Status Update

Aug 24, 2020

Hello. I am Farhan Ahmed, Head of Investor Relations at Micron. Thanks for listening to this prerecorded presentation posted on our Investor Relations website. In this presentation, Naga Chandra Sakharan, Senior Vice President of Technology Development will provide an update on Micron Sustainability Initiatives. As a reminder, the matters we will be discussing today include forward looking statements. These forward looking statements are subject to risks and uncertainties that may cause actual results to differ materially from the statements made today. We refer you to the documents we file with the SEC, specifically our most recent Form 10K and Form 10 you for a discussion of risks that may affect our future results. Although we believe that the expectations reflected in the forward looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. We are under no duty to update any of the forward looking statements after today's date to form these statements to actual results. Hi. I'm Naga Chandra Shekran, Micron's Senior Vice President of Technology Development and a proud Micron employee of over 19 years. Thanks for listening to this presentation. Today, I'm happy to provide an update on Micron's sustainability initiatives. The topic of sustainability brings a lot of excitement and passion to me. I wanted to share a personal story to help you understand my passion around this topic. I was born and raised in the city located in southern part of India. We were dependent on well water in our house. Whenever it was around ten years old, the quality of water decreted with lowering water table in our house. We had to start using city supplied water Initially, every street had a city tap from which we had to collect drinking water. During summertime, water supply might not be available every day, and we had to stand in line to collect water once every few days. I still remember the days when I used to get to the street early in the morning to get a spot in the line and wait for water to be turned on. If we miss it, we had to manage with poor quality well water till the next opportunity. Even as early as last year, the city and its entire population was struggling to get water due to a variety of factors. While many of us today are blessed to not have to think twice about water, there are millions around the world who still struggle to get the much needed water for living. I'm passionate about this topic because of my experience, And at the same time, excited and proud to work for a company who is committed to making a difference when it comes to sustainability initiatives. At Micron, sustainability is managed throughout the company and is a component of Micron's annual performance incentive plan. Company wide. Oversight extends to the highest level, the Micron Board of Directors. The Board of Directors governance and sustainability committee usually meets quarterly with leaders on our sustainability team, helping to guide prioritization and accountability. In a recent meeting, our focus was on environmental goals, diversity, equality and inclusion, sustainability reporting, and we also discussed how we can have broader team member engagement in our sustainability initiatives. Our dedicated sustainability team is responsible for facilitating the corporate sustainability strategy and for driving transparency through public reporting and other external and internal communications. Micron's sustainability council includes cross functional representation from throughout Micron, enabling coordination of sustainability objectives across the company in a collaborative fashion. It also provides an important vehicle for surfacing opportunities from and to the broader organization. And finally, I, along with other senior executives, provide executive oversight and support to the efforts of the sustainability council and team. Over time, we have improved our sustainability program and external disclosures. And in the last year, we joined the SSP standards advisory group and issued Micron's 1st sustainability reporting index, which was aligned with SASB's semiconductor industry standard. In today's presentation, I want to discuss how Micron drives sustainability in 3 primary areas. 1st, the impact of our products, 2nd, through responsible operations, and third, through team member engagement. Let us start with our product We apply our innovations to develop products that make the world better, empowering billions of people and enabling sustainability across industries. And we innovate to deliver this impact while making our products more efficient. Micron's vision is to transform how the world uses information to enrich life for all. I say for all to emphasize the importance of inclusion, and we are proud that Micron's products have played a significant role in enriching life for billions of people. All modern computing hardware today depends on shared underlying technology, semiconductor, memory, and storage to store and access the data. As a leader in the semiconductor industry for more than 40 years, Micron has taken part in every stage of this essential technology's evolution. Micron has a broad product portfolio and the only memory company in the world, that offers DRAM, NAND, 3d Crosspoint, NOR, high bandwidth memory, and multi chip package solutions to meet our customer needs. Our products play a vital role in some of today's most significant advances. For example, the Internet, it's supporting data center, cloud and networking infrastructure and the pervasive use of mobile phones and personal computing devices. These technologies have given people around the world greater freedom to access, interact with and understand information. For example, mobile devices that we are also used to provide access to internet at our fingertips. Allowing people to access essential services even at remote locations and to participate in the global economy, Some of them for the first time, digital access has perhaps become even more important to our daily lives given COVID-nineteen. The ripple effect is broad reaching impacting daily life for consumers, businesses and even how the scientists conduct research. The advancements of artificial intelligence, 5G, autonomous vehicles, internet of tanks and the arrival of several new technological breakthroughs in future. Will all depend on memory and storage solutions, and Micron is committed to doing our part. Micron's products also help other industries pursue and advance their own sustainability objectives to benefit the environment and society, and we are proud to help all other industries achieve their goals. For example, the use of virtual reality in Healthcare, AI for Smart Manufacturing, self driving cars that will improve driver safety and reduce vehicle emissions and AI in the health care industry, for example, cancer research. These are just a few handful of applications that strengthen society and the environment. I'm particularly excited about healthcare applications. For example, emerging approaches to cancer care, such as precision oncology, involve tailoring treatments to each patient. Unlocking these innovative treatments using AI, memory, storage, and deep learning acceleration technologies is enabling health care to tailor individual treatments for individual tumor types. Our technology is helping speed up analytics pipelines so medical professionals can determine and deliver treatments faster than ever. Semiconductor Memory technology is helping save lives. Let's take the example of autonomous cars, self driving cars improve driver safety and reduce vehicle emissions. High performance computers based on artificial intelligence Employee deep neural network algorithms, which now enable autonomous cars to drive better than human driven cars. Our wide range of memory and storage devices all play an essential role in getting us a step closer to a future when our autonomous vehicles navigate the best route to get us safely to our destination and to our families. Semiconductor memory technology is driving improved safety and sustainability. As enablers of these new realities within our products, Micron is also implementing several smart solutions in our factories. By using connected missions to collect real time data in our factories and then analyzing data using AI and ML algorithms we can dramatically improve operational efficiency by making real time decisions and predictions. Thus enabling sustainable manufacturing. Semiconductor Memory Technology is enabling sustainable manufacturing. Micron's memory and storage products are at the core of countless digital devices and affect their sustainability. We are constantly innovating For example, data centers globally use roughly 200 terawatt hours of electricity per year. And energy efficiency is a huge opportunity in this area. To address this opportunity in our server DRAM, we are working to The next major transition from DDR4 to DDR5 products will take place over the next several years. And will be critical to enabling data center servers to operate more effectively, and Micron is playing a leadership role in driving this transition. In our tests, DDR5 products offers a 13% reduction in energy per bit versus DDR4 products. This reduction in power consumption will contribute to a lower dollar cost for performance as well, given that the power consumption is a major cost for data center customers. For mobile and embedded applications, Micron delivered the world's first low power DDR5 DRAM in mass production in early 2020. This lower power DRAM will meet growing consumer demand for artificial intelligence and 5 g functionality in smartphones. In addition to offering a 16% improvement over LP4 products, Micron's industry leading LP5 DRAM will offer offer 20% lower power consumption when compared with competition and when tested for bandwidth intensive use cases. Micron's high bandwidth memory solutions offer capability to our customers to store and move large amounts of data that can improve performance at a reduced power. We have built sustainability into our world class operations with a focus on protecting the environment, supply chain responsibility, and employee health and safety. Micron has developed into the 3rd largest memory and storage company with over $20,000,000,000 in annual revenue. Our global network of Manufacturing Technology And Business Centers of Excellence plays a key role in our strength. Our global footprint provides our customers a geographically diverse source of supply, which is becoming increasingly important for many of our customers. Our diverse locations also brings together some of the world's brightest talent to work on our most advanced memory technologies. Within this context, our scale, global reach, and responsibility to society demands that we operate sustainably. Sustainable operations are also important to Micron. Given the incredible growth for our markets. The volume of DRAM produced in 2019, which our industry measures in bits, was twelve times what was produced in 2009. And for NAND, this growth was 48 times in the last decade. Given that the demand for our products is expected to continue growing exponentially for years to come, it is imperative that we are also responsible The inherent capability of Moore's law has allowed higher bit density with each successive generation while also reducing resources required. No other industry is as efficient as the semiconductor industry in this regard. However, we are still focusing on improving Micron's executive vice president of global operations, announced our plans to invest over $1,000,000,000 of CapEx in the next 5 to 7 years on sustainability programs. Today, I'd like to announce measurable environmental targets that we aim to achieve I'll take a moment to review these 1 by 1. In the area of emissions, we are targeting reductions through greenhouse gas abatement and heat transfer efficiency improvement. By calendar 2030, we are targeting a 75% reduction in emissions per unit of production when compared to calendar 2018. Longer term, we'd like to drive this number down even further And on an absolute basis, we aspire to a 40% reduction relative to calendar 2018 levels. In energy, we are targeting energy consumption reduction through adoption of energy efficient facilities and smart control systems as well as a transition to renewable energy sources where available. By calendar 2025, we'd like to be using 100 percent renewable energy in the US. Longer term, we'd like to get to 100 percent renewable energy and we are partnering with governments around the world to increase the availability of renewable energy projects in the areas where we manufacture. In water, we are targeting conservation through enhancing our water reuse and recycle infrastructure as well as engaging in water restoration projects. By 2030, we'd like to get to 75% reuse, recycle, restore of our total water usage. It is our aspiration to get this to 100% in the longer term. And finally, in waste, we are focusing on reduction, reuseability, and recyclability through enhanced waste recovery systems, and improved waste stream segregation. By calendar 2030, we'd like to get to 95% reuse recycle and recovery and 0 hazardous waste to landfill. Longer term, it is our aspiration to get these numbers to 100%. Including all based, not just hazardous waste. In order to achieve these goals, we are developing new technology solutions integrating responsible development, applying IoT, AI and ML into our factories to improve efficiency. These projects and goals are embedded into our development and manufacturing processes. Micron is building sustainability into all aspects of our operations, starting with the design of our facilities. We consider leadership in energy and environmental design, also known as LEAD, the world's top rating system for green buildings, in all our design process. Many of our newest buildings and fabs have achieved LEAGOLD status including our newest wafer fab expansion in Singapore and our assembly and test facility in Taiwan. We design and build all new construction to meet or exceed these standards. Micron plays an important role in managing risks and driving sustainability across our supply chain through direct relationships with our suppliers and industry bodies like the Responsible Business Alliance or RBA. We hold our network of over 9000 suppliers in 42 countries to the high standards of the RBA code and Micron's own code of contact, establishing high standards for compliance, ethics, human rights, and environmental performance. We also have specific programs to manage and mitigate risks and improve performance in responsible mineral sourcing supplier diversity and climate change. Each year, Micron's members of the sourcing risk and compliance group screen assess score, audit, improve, and develop our suppliers based on these areas. Of course, Micron itself is a supplier to our customers, and we are subject to many of the same auditing protocols as our own suppliers and hold ourselves to high standards. Many customers use sustainability as one of the criteria to evaluate Micron's overall performance, looking for transparency, risk management, environmental, and social performance and responsible sourcing related topics. We partner closely with our customers to improve in all of these areas. Customers include this information and supplier performance evaluations and purchasing decisions alongside quality, delivery technology, service and price. All Micron sites have qualified for RBA Platinum Recognition and all sites that have been audited in the past 2 years have achieved perfect audit scores. Micron's lip safe culture incorporates a combination of training, mentoring, metrics, and innovative use of technology to drive improvements in safety. We have a shift left mindset with safety. Which means we go to the root of problems as early as we can and address them. When risks are identified, Micron removes and mitigates them through team member behavioral changes, business process adjustments, and technology design changes We also closely partner with our suppliers and vendors We work to proactively identify innovative technology solutions to improve safety in a sustainable manner in semiconductor Manufacturing. Lybsafe has contributed to improvements to Micron's recordable injury rate, which improved in calendar year 2019, from an already world class level. Of course, this year, COVID presented its own unique challenges for health and safety. With Micron's global footprint, we benefited from early visibility to the situation and were a leader in responding. Proactively implementing measures to safeguard are more than 37,000 employees in 18 countries, while continuing operations at all our manufacturing sites globally, acting with an abundance of caution We established early preventative protocols to reduce the risk of exposure, including remote work, and separate red and blue teams to minimize the number of people working on-site at the same time. Additional cleaning and physical distancing were also implemented. And as the situation escalated, we provided additional assistance to our employees. Looking ahead, as governments across the globe lift our ease restrictions, Micron is developing return to on-site work protocols to prioritize the health and safety of our teams. We are carefully assessing risk and are planning a phased approach to team members return to work on-site, varying by location, job role, and business needs. At all Micron's buildings and workspaces, including leased locations, our air handling and ventilation systems are being optimized to enhance indoor air quality and to maintain a healthy and safe working environment for team members. We will continue to enforce the strong preventative measures we implemented at our sites from the start of the COVID 19 outbreak. And deploy new protocols as needed to maximize safety. Turning to team member engagement. We are very proud of our talented team working on developing and manufacturing the technology and products that will drive our company into employee engagement and development and community impact. Micron continues to grow our commitments to diversity, equality and inclusion. In fiscal year 'twenty one, we will continue to focus on increasing our representation of underrepresented groups such as Blacks, Latinx, people with disabilities and women through all levels of the organization including leadership roles and our board of directors. We are creating a diverse slate of candidates that include underrepresented groups, and diverse interview teams to mitigate bias in the interview process. Micron is a great place to work and an attractive company we are confident that we can by strengthening our efforts at historically Black Colleges And Universities And Hispanic serving institutions. And also by working with organizations such as the Society of Women Engineers. We are driving for equality throughout our organization. And our fiscal year 2021 pay equality analysis will include a broader set of underrepresented groups. We will also increase Micron's minimum wage to $15 an hour in the U. S. And we'll continue to drive inclusive benefits globally. We are strengthening our culture of inclusion by enhancing our employee resource groups, and training leaders and team members on the adoption of inclusive behaviors. Micron is also taking a stand to support diversity beyond our walls. Our commitment to social justice will be anchored in our newly created Social Justice Council. The objective of the Council will be to determine how best to drive racial equality an lgbtq plus human rights in the workplace and in our communities. We are putting our money where we say our commitments are. We are committing a portion of Micron's cash to be managed by minority owned financial institutions. And we will continue to drive our supplier diversity initiative to build mutually beneficial partnerships with underrepresented and small business enterprises. Micron fosters a supportive work environment where team members try engage in meaningful work and bring their best selves every day. Employees who are engaged at work tend to thrive professionally and our performance is better as a result. At Micron, we enable greater employee engagement through a focus on leadership, training, a culture of excellence and a sense of purpose. We help our team members to understand the important role we play to technology advancement and our society. We measure employee engagement in our buy Annual Engagement Survey, which provides an opportunity to solicit feedback from employees and then act on their input. The participation rate in the October 2019 engagement survey was 95% and the favorability ratings have increased since the first survey was conducted. Survey questions prompt employees to indicate their level of agreement with statements like I understand how my work contributes to Micron's strategy, and Micron is a good corporate citizen. Micron's commitment to sustainability also extends to our communities. For decades now, Micron has given back to the communities where our employees live and work. We enrich our communities by addressing basic human needs, which during such a challenging time, has been especially important. We engage our team members by supporting their volunteer time, as well as matching their donations to courses around the world. We also work to inspire the next wave of innovators and educators by supporting and developing programs to promote science, technology, engineering, and mathematics education with a focus on underrepresented groups. Finally, our operations and sourcing practices have a significant effect on people, our planet and our customer's sustainability performance. We work closely with our supply chain partners to ensure resource materials responsibly. Plus, we consistently work to reduce our impact on the environment under communities where we operate in the areas of water management energy efficiency, recycling and more. The Micron team began taking action early to help communities combat the coronavirus and dedicated $35,000,000 towards these efforts. $10,000,000 was from our Micron Foundation to help provide much needed support for food banks health facilities, and educational organizations as they began to transition to online learning as schools closed. Our Micron team members were also extraordinarily generous, as they dedicated their volunteering time, often virtually unutilized our matching gifts program where all donations are double matched by the Micron Foundation during the year 2020. Micron also provided one time assistance to 68% of our team members worldwide, and special grants for those facing financial hardships. Today's astounding rate of innovation is driven by memory and storage solutions. As a company and as a corporate citizen, Micron is finding more ways to accelerate sustainability and enrich life for all. Last year, investors requested that we report according to the SaaS B standards and that we commit to measurable environmental targets. As we shared today, we have delivered on this request. We look forward to more open dialogue with the investment community as we continue our ESG journey. Thanks again for listening in, and please feel free to reach out to Micron Investor Relations if you'd like to engage more with us on ESG issues. To learn more, please visit investors. Microndot com or follow these links.