent upon us or Intel for additional cash
requirements. The primary activities of IMFT were driven by the constant introduction of product and process technology. Because we
performed a significant majority of the technology development, we had the power to direct its key activities. We consolidated IMFT due tothis power and our obligation to absorb losses and the right to receive benefits from IMFT that could have been potentially significant to it. On
October 31, 2019, we acquired Intel’s interest in IMFT at which time IMFT, now known as MTU, became a wholly-owned subsidiary. (See
“Equity – Noncontrolling Interest in Subsidiary.”)

Recently Adopted Accounting Standards
In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-02 – Leases (as amended, “ASC 842”), whichamends a number of aspects of lease accounting, including requiring lessees to recognize operating leases with a term greater than one
year on their balance sheet as a right-of-use asset and corresponding lease liability, measured at the present value of lease payments. We
adopted ASC 842 in the first quarter of 2020 under the modified retrospective method and elected to not recast prior periods. We elected thepractical expedients available under the transition guidance, including but not limited to, not reassessing past lease accounting or using
hindsight to evaluate lease term. In addition, we elected to not separate lease and non-lease components for real estate or gas plant leases.
As a result of adopting ASC 842, we recognized $567 million for operating lease liabilities and right-of-use assets and reclassified an
additional $66 million of other balances to right-of-use assets to conform to the new presentation requirements of ASC 842.

Recently Issued Accounting Standards
In November 2018, the FASB issued ASU 2018-18 – Collaborative Arrangements, which clarifies that certain transactions between
collaborative arrangement participants should be accounted for as revenue when the collaborative arrangement participant is a customer inthe context of a unit of account and precludes recognizing as revenue consideration received from a collaborative arrangement participant if
the participant is not a customer. This ASU will be effective for us in the first quarter of 2021 with early adoption permitted. This ASU requires
retrospective adoption to the date we adopted ASC 606, which was August 31, 2018, by recognizing a cumulative-effect adjustment to the
opening balance of retained earnings of the earliest annual period presented. We do not anticipate the adoption of this ASU will have amaterial impact on our financial statements.
In June 2016, the FASB issued ASU 2016-13 – Measurement of Credit Losses on Financial Instruments, which requires a financial asset (ora group of financial assets) measured on the basis of amortized cost to be presented at the net amount expected to be collected. This ASU
requires that the income statement reflect the measurement of credit losses for newly recognized financial assets as well as the increases ordecreases of expected credit losses that have taken place during the period. This ASU requires that credit losses of debt securities
designated as available-for-sale be recorded through an allowance for credit losses and limits the credit loss to the amount by which fairvalue is below amortized cost. This ASU will be effective for us in the first quarter of 2021 with early

10 | 2020 Q3 10-Q

adoption permitted. This ASU requires modified retrospective adoption, with prospective adoption for debt securities for which an other-thantemporary impairment had been recognized before the effective date. We are evaluating the timing and effects of our adoption of this ASU on
our financial statements.

Cash and Investments
Substantially all of our marketable debt and equity investments were classified as available-for-sale as of the dates noted below. Cash andequivalents and the fair values of our available-for-sale investments, which approximated amortized costs, were as follows:

As of

May 28, 2020
Long-term
Cash and Short-termMarketable Total Fair
Equivalents Investments Investments(1)
Value

Cash
$
Level 1(2)Money market funds
Level 2(3)Certificates of deposits
Corporate bonds
Government securities
Asset-backed securities
Commercial paper
Restricted cash(4)Cash, cash equivalents,
and restricted cash$

2,506 $

— $— $ 2,506

4,346

—

—

1,405
—
5
—
5

3
238
63
25
62

4
242
235
96
—

8,267 $
53391 $

577 $ 9,235

8,320

August 29, 2019
Long-term
Cash and Short-termMarketable Total Fair
Equivalents Investments Investments(1)Value$

2,388 $

— $— $ 2,388

4,346

3,418

—

—

3,418

1,412
480
303
121
67

1,292
—
36
—
18

13
550
149
67
24

1
689
232
242
—

1,306
1,239
417
309
42

7,152 $
127

803 $

$

1,164 $ 9,119

7,279

The maturities of long-term marketable investments 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 analyses to validate information
obtained from these pricing services. No adjustments were made to the fair values indicated by such pricing information as of May 28,
2020 or August 29, 2019.
(4) Restricted cash is included in other noncurrent assets and primarily relates to certain government incentives received prior to being
earned. The restrictions lapse upon achieving certain performance conditions. Restricted cash as of August 29, 2019 also included
amounts related to the corporate reorganization proceedings of MMJ.
(1)
(2)

Gross realized gains and losses from sales of available-for-sale securities were not significant for any period presented. As of May 28, 2020,
there were no available-for-sale securities that had been in a loss position for longer than 12 months.

Receivables
May 28,2020

As ofTrade receivables
Income and other taxes
Other

August 29,
2019$

3,265 $
195
143

2,778
242
175

$

3,603 $

3,195

11

Inventories
May 28,2020

As ofFinished goods
Work in process
Raw materials and supplies

August 29,
2019

$

817 $
3,866
722

757
3,825
536

$

5,405 $

5,118

Property, Plant, and Equipment
May 28,
2020

As of
Land
Buildings$

August 29,
2019

Equipment(1)Construction in progress(2)Software352 $12,06847,292
2,674
885

352
10,93144,051
1,700
790

Accumulated depreciation

63,271(33,190)

57,824(29,584)

30,081 $28,240$(1)(2)

Included costs related to equipment not placed into service of $817 million as of May 28, 2020 and $2.33 billion as of August 29, 2019.
Included building-related construction, tool installation, and software costs for assets not placed into service.

We periodically assess the estimated useful lives of our property, plant, and equipment. Based on our assessment of planned technology
node transitions, capital spending, and re-use rates, we revised the estimated useful lives of the existing equipment in our NAND wafer
fabrication facilities and our research and development (“R&D”) facilities from five years to seven years as of the beginning of the first quarterof 2020. This revision reduced our aggregate depreciation expense by approximately $510 million in the first nine months of 2020, of whichapproximately $150 million remained capitalized in inventory as of the end of the third quarter of 2020. Adjusting for the effect of the reduced
amount of depreciation expense remaining in inventory, the revision in estimated useful lives benefited both operating income and net
income by approximately $160 million and diluted earnings per share by approximately $0.14 for the third quarter of 2020, and benefited both
operating income and net income by approximately $360 million and diluted earnings per share by approximately $0.32 for the first ninemonths of 2020.

Intangible Assets and Goodwill
May 28, 2020
Gross
Accumulated
AmountAmortization

As of
Product and process technology
Goodwill

$

602 $
1,228

(270) $
N/A

August 29, 2019
Gross
Accumulated
AmountAmortization
583 $
1,228

(243)
N/A

In the first nine months of 2020 and 2019, we capitalized $50 million and $71 million, respectively, for product and process technology withweighted-average useful lives of 10 years and 8 years, respectively. Expected amortization expense is $21 million for the remainder of 2020,$69 million for 2021, $55 million for 2022, $49 million for 2023, and $44 million for 2024.

12 | 2020 Q3 10-Q

Leases
We have finance and operating leases through which we acquire or utilize equipment and facilities in our manufacturing operations and R&D
activities as well as office space and other facilities used in our selling, general, and administrative (“SG&A”) functions.
Our finance leases consist primarily of gas or other supply or service agreements that are deemed to be embedded leases in which we
effectively control the underlying gas plants or other assets used to fulfill the supply agreements.
Our operating leases consist primarily of offices, other facilities, and land used in SG&A, R&D, and certain of our manufacturing operations.
Certain of our operating leases include one or more options to extend the lease term for periods from one year to 10 years for real estate andone year to 30 years for land.
Certain supply or service agreements require us to exercise significant judgment to determine whether the agreement contains a lease of aright-of-use asset. Our assessment includes determining whether we or the supplier control the assets used to fulfill the supply or service
agreement by identifying whether we or the supplier have the right to change the type, quantity, timing, or location of the output of the assets.
In determining the lease term, we assess whether we are reasonably certain to exercise options to renew or terminate a lease, and when orwhether we would exercise an option to purchase the right-of-use asset. Measuring the present value of the initial lease liability requires
exercising judgment to determine the discount rate, which we base on interest rates for similar borrowings issued by entities with credit
ratings similar to ours.
Short-term and variable lease expenses were not significant and are presented within operating lease costs in the table below. Sublease
income was not significant in any period presented. The components of lease expense are presented below:

Finance leases
Amortization of right-of-use asset
Interest on lease liability
Operating leases

Quarter ended

Nine months
ended

May 28,2020

May 28,
2020

$

29 $
6
27

108
17
75

$

62 $

200

Other information related to our leases were as follows:
May 28,2020

Nine months ended
Cash flows used for operating activities
Finance leases
Operating leases(1)Cash flows used for financing activities
Finance leases
Noncash acquisitions of right-of-use assets
Finance leases
Operating leases
(1)

$

18
15
171
81
32

Amount is net of $48 million of reimbursements received for tenant improvements.

13

May 28,
2020

As of
Finance lease right-of-use assets (included in property, plant, and equipment)
Weighted-average remaining lease term (in years)

$

550
4.7
7.1

Finance leases
Operating leases
Weighted-average discount rate

4.64 %
2.67 %

Finance leases
Operating leases
Maturities of lease liabilities existing as of May 28, 2020 were as follows:
Finance
LeasesFor the year ending
Remainder of 2020
2021
2022
2023
2024
2025 and thereafterLess imputed interest

Operating
Leases

$

85 $
86
83
58
47
280
(110)

18
69
67
63
54
445
(122)

$

529 $

594

The table above excludes any lease liabilities for leases that have been signed but have not yet commenced. As of May 28, 2020, we hadsuch lease liabilities relating to 1) operating lease payment obligations of $150 million for the initial 10-year lease term for a building, whichmay, at our election, be terminated after 3 years or extended for an additional 10 years, and 2) finance lease obligations of $805 million overa weighted-average period of 15 years for gas supply arrangements deemed to be embedded leases. We will recognize right-of-use assets
and associated lease liabilities at the time such assets become available for our use.
As of August 29, 2019, prior to our adoption of ASC 842, future minimum operating lease commitments with an initial term in excess of one
year were $54 million for 2020, $64 million for 2021, $63 million for 2022, $59 million for 2023, $53 million for 2024, and $459 million in 2025
and thereafter.

Accounts Payable and Accrued Expenses
May 28,2020

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

14 | 2020 Q3 10-Q

August 29,
2019$2,234 $
1,866
810
233
221

1,677
1,782
695
309
163

$

5,364 $

4,626

Debt
May 28, 2020

August 29, 2019

Net Carrying Amount
As of
Finance lease obligations
2023 Notes
2024 Notes
2024 Term Loan A
2026 Notes
2027 Notes
2029 Notes
2030 Notes
2032D Notes
MMJ Creditor Payments
IMFT Member Debt
2025 Notes
2033F Notes

StatedRate
N/A
2.497 %
4.640 %
1.440 %
4.975 %
4.185 %
5.327 %
4.663 %
3.125 %
N/A
N/A
5.500 %
2.125 %

Effective
Rate

Current

Long-Term

Net Carrying Amount

Total

Current

Long-Term

Total

4.64 % $2.64 %
4.76 %
1.49 %
5.07 %
4.27 %
5.40 %
4.73 %
6.33 %
N/A
N/A
5.56 %
2.13 %

135 $
—
—
62
—
—
—
—
130
3
—
—
—

394 $
1,245
597
1,186
498
895
696
845
—
—
—
—
—

529
1,245
597
1,248
498
895
696
845
130
3
—
—
—

$

223 $
—
—
—
—
—
—
—
—
198
693
—
196

368 $
—
597
—
497
895
696
845
127
—
—
516
—

591
—
597
—
497
895
696
845
127
198
693
516
196

$

330 $

6,356 $

6,686$

1,310 $

4,541 $

5,851

Senior Unsecured Notes
On April 24, 2020, we issued $1.25 billion aggregate principal amount of our 2023 Notes in a public offering. Issuance costs for these notes
were $5 million. We may redeem some or all of these notes at our option prior to their maturity 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 andinterest thereon.
The 2023 Notes contain covenants that, among other things, limit, in certain circumstances, our ability and/or the ability of our restrictedsubsidiaries (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 and lease-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 definedin the indenture governing such 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.

Credit Facility
Our credit facility provides for our Revolving Credit Facility and our 2024 Term Loan A, which each generally bear interest at rates equal to
LIBOR plus 1.25% to 2.00%, depending on our corporate credit rating and leverage ratio. Under the terms of the credit facility, we must
maintain ratios, calculated as of the last day of each fiscal quarter, of total indebtedness to adjusted EBITDA and adjusted EBITDA to net
interest expense.
2024 Term Loan A: On October 30, 2019, we drew the $1.25 billion available under our 2024 Term Loan A credit facility. Principal payments
are due annually in an amount equal to 5.0% of the initial principal amount with the balance due at maturity in October 2024. The 2024 Term
Loan A facility bears interest at a rate equal to LIBOR plus 1.25% based on our current corporate credit rating and leverage ratio.
Revolving Credit Facility: On March 13, 2020, we drew the $2.50 billion available under our Revolving Credit Facility and on April 24, 2020,
we repaid the $2.50 billion. As of May 28, 2020, $2.50 billion was available to us under the Revolving Credit Facility. Borrowings under the
Revolving Credit Facility are scheduled to mature in July15

2023 and we may repay amounts borrowed any time without penalty. The Revolving Credit Facility bears interest at a rate equal to LIBOR
plus 1.25% based on our current corporate credit rating and leverage ratio.

Convertible Senior Notes
On March 27, 2020, we notified holders of our 2033F Notes that we would redeem all of the outstanding 2033F Notes on May 5, 2020.
Holders could elect to convert these notes through May 4, 2020, at a conversion rate of 91.4808 shares of our common stock per $1,000 ofprincipal amount. In connection with our notice, we made an irrevocable election to settle any conversions in cash. Holders converted all of
the 2033F Notes and on May 5, 2020, we paid $64 million to settle the conversions. We recognized a loss of $3 million in the third quarter of2020 in connection with the transaction.
The closing price of our common stock exceeded 130% of the conversion price per share for at least 20 trading days in the 30 trading day
period ended on June 30, 2020. As a result, the 2032D Notes are convertible by the holders at any time through September 30, 2020. As of
May 28, 2020, the $46.47 trading price of our common stock was higher than the conversion price of our 2032D Notes and, as a result, theaggregate conversion value of $622 million exceeded the aggregate principal amount of $134 million by $488 million.

IMFT Member Debt
In connection with our purchase of Intel’s noncontrolling interest in IMFT on October 31, 2019, we extinguished the remaining IMFT Member
Debt as a component of the cash consideration paid to Intel for their interest in IMFT and recognized a non-operating gain of $72 million forthe difference between the $505 million of cash consideration allocated to the extinguishment of IMFT Member Debt and its $577 million
carrying value. (See “Equity – Noncontrolling Interest in Subsidiary” for the cash consideration allocated to the repurchase of noncontrollinginterest.) Prior to our acquisition of Intel’s interests in IMFT, IMFT repaid Intel $116 million of IMFT Member Debt in the first quarter of fiscal
2020.

Debt Activity
The table below presents the effects of issuances, prepayments, and conversions of debt in the first nine months of 2020. When we receive a
notice of conversion for any of our convertible notes and elect to settle in cash any amount of the conversion obligation in excess of theprincipal amount, the cash settlement obligations become derivative debt liabilities subject to mark-to-market accounting treatment based on
the volume-weighted-average price of our common stock over a period of 20 consecutive trading days. Accordingly, at the date of ourelection to settle a conversion in cash, we reclassify the fair value of the equity component of the converted notes from additional capital toderivative debt liability within current debt in our consolidated balance sheet.

Nine months ended May 28, 2020
Issuances
Revolving Credit Facility
2023 Notes
2024 Term Loan A
Prepayments
Revolving Credit Facility

Increase
Increase
Increase(Decrease) in (Decrease) in (Decrease) in
Principal
Carrying Value
Cash$2025 Notes
IMFT Member Debt
Settled conversions
2033F Notes$

16 | 2020 Q3 10-Q

Decrease in
EquityGains(Losses)

2,500 $
1,250
1,250

2,493 $
1,245
1,248

2,500 $
1,245
1,248

— $
—
—

—
—
—

(2,500)
(519)
(693)

(2,493)
(516)
(693)

(2,500)
(534)
(621)

—
—
—

—
(18)
72

(62)

(196)

(266)

(56)

(14)

1,226 $

1,088 $

1,072 $

(56) $

40

Contingencies
We have accrued a liability and charged operations for the estimated costs of adjudication or settlement of various asserted and unasserted
claims existing as of the balance sheet date, including those described below. We are currently a party to other legal actions arising from thenormal course of business, none of which are expected to have a material adverse effect on our business, results of operations, or financial
condition.

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 August 12, 2014, MLC Intellectual Property, LLC filed a patent infringement action against Micron in the United States District Court for
the Northern District of California. The complaint alleges that Micron infringes a single U.S. patent and seeks damages, attorneys’ fees, andcosts.
On November 21, 2014, Elm 3DS Innovations, LLC (“Elm”) filed a patent infringement action against Micron; Micron Semiconductor
Products, Inc.; and Micron Consumer Products Group, Inc. in the U.S. District Court for the District of Delaware. On March 27, 2015, Elm
filed an amended complaint against the same entities. The amended complaint alleges that unspecified semiconductor products of ours thatincorporate multiple stacked die infringe 13 U.S. patents and seeks damages, attorneys’ fees, and costs.
On December 15, 2014, Innovative Memory Solutions, Inc. (“IMS”) filed a patent infringement action against Micron in the U.S. District Court
for the District of Delaware. The complaint alleges that a variety of our NAND products infringe eight U.S. patents and seeks damages,
attorneys’ fees, and costs. On August 31, 2018, Micron was served with a complaint filed by IMS in Shenzhen Intermediate People’s Court inGuangdong Province, China. On November 12, 2019, IMS filed an amended complaint in the same court. The amended complaint allegesthat certain of our NAND flash products infringe a Chinese patent. The complaint seeks an order requiring Micron to stop manufacturing,using, selling, and offering for sale the accused products in China, and to pay damages and costs of 21 million Chinese yuan.
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 April 3, 2018, MSS was served with another patent infringement complaint filed by Jinhua and two additional complaints filed by UMC in
the Fuzhou Court. The three additional complaints allege that MSS infringes three Chinese patents by manufacturing and selling certain
Crucial MX300 SSDs and certain GDDR5 memory chips. The two complaints filed by UMC each seek 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 for each complaint 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, and offering for sale the accused products in China; and to pay
damages of 98 million Chinese yuan plus court fees17

incurred. On October 9, 2018, UMC withdrew its complaint that alleged MSS infringed a Chinese patent by manufacturing and selling certain
GDDR5 memory chips.
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 make up slightly more than 1% of our annualized revenue. 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 (“Flash-Control”) filed a patent infringement action against Micron in the United States District Court for
the Western District of Texas. 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, andcosts.
Among other things, the above lawsuits pertain to substantially all of our DRAM, NAND, and other memory and storage products wemanufacture, which account for a significant portion 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 range. The Appeals Court
held a subsequent hearing on April 30, 2019, and on May 28, 2019, the Appeals Court remanded the case to the expert for supplemental
expert opinion. On March 31, 2020, the expert presented a revised opinion to the Appeals Court which reaffirmed the earlier view that theamount paid by Micron was still within an acceptable range of fair value.

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 plaintiffs the opportunity to file a consolidated, amended complaint. On October 28, 2019, the plaintiffs filed a consolidated amended
complaint that18 | 2020 Q3 10-Q

purports to be on behalf of a nationwide class of indirect purchasers of DRAM products. The amended complaint asserts claims based onalleged price-fixing of DRAM products under federal and state law during the period from June 1, 2016 to at least February 1, 2018, andseeks treble monetary damages, costs, interest, attorneys’ fees, and other injunctive and equitable relief.
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 purports to be on behalf of a nationwide class of direct purchasers of DRAM
products. The consolidated complaint asserts 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 seeks treble monetary damages, costs, interest, attorneys’ fees, and otherinjunctive and equitable relief.
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.

Securities Matters
On January 23, 2019, a complaint was filed against Micron and two of our officers, Sanjay Mehrotra and David Zinsner, in the U.S. District
Court for the Southern District of New York. The lawsuit purported to be brought on behalf of a class of purchasers of our stock during theperiod from June 22, 2018 through November 19, 2018. Subsequently two substantially similar cases were filed in the same court adding oneof our former officers, Ernie Maddock, as a defendant and alleging a class action period from September 26, 2017 through November 19,
2018. The separate cases were joined, and a consolidated amended complaint was filed on June 15, 2019. The consolidated amended
complaint alleged that defendants committed securities fraud through misrepresentations and omissions about purported anticompetitive
behavior in the DRAM industry and sought compensatory and punitive damages, fees, interest, costs, and other appropriate relief. On
October 2, 2019, the parties submitted a joint stipulation to dismiss the complaint. The Court approved the stipulation and dismissed thecomplaint on October 3, 2019. On March 5, 2019, a derivative complaint was filed by a shareholder in the U.S. District Court for the District ofDelaware, based on similar allegations to the securities fraud cases, allegedly on behalf of and for the benefit of Micron, against certain
current and former officers and directors of Micron for alleged breaches of their fiduciary duties and other violations of law. The complaintseeks damages, fees, interest, costs, and other appropriate relief. Similar shareholder derivative complaints were subsequently filed in the
U.S. District Court for the District of Delaware and the U.S. District Court for the District of Idaho. On November 20, 2019, the plaintiff in thesecond action filed in the U.S. District Court for the District of Delaware voluntarily dismissed his complaint. On November 21, 2019, theplaintiff voluntarily dismissed his complaint that was filed in the U.S. District Court for the District of Idaho.

Other
On December 5, 2017, Micron filed a complaint against UMC and Jinhua in the U.S. District Court for the Northern District of California. The
complaint alleges that UMC and Jinhua violated the Defend Trade Secrets Act, the civil provisions of the Racketeer Influenced and Corrupt
Organizations Act, and California’s Uniform Trade Secrets Act by misappropriating Micron’s trade secrets and other misconduct. Micron’scomplaint seeks damages, restitution, disgorgement of profits, injunctive relief, and other appropriate relief.
On June 13, 2019, current Micron employee Chris Manning filed a putative class action lawsuit on behalf of Micron employees subject to the
Idaho Wage Claim Act who earned a performance-based bonus after the conclusion of fiscal year 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,
Manning and the19three other plaintiffs assert claims for violation of the Idaho Wage Claim Act, breach of contract, breach of the covenant of good faith and fairdealing, and fraud.
In the normal course of business, we are a party to a variety of agreements pursuant to which we may be obligated to indemnify the otherparty. 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.
We are unable to predict the outcome of the patent matters, the Qimonda matter, antitrust matters, securities matters, and other mattersnoted above and therefore cannot estimate the range of possible loss. 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 to our products and/or manufacturing processes. Any of the foregoing, as well as theresolution of any other legal matter noted above, could have a material adverse effect on our business, results of operations, or financial
condition.

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 third quarter and first nine months of
2020, we repurchased 0.9 million shares of our common stock for $40 million, and 2.8 million shares of our common stock for $134 million,
respectively. In the third quarter and first nine months of 2019, we repurchased 3.8 million shares of our common stock for $157 million, and66.4 million shares of our common stock for $2.66 billion, respectively. Through May 28, 2020, we had repurchased an aggregate of $2.8
billion under the authorization. The shares were recorded as treasury stock.
Capped calls: In the second quarter of 2020, we share-settled our remaining capped calls upon their expiration and received an aggregateof 1.7 million shares of our common stock, equal to a value of $98 million.

Noncontrolling Interest in Subsidiary
May 28, 2020
As of
IMFT

Balance$August 29, 2019

Percentage
—

— % $

Balance889

Percentage
49 %On October 31, 2019, we purchased Intel’s noncontrolling interest in IMFT, now known as MTU, and IMFT Member Debt for $1.25 billion. In
connection therewith, we recognized a $160 million adjustment to equity for the difference between the $744 million of cash consideration
allocated to Intel’s noncontrolling interest and its $904 million carrying value. (See “Debt” for the cash consideration allocated to, andextinguishment of, IMFT Member Debt.)
Pursuant to the terms of the IMFT wafer supply agreement, Intel received supply from MTU from November 2019 through March 6, 2020, at
a volume equal to approximately 50% of their volume from IMFT in the six-month period prior to closing. On March 9, 2020, we agreed withIntel to terminate such agreement and entered into a new 3D XPoint wafer supply agreement. IMFT sales to Intel in the first quarter of 2020
through the date of our acquisition of Intel’s noncontrolling interest in IMFT were $158 million. IMFT sales to Intel in the third quarter and firstnine months of 2019 were $184 million and $531 million, respectively.

20 | 2020 Q3 10-Q

Fair Value Measurements
The estimated fair values and carrying values of our outstanding debt instruments (excluding the carrying value of equity components of ourconvertible notes), were as follows:
May 28, 2020
Fair
Carrying
Value
Value

As of
Notes and MMJ Creditor Payments
Convertible notes$

6,532 $
663

6,027
130

August 29, 2019
Fair
Carrying
Value
Value
$

5,194 $
852

4,937
323

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

Derivative Instruments
Gross
Notional
AmountAs of May 28, 2020
Derivative instruments with hedge accounting designation
Cash flow currency hedges$

Derivative instruments without hedge accounting designation
Non-designated currency hedges

As of August 29, 2019
Derivative instruments with hedge accounting designation
Cash flow currency hedges
Derivative instruments without hedge accounting designation
Non-designated currency hedges
Convertible notes settlement obligation(4)$Current
Assets(1)1,884 $

2 $

1,155

(2)

(3)
(4)

(21) $

(1)

2

(2)

—

$

4 $

(23) $

(1)

146 $

1 $

— $

—

1,871

$
(1)

Fair Value of
Current
Noncurrent
Liabilities(2) Liabilities(3)

1
—

(9)
(179)

—
—

1

(188)

—

2 $

(188) $—

Included in receivables – other.
Included in accounts payable and accrued expenses – other for forward contracts and in current debt for convertible notes settlement
obligations.
Included in other noncurrent liabilities.
As of August 29, 2019, the notional amount of our settlement obligation for notes that had been converted was 4 million shares of ourcommon stock.

21

Derivative Instruments with Hedge Accounting Designation
We utilize currency forward contracts that generally mature within two years to hedge our exposure to changes in currency exchange rates.
Currency forward contracts are measured at fair value based on market-based observable inputs including currency exchange spot andforward rates, interest rates, and credit-risk spreads (Level 2). We do not use derivative instruments for speculative purposes.
Cash Flow Hedges: We utilize cash flow hedges for our exposure from changes in currency exchange rates for certain capital expendituresand manufacturing costs. We recognized losses of $6 million and $20 million in the third quarter and first nine months of 2020, respectively,in accumulated other comprehensive income from the effective portion of cash flow hedges. The amounts for the third quarter and first ninemonths of 2019 were not significant. We recognized losses of $8 million and $10 million in the third quarter and first nine months of 2020,
respectively, in cost of goods sold from the amounts excluded from hedge effectiveness. The amounts for the third quarter and first ninemonths of 2019 were not significant. The reclassifications from accumulated other comprehensive income to earnings were not significant in
the third quarters or first nine months of 2020 or 2019. As of May 28, 2020, we expect to reclassify $18 million of losses related to cash flow
hedges from accumulated other comprehensive income into earnings in the next 12 months.

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. For derivative instruments without hedge accounting designation, we recognized
losses of $6 million in the third quarter of 2020, and losses of $23 million in the third quarter and first nine months of 2019. The amounts
recognized in the first nine months of 2020 were not significant.
Convertible Notes Settlement Obligations: For settlement obligations associated with our convertible notes subject to mark-to-market
accounting treatment, the fair values of the underlying derivative settlement obligations were initially determined using the Black-Scholes
option valuation model (Level 2), which requires inputs of stock price, expected stock-price volatility, estimated option life, risk-free interest
rate, and dividend rate. The subsequent measurement amounts were based on the volume-weighted-average trading price of our common
stock (Level 2). (See “Debt.”) We recognized losses of $14 million in the first nine months of 2020 and gains of $11 million and losses of $55
million in the third quarter and first nine months of 2019, respectively, in other non-operating income (expense), net for the changes in fairvalue of the derivative settlement obligations. The amounts recognized in the third quarter of 2020 were not significant.

Equity Plans
As of May 28, 2020, 92 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 Award activity is summarized as follows:
Quarter ended
May 28,2020
Restricted stock award shares granted
Weighted-average grant-date fair value per share

22 | 2020 Q3 10-Q$—
45.78 $

Nine months ended

May 30,
2019

May 28,
2020
1

40.00

$

8
46.37 $

May 30,
2019
7
39.83

Employee Stock Purchase Plan (“ESPP”)
For the six-month ESPP periods ended January 2020 and January 2019, we issued 2 million and 1 million shares, respectively, at a pershare price of $38.16 and $32.50, respectively. Grant-date fair value and assumptions used in the Black-Scholes option valuation model for
ESPP grants for the periods below were as follows:
May 28,2020

Nine months ended
Weighted-average grant-date fair value per share
Average expected life in years
Weighted-average expected volatility
Weighted-average risk-free interest rate
Expected dividend yield$May 30,
2019

14.43
$
0.5
43 %
1.5 %
0 %

10.92
0.5
47 %
2.5 %
0 %

Stock-based Compensation Expense
Quarter ended
May 28,2020
Stock-based compensation expense by caption
Cost of goods soldSelling, general, and administrative
Research and development

Stock-based compensation expense by type of award
Restricted stock awards
ESPP
Stock options

Nine months ended

May 30,
2019

May 28,2020

May 30,
2019

$

34 $
26
22

24
18
16

$

102 $
74
63

73
55
48

$

82 $

58

$

239 $

176

$

70 $
9
3

44
8
6

$

197 $
28
14

127
24
25

$

82 $

58

$

239 $

176

Income tax benefits related to the tax deductions for share-based awards are recognized only upon the settlement of the related share-based
awards. Income tax benefits for share-based awards were not significant for the third quarters of 2020 or 2019 and were $62 million and $57
million for the first nine months of 2020 and 2019, respectively. As of May 28, 2020, $572 million of total unrecognized compensation costs
for unvested awards, before the effect of any future forfeitures, was expected to be recognized through the third quarter of 2024, resulting ina weighted-average period of 1.3 years.

Revenue and Contract Liabilities
Revenue by technology is presented in the table below. (See “Segment and Other Information” for disclosure of disaggregated revenue bymarket segments.)
Quarter ended
May 28,
2020
DRAM
NAND
Other (primarily 3D XPoint memory and NOR)

Nine months ended

May 30,
2019

May 28,2020

May 30,2019$

3,587 $
1,665
186

3,398
1,104
286

$

10,139 $
4,601
639

13,442
4,151
943

$

5,438 $

4,788$

15,379 $18,53623

Beginning in 2020, revenues for MCPs and SSDs, which contain both DRAM and NAND, are disaggregated into DRAM and NAND based on
the relative values of each component. The three and nine months ended May 30, 2019 in the table above have been conformed to current
period presentation.
Our contract liabilities from customer advances are for advance payments received from customers to secure product in future periods. Other
contract liabilities consist of amounts received in advance of satisfying performance obligations. These balances are reported within othercurrent liabilities and other noncurrent liabilities. Revenue and interest expense associated with contract liabilities for the time value ofadvance payments was not significant in any period presented. Contract liabilities were as follows:
May 28,2020

As ofContract liabilities from customer advances
Other contract liabilities

August 29,
2019

$

43 $
27

61
69

$

70 $

130

Revenue recognized during the first nine months of 2020 from the beginning balance as of August 29, 2019 included $79 million frommeeting performance obligations of other contract liabilities and shipments against customer advances. Contract liabilities from customer
advances also decreased $22 million due to the return of an unutilized customer advance upon expiration of a contract.
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, in some cases, beyond one year. As of May 28, 2020, we expect future revenue
related to these longer-term contracts of approximately $600 million, of which approximately 60% relates to performance obligations andproduct shipments we expect to satisfy within the next 12 months and 40% beyond 12 months.
As of May 28, 2020, other current liabilities included $407 million for estimates of consideration payable to customers, including estimates for
pricing adjustments and returns.

Other Operating (Income) Expense, Net
Quarter ended
May 28,2020
Restructure and asset impairments
Other

Nine months ended

May 30,
2019

May 28,2020

May 30,
2019

$

4 $
6

9
(3)

$

10 $
8

93
46

$

10 $

6

$

18 $

139

Other Non-Operating Income (Expense), Net
Quarter ended
May 28,2020
Gains (losses) on debt prepayments and conversions
Losses from changes in currency exchange rates
Other

24 | 2020 Q3 10-Q

Nine months ended

May 30,
2019

May 28,2020

May 30,
2019

$

(2) $
(3)
15

(317)
(1)
1

$

40 $
(7)
22

(386)
(9)
3

$

10 $

(317)

$

55 $

(392)

Income Taxes
Our income tax (provision) benefit consisted of the following:
Quarter ended
May 28,
2020
Income tax (provision) benefit, excluding items below$
Utilization of and other changes in net deferred tax assets of MMJ,
MMT, and MTTW
Repatriation tax, net of adjustments related to uncertain tax
positions$

Nine months ended

May 30,
2019

May 28,2020(30) $

125

(38)

(32)

—

42

(68) $

135$$

May 30,2019(60) $

(469)

(84)

(162)

—

9

(144) $

(622)

Income tax provision in the third quarter of 2020 increased as compared to the third quarter of 2019 primarily due to tax benefits in the third
quarter of 2019 resulting from tax law changes. Our provision for income tax decreased in the first nine months of 2020 as compared to thefirst nine months of 2019 primarily as a result of reductions in our profit before tax and the foreign minimum tax.
As of May 28, 2020, gross unrecognized tax benefits related to uncertain tax positions were $396 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 notsignificant for any period presented.
We operate in a number of jurisdictions outside the United States, including Singapore, where we have tax incentive arrangements. Thesearrangements 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 $70 million (benefiting our diluted
earnings per share by $0.06) and $78 million ($0.07 per diluted share) for the third quarter and first nine months of 2020, respectively, and by$71 million ($0.06 per diluted share) and $742 million ($0.65 per diluted share) for the third quarter and first nine months of 2019,respectively.

Earnings Per Share
Quarter ended
May 28,2020

Nine months ended

May 30,
2019

May 28,2020

May 30,2019

Net income attributable to Micron – Basic
Assumed conversion of debt

$

803 $
—

840
(4)

$

1,699 $
(4)

5,752
(6)

Net income attributable to Micron – Diluted

$

803 $

836

$

1,695 $

5,746

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

1,111
18

1,105
24

1,110
21

1,117
31

Weighted-average common shares outstanding – Diluted

1,129

1,129

1,131

1,148

0.72 $
0.71

0.76
0.74

1.53 $
1.50

5.15
5.01

Earnings per share
Basic
Diluted$$Antidilutive potential common stock shares that could dilute basic earnings per share in the future were 9 million and 5 million for the third
quarter and first nine months of 2020, respectively, and 6 million and 7 million for the third quarter and first nine months of 2019, respectively.

25

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 and sales of certain 3D XPoint products.
Mobile Business Unit (“MBU”): Includes memory 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, other discrete storage products sold in component and wafer form to the removable storage market, and sales of certain 3D
XPoint products.
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
May 28,2020
Revenue
CNBU
MBU
SBU
EBU
All Other

Operating income (loss)
CNBU
MBU
SBU
EBU
All Other26 | 2020 Q3 10-Q

May 30,
2019

May 28,2020

May 30,2019$

2,218 $
1,525
1,014
675
6

2,079
1,174
813
700
22

$

6,164 $
4,240
2,852
2,105
18

8,065
4,997
2,978
2,432
64

$

5,438 $

4,788$

15,379 $18,536

$

448 $
295
177
64
(3)

800
331
(198)
173
4

$

1,132 $
773
(42)
256
(2)

4,171
2,241
(138)
822
11

981

1,110

2,117

7,107

(82)
(4)
—
—
(7)

(58)
(9)
—
(23)
(10)

(239)
(10)
(1)
—
(21)

(176)
(90)
(37)
(46)
(32)

(93)

(100)

(271)

(381)

888 $

1,010

1,846 $

6,726

Unallocated
Stock-based compensation
Restructure and asset impairments
Employee severance
Start-up and preproduction costs
Other

Operating income

Nine months ended$$

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 August 29, 2019. 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 year 2020 contains 53 weeks and the fourth
quarter of 2020 will contain 14 weeks. All tabular 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 solutions. Throughour global brands — Micron® and Crucial® — our broad portfolio of high-performance memory and storage technologies, including DRAM,
NAND, 3D XPoint memory, and NOR, is transforming how the world uses information to enrich life. Backed by more than 40 years oftechnology leadership, our memory and storage solutions enable disruptive trends, including artificial intelligence, 5G, machine learning, andautonomous vehicles, in key market segments like mobile, data center, client, consumer, industrial, graphics, automotive, and networking.
We manufacture our products at our wholly-owned facilities and also utilize subcontractors to perform certain manufacturing processes. In
recent years, we have increased our manufacturing scale and product diversity through strategic acquisitions, expansion, and various
partnering arrangements. On October 31, 2019, we purchased Intel’s noncontrolling interest in IMFT and IMFT Member Debt for $1.25
billion, at which time IMFT, now known as MTU, became a wholly-owned subsidiary.
We make significant investments to develop proprietary product and process technology, which are implemented in our manufacturing
facilities. We generally increase the density per wafer and reduce manufacturing costs of each generation of product through advancements
in product and process technology, such as our leading-edge line-width process technology and 3D NAND architecture. We continue tointroduce new generations of products that offer improved performance characteristics, including higher data transfer rates, advanced
packaging solutions to meet industry standards, lower power consumption, improved read/write reliability, and increased memory density.
Our managed NAND and SSD storage products, which incorporate NAND, a controller, and firmware, constitute a significant portion of ourrevenue. We have developed proprietary firmware and controllers, which are included in certain of our SSDs. Development of advanced
technologies enables us to diversify our product portfolio toward a richer mix of differentiated, high-value solutions and to target high-growthmarkets.
We market our products through our internal sales force, independent sales representatives, and distributors primarily to original equipment
manufacturers and retailers located around the world. 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 R&D investments, efficient utilization of our manufacturing infrastructure,development and integration of advanced product and process technologies, market acceptance of our diversified portfolio of semiconductorbased memory and storage solutions, and return-driven capital spending.

Impact of COVID-19 to our Business
Events surrounding the ongoing COVID-19 outbreak have resulted in a reduction in economic activity across the globe. The severity andduration of these economic repercussions remain largely unknown and ultimately will depend on many factors, including the speed andeffectiveness of the containment efforts throughout the world. While we have observed demand increases in some areas of our business that
support the stay-at-home economy, such as products used in data center infrastructure, notebook computers, and similar applications, wehave also observed demand decreases in other categories such as smartphones, consumer electronics, and automotive. The extent to which
COVID-19 will impact demand for our products depends on future developments, which are highly uncertain and very difficult to predict,including new information that may emerge concerning the severity of the coronavirus and actions to contain and treat its impacts. While all
our global sites are currently operational, our27

facilities could be required to temporarily curtail production levels or temporarily cease operations based on government mandates.
From the start of the COVID-19 outbreak, we proactively implemented preventative protocols intended to safeguard our team members,
contractors, suppliers, customers, distributors, and communities, and ensure business continuity in the event government restrictions orsevere outbreaks impact our operations at certain sites. We remain committed to the health and safety of our team members, contractors,
suppliers, customers, distributors, and communities, and are following government policies and recommendations designed to slow the
spread of COVID-19.
Our efforts to respond to the COVID-19 outbreak include the following:•

We have put health screenings in place, required social distancing, and have established team separation protocols at our facilities.
We are also prohibiting visitors, have suspended business travel, and require team members to work from home to the extent
possible. Where work from home is not possible, all on-site team members must pass through thermal scanning equipment to ensure
they do not have an elevated body temperature and must wear a mask at all times.

•

To respond to changing market conditions, we have shifted some supply from markets which have experienced declines in demand,such as smartphones, to markets that have experienced demand increases, such as data center markets.

•

We have evaluated our supply chain and communicated with our suppliers to identify supply gaps and taken steps to ensure
continuity. In some cases, we have added alternative suppliers and increased our on-hand inventory of raw materials needed in ouroperations.

•

We have added assembly and test capacity to provide redundant manufacturing capability through our network of captive andexternal partners.

•

We are evaluating all our construction projects across our global manufacturing operations and enacting protocols to enhance thesafety of our team members, suppliers, and contractors.

•

We have developed strategies and are implementing measures to respond to a variety of potential economic scenarios, such as
limitations on new hiring, suspension of business travel, and reductions in discretionary spending.

•

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 to the extent possible 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, but we cannot predict how the steps we, our team members, government entities, suppliers,
or customers take in response to the COVID-19 outbreak will impact our business, outlook, or results of operations.
We will continue to actively monitor the situation and may take further actions altering our business operations that we determine are in thebest interests of our employees, customers, partners, suppliers, and stakeholders, or as required by federal, state, or local authorities. It is
not clear what the potential effects any such alterations or modifications may have on our business, including the effects on our customers,
employees, and prospects, or on our financial results.

Products
Our product portfolio of memory and storage solutions, advanced solutions, and storage platforms is based on our high-performancesemiconductor memory and storage technologies, including DRAM, NAND, 3D XPoint memory, NOR, and other technologies. We sell our
products into various markets through our business units in various forms, including wafers, components, modules, SSDs, managed NAND,
and MCP products. MCP products combine DRAM, NAND, and/or NOR and in some cases also include a controller and firmware.

28 | 2020 Q3 10-Q

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, industrial, and automotive markets. Low-power DRAM products, which are engineered to meetstandards for performance and power consumption, are sold into smartphone and other mobile-device markets, as well as into theautomotive, 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, consumer, automotive, and embedded markets. Lowdensity NAND is ideal for applications like automotive, surveillance, machine-to-machine, automation, printers, and home networking.
3D XPoint Technology: 3D XPoint is a new class of non-volatile technology between DRAM and NAND in the memory and storage
hierarchy, offering higher capacity and non-volatility over DRAM along with lower latency and higher endurance as compared to NAND. 3D
XPoint technology is ideal for data center and other markets requiring high-bandwidth storage and low-latency performance.
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 (i.e., boot, application, operating system, and execute-in-place code in an embedded system) and for frequentlychanging small data storage and is ideal for automotive, industrial, and consumer applications.

Results of Operations
Consolidated Results
Third
Quarter

SecondQuarter

Third
Quarter

2020

2020

2019

Revenue
Cost of goods sold$ 5,438
3,675

Gross margin
Selling, general, and administrative
Research and development
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 attributable to noncontrollinginterests
Net income attributable to Micron$

Nine Months
2020

2019

100 % $ 4,797
68 % 3,442

100 % $ 4,788
72 % 2,960

100 % $ 15,379
62 % 10,895

100 % $ 18,536
71 %
9,229

100 %
50 %

1,763

32 %

1,355

28 %

1,828

38 %

4,484

29 %

9,307

50 %

216
649
10

4 %
12 %
— %

223
681
11

5 %
14 %
— %

206
606
6

4 %
13 %
— %

650
1,970
18

4 %
13 %
— %

624
1,818
139

3 %
10 %
1 %

888

16 %

440

9 %

1,010

21 %

1,846

12 %

6,726

36 %

(28)
10
(68)

(1) %
— %
(1) %

(12)
(1)
(21)

— %
— %
— %

23
(317)
135

— %
(7) %
3 %

(43)
55
(144)

— %
— %
(1) %

59
(392)
(622)

— %
(2) %
(3) %

3

— %

1

— %

—

— %

6

— %

1

— %

(2)

— %

(2)

— %

(11)

— %

(21)

— %

(20)

— %

803

15 % $

405

8 %$

840

18 % $ 1,699

11 % $ 5,752

31 %Total Revenue: Total revenue for the third quarter of 2020 increased 13% as compared to the second quarter of 2020 primarily as a result of
increases in sales of DRAM products and NAND products. Sales of DRAM products for the third quarter of 2020 increased 16% from thesecond quarter of 2020 primarily due to an approximate 10% increase in bit shipment volumes and mid-single-digit increase in average
selling prices due to strong demand from29

data center and networking customers. Sales of NAND products for the third quarter of 2020 increased 10% from the second quarter of 2020
primarily due to increases in SSD sales to data center customers and an upper-single-digit increase in average selling prices driven by strong
demand.
Total revenue for the third quarter of 2020 increased 14% as compared to the third quarter of 2019 primarily due to increases in sales of both
NAND and DRAM products. Sales of DRAM products for the third quarter of 2020 increased 6% as compared to the third quarter of 2019
primarily due to growth in bit shipments in the upper-30-percent range, partially offset by declines in average selling prices in the low-20percent range. Sales of NAND products for the third quarter of 2020 increased 51% as compared to the third quarter of 2019 primarily due toincreases in bit shipments in the low-30-percent range and increases in average selling prices in the mid-teen-percent range.
Total revenue for the first nine months of 2020 decreased 17% as compared to the first nine months of 2019 primarily due to price declines
resulting from imbalances between supply and market demand over the last several quarters. Sales of DRAM products for the first ninemonths of 2020 decreased 25% as compared to the first nine months of 2019 primarily due to declines in average selling prices in the low40-percent range, partially offset by growth in bit shipments in the high-20-percent range. Sales of NAND products for the first nine months of2020 increased 11% as compared to the first nine months of 2019 primarily due to increases in bit shipments in the low-30-percent range,
partially offset by declines in average selling prices in the mid-teen-percent range.
Overall Gross Margin: Our overall gross margin percentage increased to 32% for the third quarter of 2020 from 28% for the second quarterof 2020 primarily due to higher average selling prices and improvements in product mix. Our gross margins included the impact ofunderutilization costs at MTU of approximately $155 million for the third quarter of 2020, $142 million for the second quarter of 2020, and$125 million for the first quarter of 2020.
Our overall gross margin percentage decreased to 32% for the third quarter of 2020 from 38% for the third quarter of 2019 and decreased to
29% for the first nine months of 2020 from 50% for the first nine months of 2019, primarily due to declines in DRAM average selling prices,
partially offset by the effect of decreases in non-cash depreciation expense from the revision in estimated useful lives of equipment in our
NAND wafer fabrication facilities described below, cost reductions resulting from strong execution in delivering products featuring advanced
technologies, and continuous improvement initiatives to reduce production costs.
We periodically assess the estimated useful lives of our property, plant, and equipment. Based on our assessment of planned technology
node transitions, capital spending, and re-use rates, we revised the estimated useful lives of the existing equipment in our NAND wafer
fabrication facilities and our research and development facilities from five years to seven years as of the beginning of the first quarter of 2020.
The revision in estimated useful lives reduced NAND manufacturing depreciation expense by approximately $425 million in the first ninemonths of 2020, of which approximately $150 million remained capitalized in inventory as of the end of the third quarter of 2020. Adjusting forthe effect of the reduced amount of depreciation expense remaining in inventory, the revision in estimated useful lives benefited cost of
goods sold by approximately $275 million for the first nine months of 2020 ($140 million for the third quarter of 2020, $95 million for thesecond quarter of 2020, and $40 million for the first quarter of 2020).

Revenue by Business Unit

CNBU
MBU
SBU
EBU
All Other

Third
Quarter

SecondQuarter

Third
Quarter

2020

2020

2019

$ 2,218
1,525
1,014
675
6

41 % $ 1,967
28 % 1,258
19 %
870
12 %
696
— %
6

41 % $ 2,079
26 % 1,174
18 %
813
15 %
700
— %
22

$ 5,438$ 4,797$ 4,788

Percentages of total revenue may not total 100% due to rounding.

30 | 2020 Q3 10-Q

Nine Months
2020

43 % $
25 %
17 %
15 %
— %

6,164
4,240
2,852
2,105
18

$ 15,379

2019
40 % $
28 %
19 %
14 %
— %

8,065
4,997
2,978
2,432
64

$ 18,536

44 %
27 %
16 %
13 %
— %

Changes in revenue for each business unit for the third quarter of 2020 as compared to the second quarter of 2020 were as follows:••••

CNBU revenue increased 13% due to increases in average selling prices and bit sales volume for DRAM driven by strong demand indata center markets.
MBU revenue increased 21% primarily due to increases in bit sales volumes of low-power DRAM.
SBU revenue increased 17% primarily due to improved NAND pricing and significant growth in SSD shipment volumes driven bystrong demand in data center and OEM client markets.
EBU revenue decreased 3% primarily due to a reduction in automotive demand.

Changes in revenue for each business unit for the third quarter of 2020 as compared to the third quarter of 2019 were as follows:••••

CNBU revenue increased 7% primarily due to increases in bit sales growth for DRAM products partially offset by price declines.
Consistent with our view that our technology and product roadmap are more closely aligned with our CNBU business unit, beginningin the second quarter of 2020, we have included all activities for 3D XPoint within CNBU.
MBU revenue increased 30% primarily due to bit sales growth for high-value mobile MCP products, partially offset by price declines.
SBU revenue increased 25% primarily due to improved NAND pricing and significant growth in SSD shipment volumes driven bystrong demand in data center and OEM client markets, partially offset by the decline in 3D XPoint revenue attributable to SBU after
the first quarter of 2020.
EBU revenue decreased 4% primarily due reduction in automotive demand and declines in DRAM selling prices, partially offset byincreased sales to industrial multimarkets.

Changes in revenue for each business unit for the first nine months of 2020 as compared to the first nine months of 2019 were as follows:••••

CNBU revenue decreased 24% primarily due to DRAM price declines driven by imbalances in supply and demand, partially offset bybit sales growth across key markets.
MBU revenue decreased 15% primarily due to price declines, partially offset by bit sales growth for high-value mobile MCP products.
SBU revenue decreased 4% primarily due to the decline in 3D XPoint revenue in SBU after the first quarter of 2020 and NAND
selling price declines, partially offset by bit sales growth for SSDs.
EBU revenue decreased 13% primarily due to price declines partially offset by bit sales growth in industrial multimarkets andautomotive markets.

Operating Income (Loss) by Business Unit
Third
Quarter
2020
CNBU
MBU
SBU
EBU
All Other

$

448
295
177
64
(3)

$

981

20 %
19 %
17 %
9 %
(50) %$

SecondQuarter

Third
Quarter

2020

2019

Nine Months
2020

2019

283
183
(2)
79
(1)

14 % $ 800
15 %
331
— %
(198)
11 %
173
(17) %
4

38 % $ 1,132
28 %
773(24) %
(42)
25 %
256
18 %
(2)

18 % $ 4,171
18 % 2,241
(1) %
(138)
12 %
822
(11) %
11542$ 1,110$ 2,117$ 7,107

52 %
45 %
(5) %
34 %
17 %

Percentages reflect operating income (loss) as a percentage of revenue for each business unit.

31Changes in operating income or loss for each business unit for the third quarter of 2020 as compared to the second quarter of 2020 were as
follows:••••

CNBU operating income increased primarily due to improved DRAM selling prices.
MBU operating income increased primarily due to increases in sales volumes and lower R&D expenses.
SBU operating margin improved primarily due to increases in NAND pricing, higher SSD sales volumes, stronger data center SSD
mix, manufacturing cost reductions, and lower R&D expenses.
EBU operating income decreased primarily due to a lower mix of automotive sales.

Changes in operating income or loss for each business unit for the third quarter and first nine months of 2020 as compared to thecorresponding periods of 2019 were as follows:
•
•
•

•

CNBU operating income decreased primarily due to declines in DRAM pricing and MTU underutilization costs in 2020 related to 3D
XPoint.
MBU operating income decreased primarily due to declines in low-power DRAM and NAND pricing, partially offset by increases insales of high-value MCP products and manufacturing cost reductions.
SBU operating margin improved primarily due to lower 3D XPoint underutilization costs, manufacturing cost reductions, increases insales volumes, and improved product mix. SBU operating margins for the third quarter of 2020 benefited from higher selling prices ascompared to the third quarter of 2019. SBU operating margins for the first nine months of 2020 were adversely impacted by lower
selling prices as compared to the first nine months of 2019.
EBU operating income decreased as a result of declines in pricing, partially offset by increases in sales volumes.

Operating Expenses and Other
Selling, General, and Administrative: SG&A expenses for the third quarter of 2020 were relatively unchanged as compared to the second
quarter of 2020. SG&A expenses for the third quarter and first nine months of 2020 were 5% and 4% higher as compared to thecorresponding periods of 2019 primarily due to increases in employee compensation, partially offset by decreases in consulting fees.
Research and Development: R&D expenses vary primarily with the number of development and pre-qualification wafers processed,
amounts reimbursed under R&D cost-sharing agreements, the cost of advanced equipment dedicated to new product and processdevelopment, 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 reviews
and tests for performance and reliability. R&D expenses can vary significantly depending on the timing of product qualification.
R&D expenses for the third quarter of 2020 were 5% lower as compared to the second quarter of 2020 primarily due to decreases in volumesof development and pre-qualification wafers. R&D expenses for the third quarter and first nine months of 2020 were 7% and 8% higher,
respectively, as compared to the corresponding periods of 2019, primarily due to increases in employee compensation, increases in volumesof development and pre-qualification wafers, and a reduction of R&D reimbursements from our partners, partially offset by lower depreciation
expense from the revision of the estimated useful lives of equipment. R&D expenses were reduced by $23 million and $85 million in the third
quarter and first nine months of 2020, respectively, due to the revision of the estimated useful lives of equipment. R&D expenses werereduced by $6 million and $59 million in the third quarter and first nine months of 2019, respectively, due to reimbursements, primarily fromour joint development activities with Intel for 3D NAND and 3D XPoint technologies, which were substantially completed in the third quarter of2019 and first quarter of 2020, respectively.

32 | 2020 Q3 10-Q

Income Taxes: Our income tax (provision) benefit consisted of the following:
Third
Quarter

SecondQuarter

Third
Quarter

2020

2020

2019

$
Income tax (provision) benefit, excluding items below
Utilization of and other changes in net deferred tax assets of
MMJ, MMT, and MTTW
Repatriation tax, net of adjustments related to uncertain tax
positions$(30)

Effective tax rate

7.8 %

$

(38)

$

(22)

—
(68)

1

(21)
4.9 %

2020
$

(32)

—
$

125

Nine Months

135(18.9) %

(60)

$

(84)

42
$

2019
(469)
(162)

—
$

(144)
7.8 %

9
$

(622)
9.7 %

Our income tax provision for the third quarter of 2020 increased as compared to the second quarter of 2020 primarily as a result of increases
in our profit before tax. Our income tax provision in the third quarter of 2020 increased as compared to the third quarter of 2019 primarily due
to tax benefits in the third quarter of 2019 resulting from tax law changes. Our income tax provision decreased for the first nine months of2020 as compared to the first nine months of 2019 primarily as a result of reductions in our profit before tax and the foreign minimum tax. Our
income taxes include the effect of operations outside the United States, including Singapore, where we have tax incentive arrangements thatfurther decrease our effective tax rates.
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 $70 million (benefiting our diluted
earnings per share by $0.06) for the third quarter of 2020, were not significant for the second or first quarters of 2020, and $71 million ($0.06
per diluted share) for the third quarter of 2019.
Other: Interest expense for the third quarter of 2020 increased 11% as compared to the second quarter of 2020 as a result of increases indebt obligations. Interest income for the third quarter of 2020 decreased 32% as compared to the second quarter of 2020 due to decreases
in interest rates partially offset by an increase in investment balances.
Interest expense for the third quarter and first nine months of 2020 increased 76% and 62% as compared to the corresponding periods of2019 primarily due to increases in debt obligations and a reduction of capitalized interest from lower levels of capital projects in process.
Interest income for the third quarter and first nine months of 2020 decreased 56% and 32% as compared to the corresponding periods of2019 as a result of decreases in interest rates, partially offset by higher levels of cash and investment balances.
Further discussion of other operating and non-operating income and expenses can be found in “Item 1. Financial Statements – Notes toConsolidated Financial Statements – Equity Plans,” “– Other Operating Income (Expense), Net,” and “– Other Non-Operating Income(Expense), Net.”

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 May 28, 2020, $2.50 billion wasavailable to draw under our Revolving Credit Facility. We expect that our cash and investments, cash flows from operations, and available
financing will be sufficient to meet our requirements at least through the next 12 months.
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

33

estimate capital expenditures in 2020, net of partner contributions, to be approximately $8 billion, focused on technology transitions andproduct enablement. Actual amounts for 2020 will vary depending on timing of equipment deliveries. As of May 28, 2020, we hadcommitments of approximately $2.67 billion for the acquisition of property, plant, and equipment, of which approximately $2.32 billion is
expected to be paid within one year.
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 May 28, 2020, we had repurchased an aggregate of $2.8 billion of theauthorized amount. See “Item 1. Financial Statements – Notes to Consolidated Financial Statements – Equity.”
Cash and marketable investments totaled $9.24 billion as of May 28, 2020 and $9.12 billion as of August 29, 2019. Our investments consist
primarily of bank deposits, money market funds, and liquid investment-grade, fixed-income securities, diversified among industries andindividual issuers. To mitigate credit risk, we invest through high-credit-quality financial institutions and by policy generally limit theconcentration of credit exposure by restricting the amount of investments with any single obligor. As of May 28, 2020, $2.98 billion of our
cash and marketable investments was held by our foreign subsidiaries.
Limitations on the Use of Cash and Investments: Cash and marketable investments as of May 28, 2020 included $228 million held by
MMJ. As a result of the corporate reorganization proceedings of MMJ initiated in March 2012, and for so long as such proceedings arecontinuing, MMJ is prohibited from paying dividends to us. In addition, pursuant to an order of the Tokyo District Court, MMJ cannot makeloans or advances, other than certain ordinary course advances, to us without the consent of the Tokyo District Court and may, under certain
circumstances, be subject to the approval of the legal trustee. As a result, the assets of MMJ are not available for use by us in our otheroperations. Furthermore, certain uses of the assets of MMJ, including investments in certain capital expenditures, may require consent of
MMJ’s trustees and/or the Tokyo District Court.
Cash Flows:
Nine Months
2020
Net cash provided by operating activities
Net cash provided by (used for) investing activities
Net cash provided by (used for) financing activities$

6,035 $
(4,851)(135)(8)

10,956(8,985)(3,330)6$

1,041 $

(1,353)

Effect of changes in currency exchange rates on cash, cash equivalents, and restricted cash
Net increase in cash, cash equivalents, and restricted cash

2019

Operating Activities: Cash provided by operating activities reflects net income adjusted for certain non-cash items, including depreciation
expense, amortization of intangible assets, and stock-based compensation, and the effects of changes in operating assets and liabilities. The
decrease in the first nine months of 2020 as compared to 2019 was primarily due to lower net income compared with the prior period andchanges in working capital.
Investing Activities: For the first nine months of 2020, net cash used for investing activities consisted primarily of $5.77 billion of expenditures
for property, plant, and equipment (net of partner contributions) partially offset by $1.00 billion of net inflows from sales, maturities, andpurchases of available-for-sale securities. For the first nine months of 2019, net cash used for investing activities consisted primarily of $7.08
billion of expenditures for property, plant, and equipment (net of partner contributions) and $1.92 billion of net outflows from sales, maturities,
and purchases of available-for-sale securities.
Financing Activities: For the first nine months of 2020, net cash used for financing activities consisted primarily of $4.29 billion of cash
payments to reduce our debt, including $2.50 billion to pay down borrowings under our Revolving Credit Facility, $621 million for IMFT
Member Debt repayments, $534 million to prepay our 2025 Notes, $266 million to settle conversions of notes, and $171 million for scheduled
repayment of finance leases; $744 million for the acquisition of Intel’s noncontrolling interest in IMFT; and $134 million for the acquisition of
2.8 million shares of our common stock under our $10 billion share repurchase authorization. Cash used for financing activities was partially
offset by proceeds of $2.50 billion from our Revolving Credit Facility, $1.25 billion from the 2023 Notes,

34 | 2020 Q3 10-Q

and $1.25 billion from the 2024 Term Loan A. For the first nine months of 2019, net cash used for financing activities consisted primarily of$2.66 billion for the acquisition of 66.4 million shares of common stock, $1.65 billion of payments to settle conversions of notes, and $731
million of scheduled repayments of other notes and finance leases, partially offset by net proceeds of $1.79 billion from the aggregate
issuance of our 2024 Notes, 2026 Notes, and 2029 Notes.
Potential Settlement Obligations of Convertible Notes:
See “Item 1. Financial Statements – Notes to Consolidated Financial Statements – Debt – Convertible Senior Notes.”
Contractual Obligations:
See “Item 1. Financial Statements – Notes to Consolidated Financial Statements – Leases” and “– Debt.”

Recently Adopted Accounting Standards
See “Item 1. Financial Statements – Notes to Consolidated Financial Statements – Recently Adopted Accounting Standards.”

Recently Issued Accounting Standards
See “Item 1. Financial Statements – Notes to Consolidated Financial Statements – Recently Issued Accounting Standards.”

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKWe are affected by changes in currency exchange and interest rates. For further discussion about market risk and sensitivity analysis related
to changes in currency exchange 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 August 29, 2019.

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 Securities and Exchange
Commission’s rules and forms and that such information is accumulated and communicated to our management, including the principal
executive officer and principal financial officer, to allow timely decision regarding disclosure.
During the third quarter of 2020, 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.

35

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 August29, 2019 and “Part I. Financial Information – Item 1. Financial Statements – Notes to Consolidated Financial Statements – Contingencies”
and “Item 1A. Risk Factors” herein.

ITEM 1A. RISK FACTORSIn addition to the factors discussed elsewhere in this Form 10-Q, the following are important factors, the order of which is not necessarily
indicative of the level of risk that each poses to us, which could cause actual results or events to differ materially from those contained in any
forward-looking statements made by us. Any of these factors could have a material adverse effect on our business, results of operations,financial condition, or stock price. Our operations could also be affected by other factors that are presently unknown to us or not consideredsignificant.
The effects of the COVID-19 outbreak could adversely affect our business, results of operations, and financial condition.
The effects of the public health crisis caused by the COVID-19 outbreak and the measures being taken to limit COVID-19’s spread are
uncertain and difficult to predict, but may include:•

A decrease in short-term and/or long-term demand and/or pricing for our products, and a global economic recession or depressionthat could further reduce demand and/or pricing for our products, resulting from actions taken by governments, businesses, and/or
the general public in an effort to limit exposure to and the spreading of COVID-19, such as travel restrictions, quarantines, andbusiness 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 through socialdistancing measures we have enacted at our locations around the world in an effort to protect our employees’ andcontractors’ health and well-being, including working from home, limiting the number of meeting attendees, reducing thenumber of people in our sites at any one time, quarantines of team members, contractors, or vendors who are at risk ofcontracting, or have contracted, COVID-19, and suspending employee travel (“Social Distancing Measures”);◦

increased costs resulting from our efforts to mitigate the impact of COVID-19 through Social Distancing Measures, working
from home, enhanced cleaning measures and the increased use of personal protective equipment at our sites;◦

increased costs for, or unavailability of, transportation, raw materials, or other inputs necessary for the operation of ourbusiness;◦

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 failure to prevent and/or adequately mitigate spread of COVID-19 at one or more of oursites; and◦our inability to continue or resume 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 to introduce newtechnologies, reduce costs or meet customer demand;

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, and result in a higher rate of losses on our accounts receivables due to credit defaults; and36 | 2020 Q3 10-Q

•

Disruptions to our supply chain in connection with the sourcing and transportation of materials, equipment and engineering support,
and services from or in geographic areas that have been impacted by COVID-19 and by efforts to contain the spread of COVID-19.

The resumption of normal business operations after such interruptions may be delayed or constrained by lingering effects of COVID-19 on
our team members, contractors, suppliers, third-party service providers, customers, or distributors.
These effects, alone or taken together, could have a material adverse effect on our business, results of operations, legal exposure, or
financial condition. A sustained, prolonged, or recurring outbreak 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)2019 from 20182018 from 20172017 from 20162016 from 2015
2015 from 2014(30) %
36 %18 %(34) %(11) %(47) %(13) %(10) %(16) %(20) %

Beginning in 2020, revenue and units for MCPs and SSDs, which contain both DRAM and NAND, are disaggregated based on the relativevalues of each component. Prior periods presented in the table above have been conformed to current period presentation.
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, 3D memory layers, NAND celllevels, transitioning to replacement gate technology for NAND, process complexity including number of mask layers and fabrication steps,
manufacturing yield, technological barriers, changes in process technologies, and new products that may require relatively larger die sizes.
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, our ramp ofemerging technologies in dedicated manufacturing capacity, declining selling prices, and changes in supply agreements. A significant portionof our manufacturing costs are fixed and do not vary proportionally with changes in production output. As a result, lower utilization andincreases in our per gigabit manufacturing costs may adversely affect our gross margins, business, results of operations, or financial
condition.
In addition, per gigabit manufacturing costs may also be affected by a broader product portfolio, which may have smaller production
quantities and shorter product lifecycles. Our business and the markets we serve are subject to rapid technological changes and material
fluctuations in demand based on end-user preferences. As a result, we37may have work in process or finished goods inventories that could become obsolete or in amounts that are in excess of our customers’
demand. As a result, we may incur charges in connection with obsolete or excess inventories, which could have a material adverse effect on
our business, results of operations, or financial condition. In addition, due to the customized nature of certain of the products wemanufacture, we may be unable to sell certain finished goods inventories to alternative customers or manufacture in-process inventory todifferent specifications, which may result in excess and obsolescence charges in future periods. Our inability to maintain or improve grossmargins 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; Samsung
Electronics Co., Ltd.; SK Hynix Inc.; Kioxia Holdings Corporation (formerly Toshiba Memory Corporation); and Western Digital Corporation.
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. In addition, some governments may begin to provide, or have provided and may continue toprovide, significant assistance, financial or otherwise, to some of our competitors or to new entrants and may intervene in support of national
industries and/or competitors. In particular, we face the threat of increasing competition as a result of significant investment in thesemiconductor industry by the Chinese government and various state-owned or affiliated entities that is intended to advance China’s statednational policy objectives. In addition, the Chinese government may restrict us from participating in the China market or may prevent us fromcompeting effectively with Chinese companies. Some of our competitors may use aggressive pricing to obtain market share or take businessof our key customers.
Our competitors generally seek to increase wafer capacity, improve yields, and reduce die size in their product designs which may result insignificant increases in worldwide supply and downward pressure on prices. Increases in worldwide supply of semiconductor memory andstorage also result from fabrication capacity expansions, either by way of new facilities, increased capacity utilization, or reallocation of othersemiconductor 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 by commensurate increases indemand, could lead to further declines in average selling prices for our products and could materially adversely affect our business, results ofoperations, or financial condition. If competitors are more successful at developing or implementing new product or process technology, theirproducts 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.
We may be unable to generate sufficient cash flows or obtain access to external financing necessary to fund our operations, makescheduled debt payments, 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 2020, net of partner contributions, to be approximately $8 billion, focused on technology transitions andproduct enablement. Investments in capital expenditures may not generate expected returns or cash flows. Delays in completion andramping of new production facilities could significantly impact our ability to realize expected returns on our capital expenditures, which could
have a material adverse effect on our business, results of operations, or financial condition.
As a result of the corporate reorganization proceedings of MMJ initiated in 2012, and for so long as such proceedings are continuing, MMJ is
prohibited from paying dividends, including any cash dividends, to us and such proceedings require that excess earnings be used in MMJ’s
business or to fund the MMJ creditor payments. In addition, pursuant to an order of the Tokyo District Court, MMJ cannot make loans oradvances, other than certain ordinary course advances, to us without the consent of the Tokyo District Court and may, under certain

38 | 2020 Q3 10-Q

circumstances, be subject to approval of the legal trustee. As a result, the assets of MMJ are not available for use by us in our otheroperations. Furthermore, certain uses of the assets of MMJ, including certain capital expenditures of MMJ, may require consent of MMJ’s
trustees and/or the Tokyo District Court.
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. 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 futureborrowings and make it difficult for us to obtain financing on terms acceptable to us. In 2019, we suspended the security interest in thecollateral under our credit facility upon achieving specified credit ratings and the prepayment of our Senior Secured Term Loan B due 2022;
however, the security interest would be automatically reinstated upon a decline in our corporate credit rating below a certain level. There canbe no assurance that we will be able to generate sufficient cash flows, use cash held by MMJ to fund its capital expenditures, access capitalor credit markets or find other sources of financing to fund our operations, make debt payments, and make adequate capital investments toremain competitive in terms of technology development and cost efficiency. Our inability to do any of the foregoing 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.
The health crisis caused by COVID-19 has adversely affected economic conditions and caused a downturn in the worldwide economy.
Downturns in the worldwide economy have harmed our business in the past and the current downturn has adversely affected our business.
As a result, demand for certain of our products used in smartphones, consumer electronics, and automotive, has declined. Reduced demand
for these or other products could result in significant decreases in our average selling prices and product sales. If these adverse conditions
persist or worsen, we could experience additional reduction in demand for our products and/or devices that incorporate our products. Future
downturns could also adversely affect our business. In addition, to the extent our customers or distributors have elevated inventory levels, we
may experience a decrease in short-term and/or long-term demand and/or pricing for our products.
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 receivables 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.
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 2019, 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, Malaysia, Japan, and China.
The United States and other countries have levied tariffs and taxes on certain goods. General trade tensions between the U.S. and China
have been escalating since 2018, 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 U.S. has threatened to impose tariffs on goods imported from other countries, which could also impact
certain of our customers’ or our operations. If the U.S. 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 ourefforts to mitigate the impact of tariffs on our customers and our operations. Additionally, tariffs on our customers’ products could impact theirsales 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 U.S. and other countries,
what products may be subject to such actions, or what actions may be taken by other countries in retaliation. Further changes in trade policy,
tariffs, additional taxes, restrictions on exports or other trade barriers, or restrictions on supplies, equipment, and raw materials including rareearth minerals, may limit our ability

39to produce products, increase our selling and/or manufacturing costs, decrease margins, reduce the competitiveness of our products, orinhibit our ability to sell products or purchase necessary equipment and supplies, which could have a material adverse effect on ourbusiness, results of operations, or financial condition.
Trade regulations have restricted our ability to sell our products to a significant customer and could restrict our ability to sell our
products to other customers.
On May 16, 2019, the Bureau of Industry and Security (“BIS”) of the U.S. Department of Commerce added Huawei to the BIS’s Entity List,
which imposes limitations on the supply of certain U.S. items and product support to Huawei. In 2019, our sales to Huawei accounted for
12% of our total revenue. To ensure compliance with the Entity List restrictions, we suspended shipments of all products to Huawei, effective
May 16, 2019. We have determined that certain products Huawei purchases from us are not subject to the Export Administration Regulations(“EAR”) and consequently can be lawfully sold and shipped to Huawei. Accordingly, we resumed shipping certain products to Huawei in the
fourth quarter of 2019.
We applied for and received licenses that enable us to provide support for the products we sell that are not subject to the EAR, as well as
qualify new products for Huawei’s mobile and server businesses. Additionally, these licenses allow us to ship previously restricted productsthat we manufacture in the United States, which represent a very small portion of our sales. However, there are still some products outside of
the mobile and server markets that we are unable to sell to Huawei. While Huawei remains on the Entity List, and in the absence of additional
licenses from the BIS, we may be unable to work with Huawei on product development for uses other than in mobile and server endproducts, which may have a negative effect on our ability to sell products to Huawei in the future. Despite the receipt of licenses, Entity List
restrictions may also encourage Huawei to seek to obtain a greater supply of similar or substitute products from our competitors that are notsubject to these restrictions, thereby decreasing our long-term competitiveness as a supplier to Huawei. Moreover, although Huawei is notprohibited from paying (and we are not restricted from collecting) accounts receivable for products we sell to Huawei, the credit risks
associated with these accounts may have increased as a result of the BIS’s actions.
More recently, on May 15, 2020, the BIS modified its existing rules that subject certain foreign-produced items to the EAR. We believe theseactions could hinder Huawei’s ability to source parts required to manufacture their products, and could consequently have a negative impact
on Huawei’s demand for our products.
We cannot predict what additional actions the U.S. government may take with respect to Huawei, including modifications to, or interpretationsof, Entity List restrictions, export restrictions, tariffs, or other trade limitations or barriers. We may be unable to sell certain inventories toalternative customers, which may result in excess and obsolescence charges in future periods. The licenses we have received may not beeffective against such additional or heightened restrictions.
The Entity List trade restrictions enacted during our third quarter of 2019 had an adverse effect on our business. Although we received
licenses in the first quarter of fiscal 2020, we are unable to predict the impact these licenses will have on our sales to Huawei, nor the impact
existing or future trade restrictions may have on our business with Huawei. Other companies may be added to the Entity List and/or subject
to trade restrictions. For example, in October 2019, the U.S. government added several additional organizations to the Entity List, effective
October 9, 2019, and in May 2020 added 33 more China-based organizations, effective June 5, 2020.
Other trade restrictions imposed by BIS or non-US governments may further impact our business. For example, on April 28, 2020, the BIS
published new rules that increase the number of products that require export licenses and remove certain license exemptions by expanding
scope of military end-users and military end-use controls for sales of certain products. These new trade restrictions went into effect on June29, 2020. While we do not expect these changes to materially impact our business, complying with them may increase costs, and further
restrictions may materially reduce our customer opportunities in China. These and other trade restrictions that may be imposed by the U.S.,
China, or other countries may indirectly impact our business in ways we cannot reasonably quantify, including that some of our othercustomers’ products which incorporate our solutions may also be impacted. Restrictions on our ability to sell and ship our products to Huawei
have had, and may continue to have, an adverse effect on our business, results of operations, or financial condition. In addition, if there arechanges to Export Administration Regulations or Entity List restrictions, our revenue with Huawei or other customers could be negatively
impacted, and the licenses we have received could be rendered ineffective. Any such changes may have a further adverse effect on ourbusiness, results of operations, or financial condition.

40 | 2020 Q3 10-Q

Our future success depends on our ability to develop and produce competitive new 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, which involves significant risk and uncertainties. We may be unable to recover our investment in R&D orotherwise realize the economic benefits of reducing die size or increasing memory and storage densities. Our competitors are working todevelop 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 our ability 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 technologies, including 3D XPoint memory, a new class of non-volatile technology. There is no
assurance that our efforts to develop and market new product technologies will be successful. Unsuccessful efforts to develop new
semiconductor 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 fiscal years, approximately one-half of our total revenue was from our top ten customers. A disruption in our
relationship with any of these customers could adversely affect our business. We could experience fluctuations in our customer base or themix of revenue by customer as markets and strategies evolve. In addition, any consolidation of our customers could reduce the number ofcustomers to whom our products could be sold. Our inability to meet our customers’ requirements or to qualify our products with them could
adversely impact our revenue. Meaningful change in the inventory strategy of our customers, particularly those in China, could impact our
industry bit demand growth outlook. The loss of one or more of our major customers or any significant reduction in orders from, or a shift inproduct mix by, these customers could have a material adverse effect on our business, results of operations, or financial condition.
We face risks associated with our international sales and operations that could materially adversely affect our business, results ofoperations, or financial condition.
In 2019, 53% of our revenue was to customers who have headquarters located in the United States. We ship our products to the locations
specified by our customers. Customers with global supply chains and operations may request we deliver products to countries where theyown or operate production facilities or to countries where they utilize third-party subcontractors or warehouses. As a result, 89% of ourrevenue in 2019 was from products shipped to customer locations outside the United States. In addition, a substantial portion of ourmanufacturing operations are located outside the United States. In particular, a significant portion of our manufacturing operations areconcentrated in Singapore, Taiwan, Japan, and China. Many of our customers, suppliers, and vendors operate internationally and are also
subject to the risks described herein. In addition, the U.S. government has in the past restricted American firms from selling products andsoftware to certain of our customers and may in the future impose similar bans or other restrictions on sales to one or more of our significant
customers. These restrictions may not prohibit our competitors from selling similar products to our customers, which may result in our loss ofsales and market share. Even when such restrictions are lifted, financial or other penalties or continuing export restrictions imposed withrespect to our customers could have a continuing negative impact on our future revenue and results of operations, and we may not be able torecover any customers or market share we lose while complying with such restrictions. We have experienced restrictions on our ability to sell
products to certain foreign customers where sales of products require export licenses or are prohibited by government action. Possible future
U.S. government

41

actions could lead to additional or enhanced controls on exports from the United States to China or other countries, bans on sales to otherkey customers, or other similar restrictions.
Trade-related government actions, by China or other countries, that impose barriers or restrictions that would impact our ability to sell or ship
products to Huawei or other customers may have a negative impact on our financial condition and results of operations. We cannot predict
the actions government entities may take in this context and may be unable to quickly offset or effectively react to government actions that
restrict our ability to sell to certain customers or in certain jurisdictions. Government actions that affect our customers’ ability to sell products
or access critical elements of their supply chains may result in a decreased demand for their products, which may consequently reduce theirdemand for our products.
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;
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;
government actions or civil unrest preventing the flow of products, including delays in shipping and obtaining products, cancellationof orders, or loss or damage of products;
problems with the transportation or delivery of products;
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 operations 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 these risks, it could have a material adverse effect on our business, results ofoperations, 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 therefore cannot estimate the range ofpossible loss. A determination that our products or manufacturing processes infringe the intellectual property rights of others or entering intoa license agreement covering such intellectual property could result in significant liability and/or require us to make material changes to ouroperations 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.”)42 | 2020 Q3 10-Q

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 plaintiffs the opportunity to file a consolidated, amended complaint. On October 28, 2019, the plaintiffs filed a consolidated amended
complaint that purports to be on behalf of a nationwide class of indirect purchasers of DRAM products. The amended complaint asserts
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 seeks treble monetary damages, costs, interest, attorneys’ fees, and other injunctive and equitable relief.
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 purports to be on behalf of a nationwide class of direct purchasers of DRAM
products. The consolidated complaint asserts 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 seeks treble monetary damages, costs, interest, attorneys’ fees, and otherinjunctive and equitable relief.
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.
Our business, results of operations, or financial condition could be adversely affected by the limited availability and quality ofmaterials, supplies, and capital equipment, or the 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 and services that meet our standards and, in some cases, materials,
components, or services are provided by a single supplier. Various factors could reduce 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.
Shortages or increases in lead times may occur from time to time in the future. Our manufacturing processes are also dependent on our
relationships with third-party manufacturers of controllers used in a number of our products and with outsourced semiconductor assembly
and test providers, contract manufacturers, logistic carriers, and other service providers.
Certain materials are primarily available in certain countries, including rare earth elements, minerals, and metals available primarily from
China. Trade disputes or other political conditions, economic conditions, or public health issues, such as COVID-19, may limit our ability toobtain such materials. Although these rare earth and other materials are generally available from multiple suppliers, China is the predominant
producer of certain of these materials. If China were to stop exporting these materials, our suppliers’ ability to obtain such supply may beconstrained and we may be unable to obtain sufficient 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 other semiconductor memory manufacturers who are able to obtain sufficient quantities of thesematerials from China.

43

We and/or our suppliers and service providers could be affected by tariffs, embargoes, or other trade restrictions, as well as laws andregulations enacted in response to concerns regarding climate change, conflict minerals, responsible sourcing practices, public health crises,or contagious disease outbreaks, which could limit the supply of our materials and/or increase the cost. 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. Lead times for the supply of materials have been extended in the past. The disruption of our supply ofmaterials, components, services, or the extension of our lead times could have a material adverse effect on our business, results ofoperations, 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.
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 end-customer’s needs and preferences. As a result, ourproduct demand forecasts may be impacted significantly by the strategic actions of our customers.
For certain of our markets, 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, ourcustomers may exclude us from further consideration as a supplier for those products. The process to develop new products requires us todemonstrate advanced functionality and performance, often well in advance of a planned ramp of production, in order to secure design winswith our customers. The effects of the public health crisis caused by the COVID-19 outbreak and the measures being taken to limit COVID19’s spread could negatively impact our ability to meet anticipated timelines and/or expected or required quality standards with respect to thedevelopment of certain of our products. In addition, some of our components have long lead-times, requiring us to place orders several
months in advance of anticipated demand. Such long lead-times increase the risk of excess inventory or loss of sales in the event ourforecasts vary substantially from actual demand. There can be no assurance of the following:
•
•
•
•
•
•

that our product development efforts will be successful;that we will be able to cost-effectively manufacture new products;that we will be able to successfully market these products;that we will be able to establish or maintain key relationships with customers, or that we will not be prohibited from working withcertain customers, for specific chip set or design requirements;that we will be able to introduce new products into the market and qualify them with our customers on a timely basis; orthat margins 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 andqualify 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

44 | 2020 Q3 10-Q

with specifications unique to a customer increases our reliance upon that customer for purchasing our products at sufficient volumes andprices 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 our customers, 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 overthose of our competitors and purchasing our products at sufficient volumes and prices. Our competitors’ products may be less costly, provide
better performance, or include additional features when compared to our products. Our long-term ability to sell system-level memory andstorage products is reliant upon our customers’ 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 ofoperations, or financial condition may be materially adversely affected.
Even if we are successful in selling system-level solutions to our customers in sufficient volume, we may be unable to generate sufficientprofit 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.
Additionally, some of our system solutions are increasingly dependent on sophisticated firmware that may require significant customization tomeet customer specifications, which increases our costs and time to market. Additionally, we may need to update our firmware or develop
new firmware as a result of new product introductions or changes in customer specifications and/or industry standards, which increases ourcosts. System complexities and extended warranties for system-level products could also increase our warranty costs. Our failure to costeffectively manufacture system-level solutions and/or firmware in a timely manner may result in reduced demand for our system-levelproducts and could have a material adverse effect on our business, results of operations, or financial condition.
Products that fail to meet specifications, are defective, or that 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. 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 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.
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.

45

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. Due to the volatile nature of our industry and ouroperating results, 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.
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;
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.
Litigation 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. 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 could be subject to litigation or arbitration
disputes arising from our relationships with vendors or customers, supply agreements, or contractual obligations with our subcontractors orbusiness partners. We may also be associated with and subject to litigation arising from the actions of our subcontractors or business
partners. We may also be subject to litigation as a result of indemnities we issue, primarily with our customers, the terms of our productwarranties, and 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. 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 litigation could lead tosignificant costs and expenses as we defend claims, are required to pay damage

46 | 2020 Q3 10-Q

awards, or enter into settlement agreements, any of which could have a material adverse effect on our business, results of operations, or
financial condition.
We are subject to allegations of securities violations and related wrongful acts.
On January 23, 2019, a complaint was filed against Micron and two of our officers, Sanjay Mehrotra and David Zinsner, in the U.S. District
Court for the Southern District of New York. The lawsuit purported to be brought on behalf of a class of purchasers of our stock during theperiod from June 22, 2018 through November 19, 2018. Subsequently two substantially similar cases were filed in the same court adding oneof our former officers, Ernie Maddock, as a defendant and alleging a class action period from September 26, 2017 through November 19,
2018. The separate cases were joined, and a consolidated amended complaint was filed on June 15, 2019. The consolidated amended
complaint alleged that defendants committed securities fraud through misrepresentations and omissions about purported anticompetitive
behavior in the DRAM industry and sought compensatory and punitive damages, fees, interest, costs, and other appropriate relief. On
October 2, 2019, the parties submitted a joint stipulation to dismiss the complaint. The Court approved the stipulation and dismissed thecomplaint on October 3, 2019. On March 5, 2019, a derivative complaint was filed by a shareholder in the U.S. District Court for the District ofDelaware, based on similar allegations to the securities fraud cases, allegedly on behalf of and for the benefit of Micron, against certain
current and former officers and directors of Micron for alleged breaches of their fiduciary duties and other violations of law. The complaintseeks damages, fees, interest, costs, and other appropriate relief. Similar shareholder derivative complaints were subsequently filed in the
U.S. District Court for the District of Delaware and the U.S. District Court for the District of Idaho. On November 20, 2019, the plaintiff in thesecond action filed in the U.S. District Court for the District of Delaware voluntarily dismissed his complaint. On November 21, 2019, theplaintiff voluntarily dismissed his complaint that was filed in the U.S. District Court for the District of Idaho.
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.
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.
From time to time, there have been disruptions in the manufacturing process 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 in locations
subject to natural occurrences such as severe weather and geological events, including earthquakes or tsunamis, that could disrupt
operations. In addition, our suppliers and customers also have operations in such locations. Additionally, 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 affect our production capabilities or that of our suppliers, including as a result of quarantines, closures of production facilities, lack ofsupplies, or delays caused by restrictions on travel or shipping. For example, in March 2020, the government of Malaysia announced
measures to restrict movement in that country in an effort to suppress the number of COVID-19 cases. Those restrictions temporarily limited
our ability to fully operate our manufacturing facilities in that country. The events noted above have occurred from time to time in the past andmay occur in the future. As a result, in addition to disruptions to operations, our insurance premiums may increase or we may not be able tofully recover any sustained losses through insurance.
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.

47

Breaches of our security systems, or those of our customers, suppliers, or business partners, could expose us to losses.
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. These parties may also be able to develop and deploy viruses, worms, and other malicious software programs that disrupt
our operations and create security vulnerabilities. Breaches of our physical security and attacks on our network systems, or breaches or
attacks on our customers, suppliers, or business partners who have confidential or sensitive information regarding us and our customers andsuppliers, could result in significant losses and damage our reputation with customers and suppliers and may expose us to litigation if theconfidential information of our customers, suppliers, or employees is compromised. The foregoing could have a material adverse effect on
our business, results of operations, or financial condition.
Our acquisition of Intel’s noncontrolling interest in IMFT involves numerous risks.
On October 31, 2019, we purchased Intel’s noncontrolling interest in IMFT, now known as MTU. Our acquisition involves risks including, but
not limited to, an inability to sell the product MTU produces, increases in underutilization charges, increase in R&D expenses, retention of key
employees, and successful integration of MTU. We may also face risks from disputes in connection with joint venture activities, or difficulties
or delays in collecting amounts due to us. The foregoing could have a material adverse effect on our business, results of operations, or
financial condition.
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 May 28, 2020, we had debt with a carrying value of $6.69 billion. As of May 28, 2020, $2.50 billion of our
Revolving Credit Facility was available to us. As of May 28, 2020, the conversion value in excess of principal of our 2032D Notes was $488
million, based on the trading price of our common stock of $46.47 per share on such date.
Our debt obligations could adversely impact us. For example, these obligations could:
•
•
•
•
•
•
•
•
•
•

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, and other business activities;
require us to use cash and/or issue shares of our common stock to settle any conversion obligations of our convertible notes;
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;increase our exposure to interest rate risk from variable rate indebtedness;
continue to dilute our earnings per share as a result of the conversion provisions in our convertible notes; andrequire us to continue to pay cash amounts substantially in excess of the principal amounts upon settlement of our convertible notes
to minimize dilution of our earnings per share.

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,

48 | 2020 Q3 10-Q

financial, competitive, legislative, and regulatory factors as well as other factors that are beyond our control. There can be no assurance thatour business will generate cash flow from operations, or that additional capital will be available to us, in amounts sufficient to enable us tomeet our debt payment obligations and to fund other liquidity 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. In 2019, we suspended the security interest in
the collateral under our credit facility upon achieving a specified credit rating and prepaying our Senior Secured Term Loan B due 2022;
however, if our corporate credit rating were to decline below a certain level, the security interest would be automatically reinstated. If we areunable 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 we are unable to implement one or more of thesealternatives, we may be unable to meet our debt payment obligations, which could have a material adverse effect on our business, results ofoperations, 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 employees. Competition for experienced
employees in our industry can be intense and hiring and retaining qualified executives, engineers, technical staff, and sales representatives
are critical to our business. Our inability to attract and retain key employees may inhibit our ability to maintain or expand our business
operations. 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 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. If our total compensation
programs and workplace culture cease to be viewed as competitive, our ability to attract, retain, and motivate employees could be weakened,
which could have a material adverse effect on our business, results of operations, or financial condition.
The acquisition of our ownership interest in Inotera from Qimonda has been challenged by the administrator of the insolvency
proceedings for Qimonda.
On 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 range. The Appeals Court
held a subsequent hearing on April 30, 2019, and on May 28, 2019, the Appeals Court remanded the case to the expert for supplemental
expert opinion. On March 31, 2020, the expert presented a49

revised opinion to the Appeals Court which reaffirmed the earlier view that the amount paid by Micron was still within an acceptable range offair value.
We are unable to predict the outcome of the matter and, therefore, cannot estimate the range of possible loss. The final resolution of thislawsuit could result in the loss of the Inotera Shares or monetary damages, unspecified damages based on the benefits 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 effecton our business, results of operations, or financial condition.
We may incur additional tax expense or become subject to additional tax exposure.
We operate in a number of locations 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 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 file income 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 and continuing 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 U.S. and many foreign jurisdictions. Changes to income tax laws and regulations in any of thejurisdictions in which we operate, or in the interpretation of such laws, 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, our effective
tax rate increased from 1.2% for 2018 to 9.8% for 2019 primarily as a result of the Tax Cuts and Jobs Act, enacted on December 22, 2017 by
the United States. Additionally, various levels of government are increasingly focused on tax reform and other legislative actions to increasetax revenue. Further changes in the tax laws of foreign jurisdictions could arise as a result of the base erosion and profit shifting project
undertaken by the Organisation for Economic Co-operation and Development, which represents a coalition of member countries andrecommended changes to numerous long-standing tax principles. If adopted by countries, 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 our business, results of operations, or financial condition.
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 cannot guarantee that we will successfully achieve performance obligations required to qualify for theseincentives or that the granting agencies will provide such funding. These incentive arrangements typically provide the granting agencies withrights to audit our performance with their terms and obligations. Such audits could result in modifications to, or termination of, the applicable
incentive program. The incentives we receive could be subject to reduction, termination, or clawback, and any decrease or clawback ofgovernment incentives could have a material adverse effect on our business, results of operations, or financial condition.

50 | 2020 Q3 10-Q

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.

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.
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, Singapore dollar, New Taiwan dollar, and yen. In addition, a significant portion of our manufacturing costs aredenominated in foreign currencies. Exchange rates for some of these currencies against the U.S. dollar have been volatile and may bevolatile 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 ourbusiness, results of operations, or financial condition.
We may incur additional restructuring charges in future periods.
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. 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.

51

Compliance with customer and responsible sourcing requirements and related regulations could limit the supply and increase thecost of certain materials, supplies, and services used in manufacturing our products.
Many of our customers have adopted responsible sourcing programs that require us to periodically report on our supply chain andresponsible sourcing efforts to ensure we source the materials, supplies, and services we use and incorporate into the products we sell in amanner that is consistent with their programs. Some of our customers may elect to disqualify us as a supplier or reduce purchases from us if
we are unable to verify that our products meet the specifications of their responsible sourcing programs. Meeting customer requirements may
limit the sourcing and availability of some of the materials, supplies, and services we use, particularly when the availability of such isconcentrated to a limited number of suppliers. This in turn may affect our ability and/or the cost to obtain in sufficient quantities materials,
supplies, and services necessary for the manufacture of our products.
This increased focus on environmental protection and social responsibility initiatives led to the passage of Section 1502 of the Dodd-Frank
Wall Street Reform and Consumer Protection Act of 2010 and its implementing SEC regulations. The act imposes supply chain diligence anddisclosure requirements for certain manufacturers of products containing specific minerals that may originate in or near the Democratic
Republic of the Congo and finance or benefit local armed groups. These conflict minerals are commonly found in materials used in the
manufacture of semiconductors.
Our inability to comply with customers’ requirements for responsible sourcing or with regulations 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 that may result in additional costs and liabilities.
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
our operations and financial condition. Any failure to comply with laws, regulations, or industry standards could adversely impact our
reputation and our financial results. Additionally, we engage various third parties to represent us or otherwise act on our behalf 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. As a result of these items, we could experience the following:
•
•
•
•
•

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

Our failure, or the failure of our third-party agents, to comply with laws, regulations, or industry standards 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 their contractual commitments which could then lead to their defaulting on their obligations with little or no notice to us, which
could limit our ability to take action to mitigate our exposure. Additionally, our ability to mitigate our exposures may be constrained by theterms of our contractual arrangements or because market conditions prevent us from taking effective action. If one of our counterparties
becomes insolvent or files for bankruptcy, our ability to recover any losses suffered as a result of that counterparty’s default may be limited by
the liquidity of the counterparty 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.

52 | 2020 Q3 10-Q

The operations of MMJ are subject to continued oversight by the Tokyo District Court during the pendency of the corporate
reorganization proceedings.
Because MMJ’s plan of reorganization provides for ongoing payments to creditors following the closing of the MMJ acquisition, thereorganization proceedings in Japan (the “Japan Proceedings”) are continuing and MMJ remains subject to the oversight of the Tokyo District
Court and of the trustees (including a trustee designated by us, who we refer to as the business trustee, and a trustee designated by the
Tokyo District Court, who we refer to as the legal trustee), pending completion of the reorganization proceedings. The business trustee is
responsible for overseeing the operation of the business of MMJ, other than oversight in relation to acts that need to be carried out in
connection with the Japan Proceedings, which are the responsibility of the legal trustee. As of the end of the second quarter of 2020,
substantially all creditor payments had been paid under MMJ’s plan of reorganization. Following distribution of the final payment and theTokyo District Court’s approval and issuance of an order concluding the reorganization proceedings, MMJ’s reorganization proceedings inJapan and oversight by the Tokyo District Court will terminate.
During the pendency of the reorganization proceedings in Japan, MMJ is obligated to provide periodic financial reports to the Tokyo District
Court and may be required to obtain the consent of the Tokyo District Court prior to taking a number of significant actions relating to its
businesses, including transferring or disposing of, or acquiring, certain material assets, incurring or guaranteeing material indebtedness,settling material disputes, or entering into certain material agreements. The consent of the legal trustee may also be required for matters thatwould likely have a material impact on the operations or assets of MMJ or for transfers of material assets, to the extent the matters ortransfers would reasonably be expected to materially and adversely affect execution of MMJ’s plan of reorganization. Accordingly, during thependency of the reorganization proceedings in Japan, our ability to operate MMJ as part of our global business or to cause MMJ to takecertain actions that we deem advisable for its business could be adversely affected if the Tokyo District Court or the legal trustee is unwillingto consent to various actions that we may wish to take with respect to MMJ.
The operations of MMJ being subject to the continued oversight by the Tokyo District Court during the pendency of the corporate
reorganization proceedings could have a material adverse effect on our business, results of operations, or financial condition.

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.

PeriodFebruary 28, 2020

– April 2, 2020

April 3, 2020

– April 30, 2020

May 1, 2020

– May 28, 2020

Total numberof shares
purchased

Averageprice paid
per share

Total number of shares
Maximum number (or approximate dollar
purchased as part ofvalue) of shares that may yet be purchased
publicly announced plans
under publicly announced plans oror programs
programs

320,260 $
608,716
—

40.41
45.18
—

320,260
608,716—

928,976 $43.54

928,976 $

7,203,401,131

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 considered common stock
repurchases under an authorized common stock repurchase plan and accordingly are excluded from the amounts in the table above.

53

ITEM 6. EXHIBITS
Exhibit
Number
4.16
4.17
31.1
31.2
32.1
32.2
101.INS
101.SCH
101.CAL
101.DEF
101.LAB
101.PRE104

Description of Exhibit
Third Supplemental Indenture, dated April 24, 2020, by and between Micron Technology,
Inc. and U.S. Bank National Association, as Trustee
Form of Note for Micron Technology, Inc.’s 2.497% Senior Notes due 2023 (included in
Exhibit 4.16)
Rule 13a-14(a) Certification of Chief Executive Officer
Rule 13a-14(a) Certification of Chief Financial Officer
Certification of Chief Executive Officer Pursuant to 18 U.S.C. 1350
Certification of Chief Financial Officer Pursuant to 18 U.S.C. 1350
XBRL Instance Document - the instance document does not appear in the Interactive Data
File because its XBRL tags are embedded 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 and contained in Exhibit 101)

54 | 2020 Q3 10-Q

Filed
Herewith

X
X
X
X
X
X
X
X
X
X
X

Form

Period Exhibit/
Ending Appendix

Filing
Date

8-K

4.2

4/24/20

8-K

4.3

4/24/20

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:

June 30, 2020

By:/s/ David A. Zinsner
David A. Zinsner
Senior Vice President and Chief Financial Officer(Principal Financial Officer)/s/ Paul MarosvariPaul Marosvari
Vice President and Chief Accounting Officer(Principal Accounting Officer)

55

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:

June 30, 2020/s/ Sanjay Mehrotra
Sanjay Mehrotra
President and Chief Executive Officer and Director

EXHIBIT 31.2
RULE 13a-14(a) CERTIFICATION OF
CHIEF FINANCIAL OFFICER
I, David A. Zinsner, 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:

June 30, 2020/s/ David A. Zinsner
David A. Zinsner
Senior Vice President and 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 May 28, 2020, fully complies with the requirements of Section
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, inall material respects, the financial condition and results of operations of Micron Technology, Inc.

Date:

June 30, 2020/s/ Sanjay Mehrotra
Sanjay Mehrotra
President and Chief Executive Officer and Director

EXHIBIT 32.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. 1350
I, David A. Zinsner, 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 May 28, 2020, fully complies with the requirements of Section
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, inall material respects, the financial condition and results of operations of Micron Technology, Inc.

Date:

June 30, 2020/s/ David A. Zinsner
David A. Zinsner
Senior Vice President and Chief Financial Officer