Micron Technology, Inc. (MU)

Analyst Meeting 2014

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Aug 6, 2014

Well, good morning, everyone. Thank you for coming to Micron's Analyst Day. It's a it's a real pleasure to be here. We, we, we try and get over, this part of the world on a regular basis, and it's been a little longer than than we would have hoped since the last time, but we're very happy to be here today to share some information about Micron Technology and our path, Ford. I'm gonna just kick off here with some high level overviews relative to our view of the memory industry and and and Micron's investment priorities, what we're focused on. On a go forward basis. And then we've got, a number of our executive staff here to share some information with you today. Following me will be Mark Adams, a little bit more detail on our operational priorities and and what he's focused on in terms of driving efficiency, new products and customer satisfaction moving forward. Scott De Boire, from our technology development organizations here to share a little bit about our view of technology roadmaps going forward and some of the important things Micron's working on. We've got Brian Shirley to talk about all the market segments, microns addressing and what our priorities in those areas are. And, introducing for the time today, to you in the investment community, Darren Thomas, who's a new leader of our storage business unit. So we get through all that. And then Ron Foster, our CFO, will come up and talk, about about how Micron's planning on allocating capital moving forward and some of our financial performance. And plans going forward. I will, I will have a relatively brief presentation up front, and then I will hold Q and A for myself until after all the various executives have an opportunity to talk, but I'll be back at the end of the presentation to do a little wrap up and and answer any questions you have for me. Without further ado, if you look at at this slide here relative to DRAM's supply and our view of it on a go forward basis, you can see a a continued projection of relatively muted DRAM supply growth going forward. If you look at, at 2014, that number has been adjusted up a little relative to where we had it before. Now our view is that that's going to come in about 30%. That's a little higher than we had previously indicated we thought supply growth was going to be. But the net result of that is that that we think the go forward, supply growth over the next, 6 to 18 months gonna be a little bit lower. Again, that that 30% is probably weighted, slightly to the front half of 2014 as opposed to the back half of 2014 with some some good performance, by, really most of the competitors in the marketplace in terms of bit, bit growth in the first half. And so as we look, going forward, you see this, compound annual growth rate for DRAM running in the roughly the 21 percent range. And by the time we get to the end of the day and you see what we think is going on in all the various market segments, I think you'll come to appreciate that's a very reasonable picture, well, the overall market health. If you look at the right side of the graph here and you look at where the growth is going to occur, obviously, mobile growth will continue to be very, very strong our view of enterprises that it will also be very strong. And 2 big components here, obviously, the cloud and then the on premise, bit growth in the enterprise. Both of those big contributors, we've taken a relatively conservative view as to how big those growth numbers can be. And, and Brian Fitzgerald will comment more on that on a go forward basis. But the overall story here is, is strong growth in both enterprise and mobile. Muted demand, leaving the overall, I think favorable market conditions for DRAM on a go forward basis. When you, switch and take a look at now, what's going on from a NAND supply perspective. Again, you can see the the CAGR on a go forward basis, 31% and declining as we move through time. So uh-uh, really a a view that most of the growth in in Nanta in NAND bits is gonna come from migrations first to the 1 x, and 1y nodes, and then on beyond that into three d, but with a capital intensity that that that drives a a reasonable supply growth on a go forward basis. And the story here is really all around what's SSD penetration gonna be like. There is a there is elasticity, in in a couple of these segments, at least, that's that's fairly significant. And so we don't see how this gets out of whack in any significant way, for any sustainable period on a go forward basis. And we see, a really very, very healthy demand in both the SSD arena and in mobile, to drive whatever supply is at is eventually supplied to the marketplace. So the story, I think, that we should think about is a a memory industry that's that's really in a very, official and and, virtuous cycle today. We have had a significant consolidation across across both all the market spaces. And the the suppliers in the in the market today all have sufficient scale in order to drive an effective and efficient business model going forward. And so our view is that we'll continue to see what we've seen over the last couple of years here, which is really a return focused approach to investment by the incumbents in the market and, one that that drives a supply that's that's in line with with customer end demand, to meet customers' needs, but not market share driven. We see limited new capacity in that environment coming into the marketplace. And with the slowing technology migrations, that are really a factor of of what's what's accomplishable at a reasonable price given the technology challenges ahead. We see relatively, in line undersupplied market on a go forward basis. And finally, we see pretty explosive demand across diversifying market spaces as we start thinking about not only what's the growth in mobile and in enterprise, but what's the growth in all the various, internet of connected things, in the automotive spacing, industrial space, really a a very, virtuous cycle in terms of demand growth that's broadly distributed across a a, a broadening set of end applications in some cases, a broadening set of customers of significance. And, some of the other guys, Brian Shirley, come up and spend a little bit more time that as well, Darren Thomas. So the net result, I think we're pretty, pretty excited about being in the memory industry today. I've been in this industry for about 30 years. And while it's always been challenging, really, I've seen the opportunity for sustained growth and and the opportunity to drive value added differentiated solutions in the way that we can today in a in an overall market environment that's very, very healthy. So as we move forward, we couldn't be more excited about the opportunity that's afforded the Micron to go out and service our customers. If you think about us in the marketplace today, we're a truly global company. Relationships and great engineering and technology development distributed around the world. We have capacity. In and really a very, very positive situation from ICON. Our focus in that environment is really on 3 things. First of all, we wanna make sure, that we're doing a good job for our customers by having the right technology available, not only from a product enablement perspective, but also in manufacturing capacity, to deliver the solutions that they need when they need them in a cough effective way. And so number 1, on our priority, when we think about what does Micron have to do, going forward, we have to continue to develop great technology and great products and memory solutions, that we can that we can deliver to the customer in a cost effective manner and that involves investment in both the manufacturing capacity, not not to create new capacity, but to create the capacity that has the performance characteristic that the customers demand for their end products. We have to continue to invest in, in system level capability, value added solution so that as this market over time continues to decommoditize, we have the right products based on the right customer to meet the customer needs. And so Micron today has been very focused on adding incremental capabilities. Throughout the team at the management level all the way down, to the entry level engineers with respect to our ability to deliver memory system and memory subsystem solutions. We do that both organically and on a go forward basis, we'll think about, where inorganic growth makes sense. But at the end of the day, we wanna be a memory subsystem and system solution provider. And, we wanna deliver those solutions that that really differentiate our products relative to the others in the marketplace. And we believe that's the path forward to success. And finally, we'll do all that with a with a view to the shareholders. Our, our company, really has historically been lean and mean Well, we wanna stay that way. We wanna spend the shareholders money, very, very carefully to achieve these objectives. And when we have extra lift over as we anticipate, in this in this market environment, we will do. We wanna look for ways to return that capital to shareholders after we or as we fulfill those first two priorities. So the relative priority of these three boxes will move around as we move through different points in time. But, when you think about what Micron has done over the last year, we've been very proactive about returning excess capital to shareholders. And, Ron will give you some more information on that here when he comes up and talks a little bit later. That that will continue to be our thought process as we move through time. So, what does that mean relative to how Micron's gonna, fund capital as we move into 2015? We wanna we wanna give you a a forecast relative to our our capital spending, to support the business in 2015. And we think it's gonna be in the $3,600,000,000 to $4,000,000,000 range. These numbers are always tough to pin down exactly in terms of where in the range we might we we might fall and we want to maintain flexibility to adjust the range relative to market conditions. But having said that, we think the number is going to be somewhere something like this are in this range in order to support those priorities I just talked about. Now it's important to note that the focus here is not on growing debt. Or or adding capacity or gaining market share. The focus for Micron, in 2015 is to make sure we have technology in place and we have checks in order to support the customer end needs at the right performance points, power points, to drive their business is forward and to do it in a cost effective way, relative to the competition. So when you look at these 3 big buckets of what Micron's going to spend money on in 2015, there's a a technology and product enablement bucket. There's a a bucket for for nonvolatile memory deployment and for DRAM deployment. And think in terms of those numbers being roughly 30% for the top bucket, roughly 20% for the bottom bucket, for the middle bucket, and roughly 50% in that in that DRAM category. Bottom. Now, those numbers are not precise. We shaded the colors on purpose because we're going to be market reactive as we look at what's going on in the marketplace. But those are, ballpark what you should think about. In the in the technology and product enablement space, there really are a number of things we need to do to service these memory systems and subsystems, that I that I talked about. And that includes things like new memory technologies, the cost effective ways of building advanced, hybrid package solutions to support the memory systems and subsystems that we wanna do as well as things like the the hybrid memory cube where we have advanced, high performance memory solutions for enterprise and networking. We wanna continue to make sure we're we're tech we're investing in the technologies of the future. So outside of NAND and DRAM in this bucket, we've got capacity low level capacity and early pilot line, activity around future memories. And Scott DeBoer will talk a little later about what some of those technologies look like. And and the market segments that they might address. And finally, we've got a bucket that that facilitates all the other activity that has to go on in the company to make that we can deliver, increasing volumes of SSDs, increasing volumes of, increasing mix of, more complicated products to the end marketplace. In the nonvolatile market, we've got the completion of the build out of 16 nanometer, NAND, planar technology, as we continue to migrate from 20 nanometer to 16 nanometer. And roughly 2 thirds of the bucket there is the first installation in capacity relative to a 3 d NAND conversion that will take place over a number of years on a go forward basis. But to get that to get that process off and moving, there is capital spend, in 2015, the the initial increment of 3 d NAND in place so that the technology learning and the early, socket enablement and customer deliveries can take place in the second half of twenty fifteen. And finally in DRAM, there is, the completion of 25 nanometer conversion has been an ongoing throughout 2014 as Willow's early production ramp of of 20 nanometer technologies, across micron's product portfolios. So the thing to keep in mind again is as we move through the year, we'll continue to monitor market conditions. Our approach here is really around market return, not around market share, and, and making sure that we're putting the right capabilities in place to deliver value added products in a cost effective way. I'm going to stop here and turn it over to Mark Adams, more about what's going on operationally. And I'll be happy to come back later on and take any of your questions. Thank you, Mark, and good morning. Appreciate you, joining us today. I wanted to pick up on, the theme that Mark had talked about. It's how we're looking about the business going forward and how it different than we may have looked at it in the past. You know, I'm not sure I need to get up and give you a a a big presentation on on the dynamics and the and the big trends of driving growth and technology today. But what's interesting about this is that if you look back in the memory business, maybe a decade ago, where memory was in terms of the the bulk of the capacity in the industry. It was pretty much of a industry standard product portfolio and a very narrow set of applications. And when you think about today's, big technology drivers, the trends and technology It's really the catalyst for why we think the memory business, is a different business going forward. And you think about, something as simple as where networking is evolving to and and the impact on growth in terms of infrastructure enablement for mobile and corporate enterprise applications. If you think about embedded in a machine to mean machine type applications and and just a massive scale out in growth in terms of smartphones and rule and the application based there. Certainly cloud computing, changing the architecture and how the world is connected and certainly, and over the last couple of years, the the the growth and and in big data applications. And so what's unique about this for us in the memory business and for Micron, as we look at our business, is it ran is a dramatically different way of doing business for when we look at serving our customers and these end market applications, we're engaging with defining and innovating solutions help our customers on a unique one to one basis. There is no industry standard part in subsystem solutions that we're developing spans across all these. Each one of these categories has different levels of technology and not just the silicon, things around the silicon that allow us again to empower our customer's different solution approach. And so from our perspective, These trends in technology are really driving a fundamentally different opportunity for Micron going forward. How does that relate to Mark's mentioning of an returns based approach? Well, when we think about how we're going to invest in 2015 and beyond, we're looking at things that have a dramatic impact on the return side of our business. We're no longer investing for quote market share or just to own the capacity and get into a capacity battle. What we're trying to do with our business is to advance either from a cost position or we're going to invest in capabilities that allow us to differentiate and actually improve our margin opportunity. And so what, when I think about things like technology development and deployment, in the past, you would do this as you added capacity. Our focus is not necessarily driven by capacity, but cost. And so when we think about our business going forward in terms of core silicon and process enablement, which think about how we enable ourselves to be a cough leader at the Silicon level. The other side of it is we're investing tomorrow. Mark talked about new memory technologies, and I'm not gonna steal too much of what Scott Dabour will get up and talk about, and our roadmap in in future years. But, we're continuing to invest, again, on driving capabilities to differentiate and drive margin, not driven by capacity. Beyond process technology at the Silicon level, we're trying to drive our capabilities in manufacturing and not just front end manufacturing, but all the way through back end tests and assembly. When I put the slide up earlier, it talked about the big data trends in terms of the technology industry. You can imagine that each of these businesses has unique customer requirements, unique supply chain requirements, product differences in terms of how we build the products and what the solutions look like. Again, that's fundamentally different than a DRAM, mod company from 10 years ago. And so our business, as we think about manufacturing and as we think about all the way out to supplying our customers with their products is a different supply chain model all the way back from how we build it to how we ship it. And so we're trying to invest in our company to be world class, not just the technology level, but how we drive our capabilities out to the customer. Lastly, is Mark talked about subsystem and systems level solutions. The memory business and how it's evolving, allowing us to drive the core technology we we develop and drive these into unique solutions that power our customers. And so when we think about solutions in each one of those market segments that I identified in terms of trends, when we think about mobile, mobile is not a core piece of silicon that we just sell to the market. Each one of our customers, we're engaged within developing products and technologies and roadmaps that drive not just one piece, but multiple pieces of our port product portfolio and our technology portfolio to solve a customer's problem. That's true with storage. That's true with just about any piece of our business as we go forward, and we're going to continue to invest Again, not necessarily driven by capacity but capabilities to differentiate our products and to innovate with our to drive a different business model in the memory business. So when if I take each one of these individually, Mark talked a little bit about where we are today in terms of executing on today's investment. In DRAM, will continue to, drive our 25 nanometer DRAM conversion on a global basis. And, that requires a lot of execution on the team and the in capital in 2015 to finish that rollout out and will allow us to drive better cost performance. On a NAND side, likewise, we'll continue to drive our NLC 16 nanometer, products into the marketplace and and drive more of a a differentiated approach in terms of some of the unique products we have in the NAND business. What I talked about earlier about solutions it's not just DRAM and it's not just NAND. Our capabilities as we look at controllers and firmware and even how we package and stack silicon to each individual end market capability are things we're driving today. So if you think about EMCP for mobile applications or EMMC where we take a controller and take our silicon and bundle that into a product solution. We have a unique opportunity to drive not just a commodity approach, but a differentiated approach. And that's the things we're investing in today. Beyond those investments, we have a lot going on in the company as far as increasing our cost capability and On the cost side, we're going to be continuing to roll out and drive improvements in our DRAM business. By the end of this year, we'll be sampling and we look to have, put that into, manufacturing ramp, in our 20 nanometer DRAM technology during calendar year 15. On the NAND front, Scott DeBora will talk a little bit about, our enablement of 3 d NAND, and we think we have a great story there and a and a big winner in terms of allowing us to bring innovative technology which we think will allow us to strengthen our NAND business. Finally, Micron has been an innovator on the packaging and silicon interface capability in terms of number of different applications. Many of you will know that we've been a driver of the hybrid memory cube opportunity in the industry. And with that, the underlying technology that allows us to see in that type of business. So when you think about technology and our investment at Micron, a lot of it's around again cost driven benefits, margin enhancements, and capabilities Again, a returns based approach to that as opposed to what we used to think about in terms of investing for capacity and and market share. All of our investments in these technology areas are really driven to improve our financial performance and improve our capabilities to deliver innovative solutions. How would that show up? If we do, as we say, we will do and execute, you will see us innovating on a whole different set of applications going to the market. For example, in the mobile segment, you'll see us innovate from low power DRAM all the way out to taking, again, core silicon and hiding that behind us the controller and allowing us to meet customer capabilities and requirements for mobile applications. If you look about terms of enterprise DRAM. And Brian Shirley will talk about that, shortly. You think about taking stack packages of DRAM and interfacing that a hybrid memory cube solution to differentiate and allow better bandwidth performance to the networking and server space. In NAND, as we think about long turning to Seth at NAND, we think about how we take NAND core technology, and again, using the 3 bit cell technology and controller technology firmware, how we deliver innovative solutions for storage and other market applications. If you look at, embedded today in the automobile, we think that NAND will play a specific role in providing unique solutions in that market. You'll hear Darren Thomas later today talk about enterprise storage and what we think about our capabilities around not just the core NAND silicon, but our firmware, our controller, all the way out to the full end systems capability we need to be successful in that business. Those are the type of things that will allow us to differentiate and innovate with our customers, and those are the things you'll see us investing, again, not capacity, capabilities, and cost driven. In the area of manufacturing, we are continuing to strive to be the world class leader in manufacturing and memory space. Continue to look at ways that we can invest our performance within the factories, but also along the supply chain. And couple examples of that are in our LP to factory in, the former LP to factory in Micron Memory, Japan, in Hiroshima, we're continuing to look at ways we can optimize the throughput and improve the overall fab performance and align with other factories in the night brand network. On the island in Singapore, we're taking a look at how we can optimize all of our NAND resources there to drive the economies of scale cost benefits and actually the capabilities to drive not just a healthy sixteen nanometer, execution, but also how we think about further technology rollouts in the NAND nonvolatile space. Things like clean room optimization, how do we look at our factories equipment utilization. These are areas that require investment for us to become world class and the performance and results we measure ourselves to In addition, one of the, areas that we need to execute really well on as this memory market diversifies an end market segment we need to be able to be flexible in terms of our product mix. One good example of that is in the mobile to PC market dynamic. When you think about the capacity that we allocate to both those markets, we have to be flexible to ride the opportunities that each of the market segments presents and and have the capabilities to move, where the best returns will be over the the near term and long term. And so we have continually done that in 2014, and the rest of our business diversify we'll be focused on being more flexible, more nimble, and driving the economies of scale around product mix and the flexibility making use of our capacity for a stronger return. We've had a pretty strong year on the manufacturing side. And we've, reduced our cycle times in the front end about 30% in, in DRAM and about 40% in NAND. And we continue to think there's opportunity for us to drive better economics around our manufacturing, performance. These are areas again that some of this requires investment and capabilities. So if in terms of equipment utilization, as well as in terms of, how we look at our measurement systems around manufacturing. And so we think it's it's very important as I talked about flexibility, but also be able to be world class in terms of cycle times, in terms of free food, throughput, in terms of quality that we're gonna be investing in this area. Again, not increasing capacity, but as we look at the opportunity for efficiency and driving better financial performance, and being flexible enough to adapt to the new opportunities in the memory space. The challenge I talk about product mix is, along with these new diversified markets, as we look at the better margin opportunities and innovative solutions in these new segments. Well, it's fantastic in terms of what it means for the memory of business and health of the memory business. But we have to be able to react to each of those opportunities. You can look back and see 10 years ago, the concentration of our business in what we would say more commoditized businesses. Well, the opportunity for us is to drive these solutions into different end market segments. How we manage the capabilities and how we have to invest in driving the flexibility around driving our diversified end market product mixes will help us be much more effective in inventory management and customer satisfaction and being able to be a differentiated memory supplier. So I've talked to you so far about technology and how we need to invest in either cost driven process migration or margin enhancement capabilities in areas such as controllers and packaging and firmware I've also talked about our capabilities around being a world class manufacturing operation. All the way from the front end in terms of what we do in terms of managing products through the fab and out to our customers. The other unique opportunity for us, which we think is a a strong foundation for where Micron is going in the future, is our ability to deliver systems level solutions. When you think of NAND and DRAM at the core of what we do, we will need to continue continually invest in capabilities around the silicon to develop solutions. But these solutions offer us the ability to solve when you think about DRAM and NAND is a precious resource. What we how we innovate that capacity with that capacity what we do with that capacity to the end markets is really the focus of our teams. And when you think about our enablement of Silicon, and whether it be something like, a EMCP or EMMC for a mobile application, all the way up to an enterprise storage class device where we're driving enterprise storage applications to large corporate, enterprise applications, we have the ability to deliver end system solutions fully to our customers. And that is a much different opportunity than you could look say 10 years ago in the memory business. So as we think about our business going forward, we will continue to invest not only in technology, not only in our operational capabilities around manufacturing and product mix management and inventory and supply chain, We are going to increase our investment in our ability to deliver innovative solutions, which requires not just the investment silicon, but technology and capabilities around the silicon to allow us to differentiate for our customers. So as Mark said, we couldn't be more excited about the opportunity serve these end markets. We think there's tremendous growth in these end markets. And the investment profile that we're discussing with you today we think about our business is really focused on how do we take advantage of these opportunities? How do we drive ourselves to be world class in terms of cost? And how do we invest in capabilities, whether it be again controllers or firmware or packaging or software that allow us to differentiate our products in a higher value segment and a higher value capability in terms of product roadmaps at the system level. So with that, I'd like to stop and, happy to take any you might have, around the information here. I think Mark presented. Mark, just a couple of questions around 1st, for this fiscal year ending this month, are you going to hit that $3,000,000,000 kind of number you've been talking about because it's a relatively big spend this quarter. And then more importantly, when you look at the three segments that Mark Durkin put for next year. That sort of technology segment being 30% of how has that been historically as a percent of spend? And can you give us a sense of what that means for your wafer start growth relative to the CapEx number you're throwing out for the next fiscal year? Sure. So the first question, was around, remind me the first part of the question? This year's CapEx. This year's CapEx. Well, we don't only forecast that I I would it's safe to say that we we're not making any updates today and and, I think, it's safe to say that, we're continuing to invest in our business. Relative to your other question around, 15 and the technology into 30% category, you make technology improvement, historically has been lower. And really what's driving that is, as I mentioned through the theme of my discussion is, It's not just about fixing and innovating and driving process capabilities, but it's the capabilities above the and one that's very important and critical for us to invest in going forward. You think about, you know, one way we look at our businesses how much of our memory will be behind the controller going forward. And what that means is controller capability and firmware capability and testing and assembly capability of end systems quality capability around driving those systems to end markets. So it has been lower. And, I think, actually, this is going to be something that is critical to my brand success as we think about differentiating our products. Those end market segments, if you go to, to go back to this, you know, each of these market segments offers, you know, dramatically different behavior than the 2004 bar here in the commodity business. And you think about enterprise storage and what that requirement means and what the product capabilities need to be in terms of winning in that business and you think about, embedded and you think about server and mobile, they're all unique in a lot of ways. And so we have to invest in those capabilities and where we've talked about in the past where the memory business and terms of process, lithography is slowing down, these capabilities become more important as we add value. Great. Thank you, ma'am. Could you go to the pages 16 to revisit your cycle time in chart? Sure. Well, I'm hearing continuously from the team makers when they implement next generation technologies manufacturing period getting longer and longer, but your charge seems to be in opposite way for instance, for me, my memory, you know, the I remember the 10 years ago, it didn't make us saying it would take only the, maybe, 40 days to manufacture, to fabricate the wafers for the DRAM. But these days, they are saying maybe 50 days or 60 days. But your chart clearly indicate maybe shorter, like, how the micron can do that. See, the philosophically is the relative chart why we didn't put any timelines per se. On a relative chart, we're we're closing the gap on our competitors in cycle time. This year, for example, as I said, relative to competitors, we went from, number 3 and cycle time to number 2 in NAND. And we're driving a relative performance on on in terms of our cycle time performance. That probably proves out more in the future. Our gains this year were not relative. Our gains were relative cuts in terms of our starting base in terms of cycle times to where we are today. As this, as you can see here in the second bullet, we do talk about, complexity drives longer site sometimes. It doesn't mean, though, for us, it won't be as important a focus to be the best in world class of what we do. So any rough idea, how many wafer how much the waiver capacity may decline every year going forward to implement during the course of the implementing the new technologies such as 20 node or 1x node? I don't think we're in a position where we wanna give a a percentage number on that, although we we certainly recognize the the the dynamic you're referring in terms of wafer the impact on wafer growth, and which is why we're pretty conservative on overall growth rate in terms of, both the DRAM and the mem NAND business. Thank you. Oh, yeah. Good morning. Oh, I was wondering if you could, go back and, reference a mark remarks about the shift and bit growth in the DRAM market. Over the past several months, you've micron has been reducing its forecast for DRAM bit growth and now we're increasing them and perhaps you could explain some of the dynamics there? Well, some of that, again, the relative bit growth, some of that has to do with our transition integration of LPDA and how we're managing our fab network. The other part of it has to do with, our increasing migration, from 30 nanometer to 25 nanometer. And so you're seeing natural processed bid growth. I think it's we need to be clear that we don't we we don't anticipate growing more than the industry. And we're not investing in greenfield technology. Or or capabilities of capacity. What we are focused on is, the capabilities to lower our cost. And even as we do that, we're looking at from a returns perspective. So some of this big growth you're seeing is natural migration from a process standpoint from the 35 to 25 nanometer, 25 nanometer. And so when you couple that capabilities of improving cycle time and what have you, you're seeing some modest improvement in bit growth, but not driven by, large greenfield investment. If I could have a follow on, I'd just, you know, we've had a situation of, unusual price stability in, the DRAM market and and yet industry wide, including all three supplier bid growth figures of just ratcheted up. Fairly dramatically in the past, you know, week. And I was just curious if you could address that. You know, we don't look at it like that. We don't think those numbers have ratcheted up. And on top of that, maybe to to to address a a a an item that came out last week. We thought the announcement last week by one of our competitors was a validation of what we've been saying all along, which is no one's gonna go out and line whole brand new factory. This is an increment into the industry and the fact that it's actually in place and in kind of any limited environment shows that there's no new massive DRAM capacity coming online. And we don't think that if you saw Mark's numbers here, We think this is the this is embedded in those numbers, and we're pretty comfortable that the supply demand balance stays healthy. We're very optimistic about that. So We think it's a validation that there's no major new capacity coming on in DRAM. And we so we think more of a we took more of a positive look at it that, the mark we'll absorb this in the in the growth rate in DRAM relative to what you're gonna hear about DRAM demand. We think we're pretty comfortable Hey, Mark. I have two questions. 1, just to follow-up on DRAM demand. If you could just help us understand if anything's changed in the last 6 months in terms of how you think about the, DRAM demand profile that gives you comfort around the 30 low-30s type of bit growth this year from a supply standpoint. And the second question is about technology in investments in general. I think some of the longer term investors are interested in understanding how you benchmark your technology investments compared to competition to make sure that you're not under investing in any portion of the business. Okay. I'll come back. The DRAM demand question Generally, we're continuing to be very bullish on the on the DRAM business. You've seen Intel, in the past come out with strong endorsement of PC market being better than expected. I think the number that's generally accepted is around the forecast for 2014 was about a 5% client and what we're seeing, in in, computing and desktop notebook is something closer to flat to maybe down 100%. But in general, across all of our segments, the Dan demand continues to be robust. Mobile DRAM is still very strong demand. Networking continues to be strong server, embedded automotive. Just about across the board, we're very, very strong demand. And if you look at inventories in the channel, inventories, not just in the channel part of DRAM, but at the OEM level, inventories remain pretty tight going into the back half of the year. And this is a this is a period where there normally is very heavy accumulation as people plan for the holiday season. We're not seeing healthy inventories, reflecting what we think is strong demand and strong balance in terms of supply and demand in the market. As it relates to, how we benchmark ourselves and to the extent that we're measuring ourselves well enough to know that we're not under investing. We look at the items that I presented to, for example, we're looking at timing, our 25 nanometer and 20 nanometer investments and and also our 3 d 3 d NAND enablement and some investments around controller and and packaging. When we look at that, we actually obviously are very focused on a a returns an ROIC model that Ram will talk to, but it gets back to, how we think we can capture the right level of, gross margin down to the operating level and make sure we're getting a good return for our customers, for our for our shareholders. And so what I would tell you is that it's not necessarily bench just against purely a competitive slate what we can do versus what our baseline is. And some of these timing issues are choices we're making, to drive those results, for us long term. And so the point we're making today really is that while none of it's necessarily driven by new capacity focus, a lot of it's driven by this return approach, which is allowing us to think about business and what you would do to make a better economic choice. And as you serve your customers, can you do things different to drive a better financial model for your company and yet serve the customers and create innovation. And that's when you think about I talked about a little about process, but a lot about capabilities and manufacturing efficiencies because those are the things that will return better, financial model for the company, operating profit, but also allow us to to differentiate downstream. Thanks. To understand the range of CapEx for next year, 3.6 to 4, is it more and variable numbers in the past in terms of the 36 kind of has to happen regardless of revenue to some extent because it's driven by technology versus capacity. And my second question is when you say flex between DRAM, LPDRAM and NAND, do you mean initial or being able to convert after the Yeah. Maybe I let me answer the second part. Maybe I misspoke. I mean, when I met on that, the flex is really within a technology. We have some capabilities on the NAND side, NAND and DRAM side, but not a lot. It's more within a technology capabilities of how we might do a mobile DRAM to to compute DRAM and how we can change waiver starts within a 9 to 12 week period. If we see, you know, again, this is a hypothetical. If we were to see a an impact on demand in one of those segments, the other one continues to be pretty strong in demand, we we're building the capability and the flexibility to move that move that capacity, in a nimble way so we can drive better results in the, in the near term. And that's going to be that's not just true in that one example, but it's true across our all of our capacity. It also will be true in NAND when you think about client SSDs and enterprise SSDs and think about, mobile NAND and those applications and embedded. Have to be able to move our capacity and flex it around because, you know, some of the price and some of the cost of being diversified end markets are, you have to be more capable from a supply chain and end systems capability to serve serve those customers. And that's really what we're talking about in terms of those investments is, it wasn't really from DRAM and NAND. It's more within a technology can we react to customer and market signals to drive better, profits, but also drive better customer service in terms of our ability to serve marks that need the capacity most. Excellent. Clarification. And the puts and takes between the 36 and the 4 and whether it's more fixed versus variable CapEx on a relative basis, given it's more technology know, it's a great question. I'm not sure I can give you an acute answer to is it more fixed or variable in the past? I will say that, as we look at it. The the the range that Mark gave, we feel pretty good about the returns range. So the range we presented that Mark presented, we feel it's, it's got great upside to drive better results to come up. Sorry. Sure. So, Mark, you you talked about more, customized product going forward and more diverse end applications. We we already seen over the last couple of years, obviously, the contract market becoming larger and the spot market becoming much smaller. So I'd like to understand as there going to be even more customized product. Does the spot market totally go away? That's the first part of the question. And the second is, how do you deal with inventory management because you go away from being a commodity market where if one customer doesn't get their production forecast right, you can always sell it to somebody else. That isn't the case anymore. So how do you make sure that all these production forecasts coming in from all these customers across a whole range of different products don't end up giving you inventory problems internally. Right? Well, I think the you've hit on an area that we're very focused on in terms of each one of these businesses and the way we've structured our are really different businesses. If you look at, what we call CMBU, computing and networking, that's a lot different in terms of the behavior in terms of the applications, the end market. The supply chain and how we service our one's a broader set of customers and slower terms with healthier margins. And so as an example, so we're investing in our capability to be to be actually have multiple supply chains within our operations. And that's really a key part of our execution. Each one of our is have to drive that level of performance. I will say something about inventory, before I get the second part of your question is, it also makes inventory a little bit different. We're not, you know, we've had a pretty high priority in terms of driving our inventory to an optimal level. We don't we're not in a liquidate inventory mentality in this new business of memory. People ask us a lot about, you know, what would if this happened or that happened, we are looking at, again, the financial, you know, uh-uh, methodologies to drive our us to serve each of these customer segments. What's nice about these customer segments that come along with a challenge there that you identified in the inventory pieces the customer stickiness and the customer engagement are different than a commodity business. In PC DRAM, in years past, you could take apart from customer a and give it to touch customer b. That's not necessarily true in mobile. That's certainly not true embedded. That's not true necessarily in networking. It's not true as you go down the enterprise scale in terms of big data and cloud and enterprise storage. So the perishability in this inventory is different. So our customer engagements are different. They're more 1 to 1. We're going in with our storage team and talking to a customer about how to solve their problem and how to divine define a solution for just them. So the inventory discussion, is more about how we manage demand forecast and their ability to forecast their business and we work with a customer on that, but it's not one where we feel we're just going to move those bits elsewhere because we'll work with a customer to drive the solutions. And so the short answer is a bit more of a supply chain by grouping, either the business units or the end market categories that were driving that capabilities in the company. And that requires information systems that requires you know, management systems to help us understand and get a good, a sense of how we're how we're performing to goals and making sure the customers are aware of that. But it also tells you that our relationships with customers is a lot different. We often get asked on calls, you know, is the discussion going with the customer and how has it changed? And quite frankly, you know, the customer has to take more ownership with us as we think about how we build a business together. And those solutions are really partnerships because they're building their products based on our capabilities. And you think about, end products in the future, whether it be, you know, for the data center and for for enterprise storage, these customers are working with us to find an architecture that's really proprietary to them in most cases. And so that's the growing trend in our business. And as we manage inventory, it's more about looking at their forecast and our business availability to project, what they will actually take from us from a demand perspective. And then they have to take ownership in in working the business model with us. And that's a different perspective than we have a commodity, set of inventory products that we have to move because we're concerned about the pricing. We think the pricing dynamic that drove that in the past is, is muted And we think going forward, each of these business segments represents an opportunity for differentiation and also to manage our relationships one to one with our customers, which allow us to, drive again more, better gross margins for us and and a better business model going, long term. Okay. I think that's all I have time for now. I know, I think we're gonna now pass it over to Scott DeBore, and Scott's gonna give you a little bit more deep dive where we're investing in the technology level. Hey. Good morning. I'm gonna start out today just talking a little bit about some of the technology highlights that we've had over the past six months, especially since the last analyst conference. In light it up to our our investment priorities and some of the the the general strategy of where we're going from a technology development point of view. So if we look at our DRAM technology highlights through this period of time. We're we're very, very pleased with how the technology integration has gone between the teams from, XLP and from Micron and how we've combined those to really make strong progress on not only 20 nanometer technology and the roll out of 25. But also on the notes, beyond that. And our our our progress on 20 nanometer yield in Hiroshima has been excellent through through this period of time. In addition to that, we've been able to focus our resources in Boise on advanced nodes on the the 1 X and the 1 Y nodes. And I'll talk in a little bit more detail about those on on an upcoming On the NAND side, we've had, a strong success and a nice recognition for the innovation of our our our 16 nanometer technology rollout had had some nice awards around, the capability of of that product. And in addition to that, we're we're very confident in our our position on 3 d NAND, and I'll give you some update, a little more details today on on our 3 d NAND production. We believe it's on track, for production in mid 2015, as, as market referenced, it'll be, it'll be moving into, fabs towards the end of this year. On the package technology front, the big focus of investment for us around memory system enablement and the rollout of of the hybrid memory cube, but also several other, 3 d package technologies that I'll talk about today. Continue to to go well through this period of time. Most of the focus in in this year has been around customer enablement of these unique 3 d package technologies, with with really a setup for the the manufacturing to start out in 2015 in a bigger way. And then on the new memory technology front, we've we've got several technologies that we've been focused on. In the next couple of years, we we've got targets to bring different technologies for early matter manufacturing introduction. The first one we're targeting for next year. Okay. So I'll go a little bit deeper into DRAM specifically right now. Our 20 nanometer technology transition as as Mark and Mark have indicated previously is really focused around differentiated product enablement. And our transition to 20 nanometer is is absolutely targeted at at that of course, cost improvement is always a a piece of these transitions. The cost improvement, in this case, indicated on the graph below, which is probably hard to see in the back. Really, if you look at a high density product, like an 8 gigabit product, really sits in kind of the sweet spot of of the dye side for manufacturing cost. So we look at our our DDR4 and our LP DDR4 products, at 8 gigabit, and they really come in and are enabled by the 20 nanometer node. Couple other interesting things on on this particular graph is it all also highlights, you know, there's kind of a lower bound to where it's it's optimal. And this this will lead into a little discussion about The products that we tend to leave on, lower densities, leaving them on legacy nodes and cover those for different parts of our In addition to that, we look out to where 16 gigabit products really get to be enabled, which is, you know, out in the really starting at the 1x timeframe, but but really requires the 1 Y node to to enable those. In in 20 15, we'll be rolling out 20 nanometer. Obviously, we're developing it and rolling it out in Hiroshima. And then we'll be rolling out one other fab. So we'll have 2 fabs running volume on 20 nanometer in 15. And then the development team's focus right now really is around, clarifying the path to the enablement of 2 nodes this 20 nanometer node. And, we have some good early suggestions on on the path there. So when we look at DRAM and and focus on what we're really getting for the technology notes as we're rolling them out. It's a much more complicated situation than it's been in the past. And as you look at the graph on on the left of year over year gigabit for wafer growth, it's an industry graph. And the projection of of the trend there going 30% and going going below, driven by really this complexity increase, especially beyond 20 nanometer 25 nanometer node. The graph on the top is just an indication of of kind of the driver of that but it it's just a a proxy for that. It's a litho levels as you're as you're going through nodes. And the litho levels, of course, bring along process complexity that we're even referenced in a question a little while ago, for all the process areas. So it's really a a building of complexities we're going on. The yellow line is indicating the wafer outs per square per area. So just indicating that the output reduction through time, as we go to these advanced nodes. So the net of this really is that process node transitions are becoming less effective, and it comes back to our our why we're doing the first place at this point to focus on on these capability enhancements. It also brings out that legacy notes, when we look at the, you know, increasingly, less commoditized nature of this business, our legacy nodes become more important in how we manage what volume on which nodes becomes a different business proposition than it was in the past. Really, the the focus on this, then all leading to, we've we've we've picked our certain products for 20 nanometer, and and we go focus on on the enablement of those four systems products. Okay. Switching over to the NAND side, again, we have a complicated transition in in the NAND world that most of you are aware of, from planer to 3 d NAND on our on micron's planer roadmap, we have optimized the cost and the performance of our 16 nanometer, both in terms MLC and TLC products. And that is our transition point our final final planar node. And I'll talk a little bit about why that is on the next slide. We're very pleased with the 16 nanometer product. The yield ramp this technology is is the fastest that we've had in Micron's history. And the the quality of this of this technology is enabling to products that we'll have for many years. When we look at our 3 d NAND technology, which, is illustrated on some of the pictures here. Our first product will will come out. So when we talk about our generation 1 product, it'll be a 32 tier 256 gigabit die. First dial will be MLC, but the the technology is really designed around TLC capability and enabling high performance, with Allstate drives. One of the unique things about this technology is the architecture we believe not only provides, outstanding performance, from our from our data, to date. It also provides us with what will be the highest, gigabit per area density in the industry. When we look at the transition of NAND technology from planer to vertical, It's a story similar to DRAM in that it's a it's a space and cost consideration, with with a few kind of significant differences. So when we look at the cost of the node transitions, historically for NAND, we optimized our 16 nanometer technology to be an extremely low cost point. So we we we picked a node that was appropriate for low capital cost and high performance. If you look nanometer from 20 nanometer the way that we took it, or chose it. But then when we go to 32 3 d NAND on a 32 tier technology, you you do have substantial, 1.7x to 2, somewhere in that range, reduction in wafer outs per per area. So, like, you have to contemplate all that when you're looking at at this node transition. Now when we looked at for Micra putting in an additional planer node, which is certainly capable of or, you know, capable of doing. For Micron, it wound up being a relatively high capital cost again. And because of the way the NAND transition goes, the the capital put into another planar shrink, is is not very useful to the 3 d. So we view that as, not efficient use of capital. And and that, and that really is what drove us to go from 16 straight to straight to three d. We think that, the cost crossover, if you look at the bottom, for 3 d NAND relative to our planer, 3 bit for cell technology, will occur in late 2015. And we think that at that point, we get to a more, historical type cost reduction with the rollout of 3 d NAND from that point on. Okay. A couple of the the other technology enablement areas that that have been referenced, the 3 d packaging on the left side of this graph, representing kind of the value contribution of packaging and general packaging technology. And packaging technology now has a a much wider connotation when you're when of the things that are included in package technology. So certainly on the NAND side, it goes to very high density, high high high die count, sax, to enable, high performance NAND technology. And on on mobile DRAM, very unique three-dimensional packaging to enable different kinds of form factors. And then on the high density compute, We've talked many times about our hybrid memory cube and and the excitement around that in the industry, really enabled by a combination system level management, in combination with with raw process technology around 3 d interconnects and, through silicon via technology. So a lot of excitement on that side and a a big focus area for us where we're adding, capability sources. On the new memory side, we're very focused around the cost and performance, gap between DRAM and NAND. And in looking at, opportunities for different memory technology that can fit into this space of cost and performance in different ways. So we believe that there's a a a real opportunity, especially when you look at system memory products for using some of the new technologies we've been developing that provide maybe non volatility at at, at higher speeds than a NAND is capable of. But at a much better cost structure than DRAM. So our our focus is around that, and we think there's some some exciting stuff to come over the next year in that area. And then this this is, last slide, kind of tying off, overall direction. One thing that's just visually to look at on on the calendar year 2015, there's an awful lot of new technology elements coming in in a big way and all kind of lining up, vertically. We have some some big and interesting challenges through this period of time and and great opportunity as we roll out multiple new technologies, through the same calendar year. Our our focus through this period of time is improving our DRM technology position. And as I mentioned, We've had, some great success with the combination of our our teams in in Japan and Boise to to really drive a a faster introduction, cadence, and new product enablement through this period of time. This on the NAND side, obviously, the 3 d NAND is a is a a big opportunity, and we're focused on enabling that and getting that out in the market in 2015 with a high performance product. And then on the technology packaging side, lots of things that Brian's going to talk some more about some of the system level opportunities that these three-dimensional packages package technologies are are enabling, some some great things there. And then finally, the, the intention to, to initiate a new memory technology in the next year, into the market. So that's ready for any questions. Thanks. It's got How does the NAND controller challenge change when you go from 16 nanometers to 3 PD. Just help us understand what was kind of the issue with, going to TLC in a faster timeframe on 16. And how are you able to deal with that, with with the migration to 3 d? So I'll I'll start off on a bit of that. And I know Brian will have some some some to add to that and even Darren. So, one of the things on on 3 d NAND capability that is is really been focused on TLC from from the very beginning. So we are our our enablement efforts around the controllers for that. Have it's not like we're starting now trying to get them ready. They've been a focus over multiple years. In addition, Brian will talk about the level of resources we've been adding to the controller area, to make sure that we're positioned well with the right capabilities to roll out, significant number of controllers in parallel as as opposed to some of the kind of slower nature in the past that we were a little bit slow on some of our TLC parts. So, I know Brian will add add more to that. I'm sorry, there was 2 parts to your question, right? Okay. Okay. Thank you. I wanted to ask on your PAC in tests where you're putting a lot of investment. It's the 2 stages. First one on 20 nanometer where you're at and moving it process and also transitioning to Micron process with your own test on the mobile DRAM. Sure. And further out on the 3 d packaging, when you that becomes a meaningful part of your mix Okay. To move the structure to 3 d. Sure. So from a process technology point of view, we've we've we have when you were talking about converged, you're talking about converged between compute and mobile or between LP and micro. Yeah. So we we have converged our process doc technology into one, one platform at 20 nanometer. We we brought parts from each and aligned move forward on 20 nanometer with 1 set of process technology. As far as mobile versus compute, there's there are subtle differences mobile mobile process is is slightly different and will continue to be different, both for DRAM and likely for NAND. So I think that part's gone well. On the on the test infrastructure, you know, again, there's subtleties that are different between compute and mobile test. But we're we're definitely coalescing to to one test flow as well. A bit of a longer term question when when you were focused on on new technologies. So right now, we've got a fantastic supply demand situation because it's very, very hard to scale for all the all the reasons you've outlined. And that has prevented anybody really having confidence to put a lot of CapEx into into new builds. When we move to a new technology, could that potentially change? Cause one theory I've heard is if we move to something rerAM or PRAM or something like that. NAND and DRAM merge into one product. People get confidence to invest again, and then we're on Moore's law again. And then we go back to, like, the DRAM industry of, like, 5, 10 years ago. And, obviously, we all hope that doesn't happen, but what what's what's the risk that I could potentially happen. Yeah. I I think that's an exceptionally low risk. I think when we when we look at, things like first off, the the complexity is often, underestimated in going to, Ari Ram or Spintour or you know, different different types of memory technology. It's a huge amount of complexity behind that. And actually, an awful lot of the memory technology from either NAND or DRAM, is very similar and has to be has to be brought in. But the other piece around new memory technology is it's It is very, system application specific. So it's gonna require, it's gonna require management. In ways that are similar to NAND or more advanced, and it's gonna require, you know, some some very careful consideration there. So we've got, a view that these new memory technologies will come along, but they will they're they're not really displacing NAND, for example. Now there's there's perspectives I understand in in the industry, but when we look at new memory in general. If you look at all the publications and different things on resistive RAM, There's really not anyone that is actually competitive with a 3 bit per cell vertical NAND in terms of a cost per bit. So we we really think these are there it's an additive business opportunity. It's it's not a 1+1 still equals 2. This is a a 2a half out of the emerging memory opportunities. Understanding that 3 d NAND has a cost advantage, but, I've heard from other folks that there's also performance advantage, particularly for enterprise. First of all, I wanted to find out if that was correct, if there's metrics for that. And if that is the case, is there a risk that you're a little behind other folks that some designs might move because of that performance advantage, or are you comfortable that that doesn't happen? I think we're we're very comfortable with the position that we've we've got right now. You know, there's there is some low volume enablement in the industry right now. And I think our our the timing of our our products coming in and going out to customers for enablement is is, very competitive in in reality. And the time of our volume ramp up is also very competitive. So I I think, I think despite a lot of publications and and noise, there's there's 3 products in the market today. We understand that. We also understand the competitive advantage, which we obviously haven't articulated perfectly yet. Of of where our products are going to come out and have performance relative to the ones that are out there today. And to the first part of your question, Absolutely. We we have a we have a performance advantage on the on the, 3 d NAND relative to planar. There's there's different enablement pieces. And even to the question earlier, there's there's controller technology that come along with it. But there are fundamental performance advantages from the 3 d NAND technology just at a at a basic, physics level that that enable better performance. Scott, a couple of questions. If you look, you guys have been significantly under earning your peers in the NAND market for the last 12 to 18 months. And I guess I'm trying to get a better understanding how much of that is a technology shortfall on your part versus kind of the parts of the market you're in today? How much of it's a technology you see versus a market issue? Can you give us an update on where you are with TLC have you finally kind of gotten over that hump? If I ask the technology, got that question, got that question. And then my second question quickly, how do you sort of juggle the ROI from 16 to planar in the litho bay because you'll have a lot of immersion tools for 16 that won't be able to readily use that 3 d. So how how do you kind of balance that ROI equation through that transition? So to to start with, I'll say that from a from a techno a base technology point of view, Micron's been very competitive. Over a number of years on the on the pure component technology piece. And I think we're we're confident in that now, and we're confident in it going work. Darren is going to talk more and Brian will too about, how we look at the NAND business and what our strategy going forward to make sure that the problem with what you framed up there isn't the problem going forward. The second piece is on, on our 16 nanometer technology, first off, Micron is big global place. So if we do have an extra scanner, we can put it someplace else. And DRAM does have a, growth in that. So as far as tool utilization overall, we don't have any excess tools with this with this transition. And, you know, there is still immersion required for 3 d NAND. It's just not in the form of the cells themselves, but you still have the circuitry and different things that drive immersion levels. So, net of it is there really isn't excess equipment from it. K. Thanks, Scott. So we're gonna take a quick break now. But let's keep it pretty brief 5, 10 minutes. There are some refreshments side, etcetera. But for the webcast as well, it'll be about a 5 to 10 minute break, and then we'll be back on. One more quick thing for those of you in the room In the quiet of the shadow, In the corner of the room. Darkness moves upon you. Like a cloud across the moon. You're aware and all the file and of a constant, that will turn. Like, the windmill deserted. So don't forget to forgot to. Keep your head above water. But don't forget to And all the suffering that you witnessed, and the handprints on the wall. They remind you how it's endless. How endlessly Let me answer that. You're seeking. For the question, found drives you further to confusion. Bring. Don't forget to bring. Roll life is here. No. 11 I'll Keep your head above water. Don't forget to breathe. I forgot. So Don't forget to break. You know you are here. But, yeah, Just bring Just bring Just bring She sprayed. That. He's all want some damn I'm now Uh-uh. I've never seen a diamond in place. I cut my cheese on wedding rings in the movie, and I'm not proud of my jam. For we don't care. We're driving Cadillac in our dream, but everybody likes to lay back down and done your time, please. That point. It's the one in our club that kinda loves to pay for us. We crave the been kind of buzzed. Let me be your ruler. Out. Let me live that fantasy. My friends in Iowa is practical. We count our dollars on train to the body and everyone who knows us. No. With? The same walkout, checking out a telephone wheel cam. But everybody like crystal, may back down and done your time, please check with iris. I just wanna go and reach you. That kinda loves to aim for us. We created a different kind of, but let me be your You can call and I'm in love with being clean. Here. We are caught up in your love affair. And we'll never be royal. It's the one in our club. That kinda loves name for us. We create a different kind of buzz. Let me be your moo. You can call me who Let me live that that me see. Cancel. This is I'm They call you. Alright, everyone. Let's see if we can we can get everyone to take their, take seats, we're gonna go ahead and get started here. Bye. Alright. One more time. If we can, if we can get everyone to their seats. We'll go ahead and try to keep this, keep this rolling on time. Alright. Let's, let's go ahead and get rolling here. For those of you, for those of you that I haven't met, let's see. I think we're okay. Good. We're rolling here. For those of you that, I haven't met, my name is Brian Shirley. I oversee, the business units and design and product engineering for for Micron. What I'm gonna share with you today, first of all, a couple of graphs on aggregate, DRAM and NAND demand. You saw the view of supply. We're gonna go into a little bit more detail on the supply piece of it. And then I'm gonna go through, a few of the key segments that we're we're excited about. Now what I'm gonna do, I'm gonna go ahead and cover the, the memory in the storage pieces for a number of those segments, when it comes to enterprise storage and client SSD storage, we're gonna defer that, for Darren Thomas, who will come up after me, and and I'll have a a chance to better introduce Darren for you as well. So let's go ahead and, and tear into it. First of all, this is this is our view, of what's happening on the DRAM demand side of the, the house. We think this is a relatively compelling view. In a lot of ways, it's actually still, fairly conservative, but what this works out to, this is a 4 year CAGR 2014 through 2018, working out to 25% demand growth. Now really the key drivers, I don't think any surprise, but but the combo of of mobile and tablet really having become a, significant piece of the market, and obviously, server storage and networking becoming the other piece, and and client as well. And those three pieces in some sense working, as as a virtuous circle here, both on the demand creation side, the storage, how we move the bits, etcetera. Starting from the top, you know, handset. Again, we think a relatively conservative view. This is, what this 26% number, has baked in is roughly a 10% unit CAGR and DRAM content per phone moving from roughly the 1 gigabyte, range up to the, essentially, the the 2 gigabyte range by the end of 2018. Tablet, you know, we have actually, since the last time we met we have pulled down this growth tablet going from roughly 1 gigabyte to the to the 3 gigabyte range. Now it's fair to say that as we pulled down the tablet number, somewhat we do look at at the cell phone tablet, and and client PC Ultra Sand Market a bit of a continuum. And indeed, since the last time we met, the PC number has come up slightly. And that's not so much a reflection of unit demand on the PC side, increasing. It's actually a, a bit of a flat model sitting, in total at about 320,000,000 units year in, year out through this time frame. And and, Now under the surface of that, there's obviously a whole bunch of movement between, desktop and traditional notebook generally moving over to to Ultrasen, in large numbers by, by 2018. And then finally, we get to, server storage and network working, where things are are clipping in at a relatively, torrid 41% growth rate. And I'll talk more about that coming up. But just a, a phenomenal growth rate inside of server, driven really by, unit growth on the cloud side and content per box growth, inside of on premise server. On the NAND side, a 4 year CAGR here of 38% on the demand side. Again, we think this pain a compelling view, but in a lot of ways is is relatively conservative. Handset coming in at 27%. You can think about that. I give you the, the unit numbers baked into, phone and tablet, but you can think about the content her phone roughly going from, on the order of about 9 gigabytes, per unit of storage today, up to roughly the 26 gigabytes by the end of 2018. On the tablet side, you're looking at something closer to rough least 17 gigabytes on average today, going up to about 60 gigabytes by 2018. Now, the other notable here is obviously enterprise SSD, huge growth rates, and and that's something Darren will will be talking more about as enterprise SSDs truly push more from what we would consider the initial, cashing opportunities and more into what we would call the, the hot edge. And then client SSD you know, I I I think something here, a relatively conservative estimate of of 33% CAGR, what this would imply by the end of 2018, SSD client SSD units on the order of 150,000,000 at about a 390 gigabyte average. You know, frankly, in our minds, there's a tipping point sometime in this time frame, these numbers would not yet show that kind of a major tipping point. So we do that there is there is upside to these numbers. Now, you know, big picture is something that, outside of the demand trends we're probably more excited about is what's happening to the actual solutions inside of of of each of these segments. And that's driven by by a few trends here. First of all, as as most of you know, a huge push, inside of the application to get more performance out of the process and the way you do that is you get the memory closer to the processor. Secondly, power is becoming critical in every single one of these applications. That helps to to give a further push of processing of these applications, the line between memory and storage starting to blur. And, as as we go through each of these segments, you'll notice a number of opportunities where we are already starting to ship DRAM and NAND in the same package. There are opportunities where they may be the same, in the same package, in the same module form factor, that speaks to some of that trend. It also speaks to the viability of some of the technologies that Scott DeBore is looking at. Now what we're we're doing about that, first of all, all of our R and D investment, is really contemplated by these by these application drivers. So, certainly, how we look at development, 25.20 nanometer, both from a low power as well as a high performance standpoint, how we look at our planer vertical NAND developments, how we're looking at alternative memory developments, but also some of the assembly technologies that that Scott talked about. We have made significant investments, not just on the R and D side, but also on the production tooling side for the this, these this next generation of form factor, where frankly, the assembly technology is just as critical if not more to this to the Send application. Now the other piece of it, is is more, in this memory solutions court, and it's really the solution development piece. So something we've done, and I think we've done a fairly good job on the DRAM side, and we're making the investments on the NAND side. Is actually bringing in, a large level of application expertise, specifically on the architecture side, as well as the go to market side. And what that does, it helps us to get closer to the end application and get this memory specialized, customized, if you will in a way that frankly, it's just it's not the same commoditized, you know, high volume, part, from from 10 years ago. The other investment we're making is significant, significant resources of controller and firmware resources inside of the company. You've seen us develop in house controllers for HMC. You've seen us do it for for our 1st generation TCIE device, which in a lot of ways is still a performance leader. You will see increased, investment across the board. And, Darren will talk about some of the investments we've already made, but, a significant level inside the company organically, and not averse, at looking, at other investment opportunities well. And then the final piece of that, is really this this field applications piece getting labs to go to market engine out closer to the customer that helps us take a lot of these core technologies and core developments and get them tuned for the end customer application, and enabled, which frankly is fairly critical. There is a, in in automotive and in, NAND storage opportunities in the industrial market, even in in mobile, there's a large number of opportunities of tuning the memory solution directly for that particular customer, and that's something that we have made investments in as well. What that what that leads to, you know, frankly, proven success for Micron in the networking server and AIM side, both from a breadth portfolio as well as a, an overall share of market, in these in these industries. I'll see more to the individual products coming up. And it also speaks to, several opportunities to to ramp next generation of products sooner, both, those that require TSVs, and and as Darren will speak to really next generation of enterprise and client based to each of these segments in a little bit more detail. Enterprise here, this is this includes both server and networking memory, by the way. What a good segment this has been for, for Micron, you know, one one figure we're gonna be looking at, content per server really driven, by the opportunities of in memory databases by real time analytics being driven, from roughly a 64 gigabyte point today to a 100 80 gigabytes per box, by 2017. So that's right around the corner. That's that's pretty big growth. Really, this this server CAGR is driven again, both by cloud computing as well as on premise applications. Executing probably a little bit more of a server unit growth, and on premise server really being driven by the amount of AM per server, for this kind of, this kind of real time analytics. Networking side Here, you have LTE, which is really in the initial innings. If you think in terms today of LTE having something on the order of, 180,000,000, subscriptions worldwide today, generally driven by about 3 large countries. Our view is that by by 2017, you're going to be looking at about 2,300,000,000, LTE connections. That drives, the entire world, obviously. That drives a huge, huge amount of networking gear. And here you have the other prerogative of the next generation of routers and switches, really 100 g ethernet switching, which requires very, very high performance DRAM. So I'm not gonna go through all of the product lines, suffice to say mainstream DDR3 and DDR4. We have pushed, both on 25 and 20 nanometer or 8 gigabit solutions here. What that does, it allows us to take the sweet spot module density from roughly 16 gigabyte in the server space today up to 32 gigabyte and next year, hybrid memory solutions. We've talked an awful lot about HMC in the past. Hopefully, you saw the press release that Micron and Intel released a few weeks ago, the next generation Xeon co processor, which by the way is helping with the HPC space inside of a number uh-uh of upper end systems. The memory solution of choice, is a a variant of HMC that Micron has worked with Intel to design. So we're we're pretty proud about that. We think it helps to validate the, the HMC concept is really the go to memory solution for these upper end solutions. Would also say that the next generation way to get it done besides HMC, and we're working with a whole lot of customers to help do that. Nonvolatile dim, these are standard DRAM dims with a layer of flash behind it. This is getting very, very good uptake for us. It's really driven by, enabling some level of persistent memory, but with the ability to still have DRAM on those modules. So you're not giving up the DRAM layer itself. Data loss prevention, cached hearing a number of companies finding this very, very useful inside of their systems. RLDRAM 3, obviously, the, this is turned into the, the memory of choice inside of, today's routers and switches, in package memory. I will tell you that this is under development. Right now. This is something that we're very bullish on. There are pieces of this that are informed by HMC, pieces of are informed by the next generation of assembly technology, but in package memory, across the space is something you will start to see, really in the few years. And then the automata processor that we introduced last time, when you talk about big data, you think in terms of what the velocity of the data is and how structured it is. And when it when it comes to unstructured high velocity data, you need some kind of a pattern recognition engine. And the best way we found to get that done is with a DRAM technology, like a Tomata processor. This isn't 2015 revenue. This is a long term play, but it's something that we're we're pretty bullish about. Inside of mobile, you know, what a what a good segment this has turned into, you know, for Micron. We were we were not large players in this, obviously, 3 3 to 5 years ago, you know, we are, frankly, across server, across PC, across mobile, we are oversubscribed today, in terms of of bits, we could move a lot more to any of these segments. I will tell you that, in addition a number of the application drivers you see up here, really, what we find most interesting is the growth happening in the mid to mid upper end, smartphone, really, some of the trends that you're seeing out of China Obviously, you've seen the numbers from, from Xiaomi, from cool pad, etcetera. What's interesting about that, that particular piece of the market is that it's it's pulling on LP memory, and NAND inside of the same package with a controller and firmware. And that's something that that inside a micron, we feel uniquely able to go and push out there. This is a trend that's been very, very good for us. And and frankly, you get back, you know, as little as a year ago. This was not well unemplated by the market. Obviously, we are still pushing an awful lot of memory out the door for for popped memory, LP inside of higher end smartphones. You'll see us, in a big way with 16 nanometer NAND in the EMMC space. But this EMCP that combines DRAM and NAND and the controller, is something that we think we bring some, some good advantages to having all of those technologies in house. The embedded segment, as as most of you know, we have a, you know, a business unit dedicated to this. It's really a combination of the automotive market, which by the way is seeing good growth in memory driven by infotainment, by ADAS systems, by digital displays. You have the industrial medical military market, really, in some ways, this this internet of things, machine to machine communication, and you have the connected home market, DTV, set top box. All of these systems, are driving good growth. And it's something that we feel uniquely able to to deliver on both across DRAM and NAND and frankly, even NOR. There's a level of, memory innovation happening here. Frankly, the space pulling in solutions generated inside of mobile, for instance, emmc see, opportunities, and helping us, we think, to really round out a nice legacy portfolio in a way that that we're uniquely capable of doing. There's a lot of, lot of competitive dynamics in the NOR space, as people are looking out there for who is a vendor they can count to be there for the long term. And if if you see what Micron is capable of doing, by putting nor inside of 300 millimeter fabrication along with legacy NAND and legacy DRAM. You know, this this space is not calling for the the latest and greatest technology. It doesn't need, 8 gigabit DRAMs necessarily. The connected home does inside a DTV. But inside of, the IMM market, these are not large density devices necessarily. But what they do need is good legacy support, something that we've helped to deliver here, called the product longevity program, p, this guarantees to these customers that we will be in long term production with these products, for 5, 10 years. And that's a very, very valuable thing. And so of this space when you talk about the industrial market, the automotive market. So it's it's really helped our embedded business unit become one of the more profitable business units inside of the company as well as inside of the industry, something we're pretty proud about. And finally, even in the client memory space, you know, good, good innovation happening, even here. We we think about this both in terms of ultrathin, growth, memory soldered down, There is a big push, obviously, with the Haswell, process are introduced this year. It will be introduced on the server side next year. Driving LP memory soon to be some level of DDR4 memory. This is a space that's really transformed in terms of something that the boxes are going out with higher content per per box as well as a little bit more focus on how to get the right level of performance and power down. And, thinking about the graph side, you know, obviously, we're showing a 6% CAGR here. Interestingly, if you had included, 2000 13, that that CAGR would have popped up, to about 19%. And the reason for that is that what you see in the graphic space is, I call it a very clumpy, uptake as the next generation of game consoles comes into play. So graphics in general are doing very, very well with the next generation of of memory consoles out there today. We play in every single one of them, and, both with our GDDR 5 portfolio, as well as our our standard DDR3 high speed portfolio, and has turned into a nice, a, a very solid market for us on the high end performance side. So, that's how we look at the market. Some some trends that we think are very, very favorable here, long term, driving really, again, from the application side, specifically, into the needs of the application, in my mind that memory is specializing. It's customizing here, almost more of an ASIC like market. We believe those are transfer all of the, you know, the, things that we can do uniquely here, both across DRAM NAND controllers, and Assembly Technologies, and, frankly, puts Micron in a good position to, to win in the memory industry long term. So with that, I'd like to go ahead and open it up to, Great. Thanks. Hey, Brian. Could you just start off with, some comments on near term pricing dynamics both in DRAM and then And maybe also mention if you're seeing incremental evidence that Micron is getting paid for memory solutions versus commodities? Sure. Very, very good questions. You know, in terms of in terms of short term dynamics, you know, I would just tell you that, as as you're probably hearing about in the channel market, generally, pricing both in in in DRAM, certainly on the PC side, the chi the PC channel market as well as what we would call the white box server market. Pricing is is up recently. Uh-uh, we are seeing that trend propagating into other markets as well. The in in terms of NAND, you asked about NAND as well. We are seeing a, an uptick in this market as well, probably best evidence by what's happening in in the the channel. And, you know, I would just, I would tell you that from a day in, day out demand perspective, again, we are oversubscribed. We could, across really our big high volume spaces. Mobile client and and enterprise, we could move a lot more volume in any single one of those spaces, easily. So So, please, please from that perspective. You know, in terms of the solutions side, you know, again, on the, on the on the DRAM side, I'd say we we have seen, evidence of that solution, value add, probably, by some of the networking solutions that we do today. NAND, as as we've told you, we, this has been an area of investment for us. We we do feel like this is a great opportunity, and you'll hear more about that from from Darren. We have been making those investments significantly over the last couple of years. But we've got some work to do. And, we think both in terms of SSDs as well as EMMC as well as really the these combined DRAM and NAND solutions, there is just a ton of opportunity there. Great. And a follow-up on hybrid memory cube and through so the conveyor readiness in general. It seems like Micron's focus for HMC is mainly on the enterprise side. Is that a fair interpretation? And second, do you see TSB getting introduced in other areas like mobile in the next 12 to 18 months? Great question. Really, HMC, it is, I think it's probably proper to think of HMC as a solution, best, you know, best utilized by the price side, in what I would call the short to medium term, we are believers that on the on the client side, and that would include mobile pieces of HMC. And there's a lot there that includes some of the packaging technologies that go into the stack, the DRAM stack itself, the technologies that go into the memory the technologies that go into the error correction. We do think that pieces of those, over time make their way out to the client market Will it be something that we call HMC in the in the next 18 months? Probably not. HMC is a, the the product itself is very, very upper end, product for, servers as well as, as networking. But the the core components that go into HMC absolutely will be making it out to, to the client spaces. Next 18 months, I I think you'll see maybe limited uptake of that, I think in terms of really kind of the 2 to 3 year timeframe. Yeah. Hi, Brian. So you mentioned that you developing the in house controller for efficiency and PCIe. Yeah. I guess it's for SSD. Right? That's right. It seems like you are leveraging, 3rd party controller, coming like a Marvell and F Python in the DMMC and the SSD. So so first of all, I guess do you define the in house if it is a hardware from 3rd party and putting yours from where is that considered to be a in house solution? And long term, what's the pros and cons for the in house versus third party? Can you separate in to, SSD and EMMC controller outsourcing, technology. We, you know, for clarity, we do use a combination of both in house and, and third party controllers today. In in house. We have, developed, our in house controllers, both for HMC and our PCIE drive. And we use, on occasion, external controllers as well. And and frankly, on a go forward basis, we're fairly pragmatic. We we look for opportunities, where we will invest the right level of resources to make sure in spaces products where we think, it is best for Micron to develop our own controllers, be it for advanced management reasons, for IP reasons, that we have the capability to do so. There will be other times you know, NAND from my perspective, we we could ship every NAND device right now behind some kind of a controller. And I don't think it's necessarily realistic for Micron to build, 20 different flavors of controllers ourselves. What we're interested in doing is making sure in, the most critical high performance applications as well as those where we need to make sure from a management perspective, we can get that solution shipping quickly. We have the the capability to do that with in house controllers if need be. We may use, external controllers as well for some of the other applications. So this is this is something we stay fairly pragmatic about but we have developed, our own good internal controller base to ensure that we're ready for whatever the the interface or the, conversely, the NAND management side of the picture needs to be. We'll we'll be ready with the controller one way or another. Raju. So second question, very quick on near term dynamic as well, because Apple commented that, for the September mobile DRAM price is coming down. And then you also mentioned that PC DRAM price is coming up. So so what is your, a mix shift into 3rd quarter. Are you going to do more PCD or in 3Q and what does that mean to your blended margin? And SP. Yeah. You know, I'm not gonna speak to any particular customer. What I would tell you about these markets in aggregate is that we're, we are pleased with the a the near term ASP trends in all of these markets. And and, to Mark Adams' point, we do have a certain amount of flexibility of balancing across our network for optimum profitability But but, you know, we are certainly in a position where, you know, we make sure that, as we as we balance that that profitability keeping an eye on the long the trends. Introduce, as the next speaker, Darren Thomas. Now a number of you have, have had a chance to meet, Mike Rayfield. Mike is here with us today. We think a a a great example of where, we have taken our mobile business unit and places under the leadership of a of a mobile birth that came from the industry and truly understand, the the care about inside of the mobile space. Recently, this last March, we we brought Darren Thomas to the company. Darren comes to us, most recently from Dell and prior to that from Compact, over about a, a 24 year career, 15 years at Compact, and then 9 years of at at Dell, Darren had the opportunity to actually run the enterprise storage businesses of these these firms, learning firsthand what these operations care about, as they push hard into the true enterprise storage systems space. So it's been a pleasure to have Darren with the company. He's gonna tell you a little bit more about client, and enterprise SSDs. And I think really doing a great job bringing to Micron a true end user perspective of what's needed to make these these products successful. So with that, Darren Thomas. Well, it's good to be here. As Brian noted, that I I come from a different end of the industry. I'm, I'm not from the, the chip in the in the silicon side. As a Mark Adams put it, I'm from what's above the silicon. And, and the silicon is very important, but as you many of your questions pointed to. What's above matters a lot also. Matter of fact, it may, in some cases, even matter more to what's going on. I'd like to point to the industry and just kind of talk about what's happening now, not necessarily trends. Trends would be more things that are going to happen very quickly. But, just looking at this industry, today, 90% 90 probably 99% of where NAND is being used is speed. They're being they it's being used because it's over a thousand times faster than a hard drive in most cases. DI operates of of the of the NAND that we sell, even in the client space where we tune them down to be more cost effective. Even at that space, we're talking nearly a 1000 times more speed. That's the market today. And but that's not all NAND is capable of. I talk about redefining the future of storage. NAND we made it look like a hard drive. We've made it active perform like an SSD. But there are startup companies out there right now that have taken 44 terabytes and put it in 1U. A a soldier can jump out of an airplane with the entire database of the military on his back at that capacity That's what's possible now, and that's what we're talking about. There there are companies that are taking, 500 terabytes and putting it in one you probably within the next year. So 500 terabytes, a petabyte. Just to put that in perspective, EMC, our good friend and a partner of ours, currently sell that capacity takes a 168 u. That's four and a half racks full of discs to make what fits in 1 u and uses 500 watts, uses the lit literally the power of a light bulb to operate that. Now those are transformative kind of things. And that hasn't even hit the industry yet, and and I'm just talking about size and power. But there's also things like resistance to vibration and shock. NAND does have that problem, spinning drives too. There are data centers that are popping up. We had a customer come out to Micron the other day he talked about a lights out data center. And he when he says lights out, he means he's gonna shut and lock the door. No human could go in that building for 1 year. That's his that's his service model. He's not that he's trying to see how dark he can make the room. He's trying to save money on people going in and changing things and touch things and upgrading things. He's basically saying, I build a data center. It has enough redundancy in it. I'm not going to touch it for a year. He has 2 major requirements. There can be no fans in the device that's operated at room temperature, and there can be no spinning drives in the device. Because spinning drives fail too frequently. SSDs operate today with very little effort on the part of us very little extra effort, they operate about 120 times more reliable than a hard drive. That's that's significant. It's beginning to question whether you need a hard drive or a drive at all on a hot plug device. Does even hot plug make sense when the failure rate goes from roughly 6% a year to 0.1% a year. Now you now you're starting to change the way people think about data centers. They can turn the lights out, pull the people out, and run the system at at a significantly lower cost. Now you can tell, I talk like somebody who's from this other end of the market. And I I I I credit Micron. It was very smart. I I know Mike Rayfield comes from the same back around I do, but it's it's these kind of trends that we need to understand and comprehend because it may take us a year or 2 to make a controller that goes on the NAND that took us 2 years to design that goes in a SSD that took me 1 year to design. Right? And so I'm talking 4 years in advance. I better know what's going on. And so these are the trends that we're talking about. That we we face today and what we have an opportunity to do. Now I want to talk just a little bit about we get the question, what is it going to do to get the margins up? Well, I'll tell you right now, we didn't have enough investment in clients. Clients are an important part of the space of this industry, a lot of volume goes through the client world. We had the technical capability to do one drive about they weren't great people, but then just wasn't enough of them. Doing OneDrive every 14 months will not meet the requirements of this industry. So as we sit here today, since I've been here, I've been at Micron about 5 months, We've quadrupled this capability. We did it with internal hiring. We did it with partnering. But we've made basically made it so we can make four drives at the same time. And there are 3 drive capabilities in this space that we want to do. So we're We're basically now running at the speed we should run at. So the first thing is we have to have more drives and we have to have more capability in this space. What you'll notice is, even with the prior capability, 98% increase in the quarter over quarter revenues, 84% in gigabit, that's great. But one way that I can get four drives at a time hitting this market And you can see right now, we've got a few things already coming. It's whoops. It says we're sampling Yeah. It says we're sampling the M600. We we've actually we're not sampling it next quarter. We're sampling it right now. The the, the M600 is the new 16 nanometer drive in the client We already shipped the 16 nanometer meter drive here, the MX 100, very first ones to ship it. And within a quarter, we'll be shipping a client version of the same drive. So we're moving very quickly now getting these products into market, and this is what it's going to take to recover our business. It won't be right away. This client business requires, more than just two drives, and it requires a a significant, set of winning of of the OEM the Dells, the HPs, the Lenovo, we have to participate in this market. But we're on track. We've got the we've got the growth rates going now. We've got the products coming out. We've got a TLC enabled product that we'll be sampling in 2Q of 2015, and we've got the world's first 16 nanometer drive out today. And, it it is won significant awards. You saw, you saw the one that Scott had on his. We've won about 7 other awards for the device itself, the, the device. Very fast growing market. And all of this does not assume what's really going on in the market. No one's ready to really predict when this market's gonna tumble over. When is client when is the the true client space just gonna say, hard drives are out at the these are in. And we're seeing it at the premium, the premium clients, the the the notebooks, the very thin notebooks, the premium clients, we're we're very near that tipping point. It's almost a 100%. One of the very interesting things is this mobile experience of an s of SSDs there isn't anybody who doesn't know you can't turn on a tablet in seconds, but you turn on your laptop. It takes up to 9 seconds. Did you put an SSD in that laptop and turn it on? And it takes about 5 or 7 seconds. We were just talking in the back, and it could be faster if Microsoft knew there was gonna be an SSD in every, in every notebook, they they it could actually be quicker than that. And, software case ability. We're we're approaching a time where you can't do this with a hard drive. We can actually take an SSD. If you're going to be on a plane and your battery is running low, you're going to be able to send signal through your through the operating system to tell your back to make your battery life longer. It'll turn the SSD down even slower. Hard drives can't do this. You can't slow them down. They run at the speed. They're they're they're on or they're off. But the devices we have, we can run them at any speed less than its full speed that we want. And that capability is coming. And here's a very interesting one. Hard drives are being designed out. The next generation PCIe with NVME, there is no hard drive interface for that. That's just an SSD interface. So this market is, is coming very quickly. I think it's very it's very hard to predict exactly when this will tip, but I think this kind of growth rate is conservative. Enterprise, we have a similar challenge, probably a little bit bigger because in the enterprise space, nobody buys an enterprise drive after looking at it for a month or 2. You're talking about long design cycles. The design cycles now instead of being a year might be a year and a half. And the, the controllers we're talking about and, Brian mentioned we've got several controllers under development. It's in this space. We have a PCIe SSD today. It's we're on its next generation. This next generation will increase but I'm not talking about 2x and I'm not even talking about 4x, but we're talking about a significant increase in the in the in the size of density of these devices. And, and we also have another controller under development because Cetus SaaS space it's huge. And the SaaS base has really taken off because, because we're now approaching 12 gigs SaaS. 6 gig SaaS wasn't fast enough for SSDs. When customers tried that, that's when the PCIe market took off. This market took off because this one wasn't fast enough. But now you have 12 gig SaaS outs, double the bus speed and you see a lot of interest by all the storage companies. You see all the all FlashArray companies. They're doing this on 12 gig, SaaS Buses. And so the SaaS market is really taking off and Micron, we have an all Micron design. And I I heard the question earlier, so it is it's our silicon. It's our firmware. It's our NAND. It's everything micron. And, the advantage of this is We we will be able to make a very high performing device. We've obviously got some good customer partners helping us with this. One of the beautiful things about this industry. Brian mentioned that, when we sell to the likes Dell and EMC, they get very involved in helping us define the way these devices look 2 3 years in advance. So it's a it's a great opportunity, and we're taking advantage of that. So looking at this, there's a couple of there's a couple of very different, trends going First, you I'm sure there's nobody in the room who hasn't heard that all active data is moving to flash. The the trouble with that is only 10% data is active, right? 10%, 15%. I've heard the numbers high as 20. Most experts kind of agree on it's between 10% 15 percent of your data is active. The rest of your data is not active. And now we have really good software that takes the inactive data and moves somewhere else. Right? We have this tiering software in the industry. And you have this inactive data going to cold and cloud. Doesn't sound like doesn't sound like D says it doesn't sound like Flash, but it's it it that's really wrong because there's not a there's not a cloud company out there that doesn't want to get your data quickly so that they can they can, upload your data and get you online. You would never do it. If you said, look, I'll buy your your online cloud system if it took you 3 months to transfer the data. So they need to do the transfers. The front ends of clouds are still going to be flash. But there's something else important happening. We've talked about big data analytics. Well, big data analytics means that customers can now mine older data for important information. And when they do that, the belief is about 30% of the cold data is gonna go back active. Some significant amount of data goes to active. So the nice thing about this market is, we can we can move data down to cold and move it back up to hot. And a significant piece is gonna stay hot because of big data analytics. And the last thing I meant lights out data centers. There's a there's a the probably the most costly thing about a data center is the human resource that goes into it. Certainly that's true in the United States and in Europe may not be a little less true in Asia, but the human cost of data centers is significant And people are looking at now the technology exists to run data centers long periods of time without human intervention. So my last slide, I'd I'd, I'd like to point out, obviously, I came from this side of the market. It's very important. I think, throughout my career, I've I've always wanted to have more control of this part of the market. You can see these these, 3 d NAND, and and planar technology capabilities, I think ownership of NAND is advantageous. I'm not going to say you have to have it, but I think it's a very advantageous thing because I can go to Scott DeVore I can tell him what customers want here, and he can make it happen here. And there's only a handful of companies that can do that. And it's one of the reasons why it came to Micron because this this is, this is the virtuous circle These customers ultimately define what these people buy. These people define this and this. And so if you understand the end user customer, you will understand the future. And, Micron's invested in this. This is this is who Micron is now, and I'm happy to take questions. Thanks. For the storage business unit, what kind of metrics are you targeting toward? Is it growth rate, share? How do you think about what you're trying to achieve? 1st of all, and second of all, the tipping point for us these, is it a dollar per gigabyte delta that does that, or is there some other factors that may create that inflection point? That's two great questions. The first one, I think of market share because if you have market share, you can do a lot of things. I don't think we're willing to trade market share for margin. There's an extreme in both directions. But ultimately, what we drive for is, to grow this business and to have a, a significant position in the market. Since we are one of very few companies who actually does create NAND. It kind of gives me a target for how much market is my fair share. I'm a, I'm a long time believer in owning my fair share, but but my fair share, I know what that number is. And so I it's very easy for me to see. I'm not there now, and that's the first thing I wanna get to. Now I want to make it clear, I'm not going to trade margins for that because we do have this virtuous circle. We own from Cradle grave, we own the, from the silicon to the solution, and we're going to, we're going to manage this very well, but market share matters. And the second question yeah. I you know, it's very hard. I've I've asked this question to customers, And, and, it's funny. Almost everybody just assumes it's like 1 to 1. It's, you know, when it gets down. But I know for a facts from this from experience that if I get close, the Seagate and the WDs are gonna drop. Right? And what what's gonna happen is I'm gonna take away higher margin businesses. I'm going to take away their higher profitability businesses. And what they're going to be stuck with is the $0.03 a gigabyte stuff. That's where they're going. And I don't think I'm, I'm not in a race for $0.03 a gig. But I think what happens is there comes a point in time that the the total dollar amount makes sense. And I'll give you an example of that. We we show when we ship the MX 100, you could buy a, you could buy a 2 56 drive for under for under a $100, right at right at a $100. You can buy a $256 drive. We sold out in 3 days. And the reason is and that drive, by the way, was almost 4.5 times the cost of an asset of a hard drive at that same price. But for a hundred bucks, you could get rid of all your failures in your laptop. You could really remove that risk in your laptop. A lot of people for a $100, they're gonna do that. Matter of fact, I was one of them. I I've I've bought the 5 I bought the 512 gig 1, but you you see that it it isn't like, I don't think it's an x factor as much as it is. When people are buying laptops, the average price is 700 to a 1000, you your difference can't be the SST is 400. That but when the SST gets down to 100, 150, it starts flipping over. So I think S low end of the market, it might be, it might be close to 2x, 2.5x. I mean, you get to the enterprise space for all these other reasons, power and cooling, space size, reliability, total total cost of ownership, it might flip it. It might flip at 3x. And we're not there yet, but but we're close. We are we are so close. It's it's amazing. Great question. Catch your lunch. Thanks. Hi. I've got a question on what is the for enterprise, what is the business model of Voice, looks like you've shown on slide 42, a number of customers including EMC, so that's kind of a more traditional kind of SSDs to storage solution providers such as EMC, or would Micron consider an opportunity to potentially move up the value stack and provide potentially storage solutions themselves, potentially more value, or perhaps, another way of disintermediation is working through the big the big, the big scale guys like Amazon, Google, etcetera, Facebook, etcetera. Yeah. So it's a great observation. You noticed that I broke this into 3 colors here. Those are actually 3 completely different sets in the enterprise space. The PCIe 1 is the end user customers. They are the ones that make that call on which PCIe SSD they buy. The SaaS 1 is the storage companies like EMC, and the SaaS ones could either be the server vendors or could be the big cloud guys. We're going after all of those. I think buried in your question was, would we consider going up scale? And we're going to consider everything. We're not obviously willing to commit to any of that, but we're not afraid to look in all the areas where we can add value and where customers would buy I would tell you that a lot of the cloud guys are already skipping all the intermediaries and coming straight to us and buying either wafers or SSDs directly. So that, that disintermediation has already occurred. So that was my last question. Thank you. And I think I'm introducing Ron Foster who's gonna bring us home. You have a clicker? Thank you all for coming. I'm going to cover some, summary financial highlights for you. You've heard a lot about the business And I thought it'd be useful just to give you some financial perspective. First of all, in terms of micron performance, give you a a view of that and where we've come in the last year. In terms of investment priorities, you've heard from Mark and Mark, both about our priorities as well from the business unit heads. I'm going to give you a little bit more perspective on capital, and, expand to what Mark Durkin said earlier. And then spend a few minutes on capital allocation and our balance sheet structure. As I'm sure you know, we've made a number of moves in terms of our capital structure in recent months. So first at Micron Performance. We have a strong operating and financial model. And the important thing to keep in mind is our financial model is in place to support the priorities of the business. That's very important to us. If you look at 2 parameters, a capital efficient business model, we get a high return on capital with our shared partnership investments such as our relationships with, with Intel and, Nanya Formosa and low cost asset acquisitions. The most recent one being the OPTA acquisition that we consummated about a year ago. And, we also have lower fixed costs come from this which generates a higher income and return on assets for our business. You can also see that we have low cash taxes and low operating expenses structurally in our business. The secondary is a flexible financial model, and comments have been made about this already. Our JV relation ships and our strategic partnerships help us share cost and market risk as a business. That was important in enabling us to get through our transitions that we've gone through over the last few years and you see all the moves we've made on the left side of this diagram here to, to build our business. It's also been commented that our flexible capacity can be shifted to meet market needs. And, that I think that's been covered pretty well. We do invest incrementally to make sure that we've got that flexibility so that we can respond to dynamics of the market. You've heard a lot about diversified products and customer mix, which gives us additional flexibility so that we can move to the higher return mark as they present themselves and as we are able ability. I'll I'll cover more on that in a bit. We also have greater access to our global capital markets. We are an international company spread around the world, and that also enables us to access capital markets around the world. And, the also been some comments and questions about this. Our capital expenditures can be modulated based on market conditions and return on investment criteria that I'll expand on. 1st of all, in terms of a 1 performance measure, this shows fiscal Q3, thirteen, micron performance a year ago. And our latest reported fiscal quarter of Q3 2014, revenue of about 72%. Obviously, we had the LPDA acquisition that came in after that, which contributed significantly as well as strong market performance. Our gross margin moved up about 10 points to 34% Notably, net income went up about 16 points to 23% year over year. And that income performance is competitive with the the best performers in the memory space today at a net income level. Our asset turns are also in doing quite well. And Mark Adams mentioned some of the things we've done to improve asset turns. We're running a ROA right now of about 25% against the cost capital that runs in the 9% to 10% range. So again, very good value add contribution. Another way to think about Micron performance If you look in terms of scale on the left side of this diagram here, whether you look at it at market cap, revenue levels, or net income, Micron is at the upper end of our semiconductor peers in the top 5 or so, in terms of our size now. From a valuation perspective, on the right hand side, whether you use enterprise value to EBITDA or PE ratio, whatever, we tend to be towards the lower end of the scale despite the fact that the stock price has moved up a lot in recent months. Turning now to investment priorities. A lot of comments have already made about our business investment priorities. I wanted to just expand a little bit on Mark's comments about CapEx. Our long term capital intensity, as the company is declining, this is a micron graph. If you look at the period 2001 to 2008, Our CapEx as a percent of sales ran about 41%. In the last 5 years, it's been running about 19% or so, over that time period. 2007 and more recent 2011 were related to NAND wafer capacity expansion, new fabs in Lehi, Utah and our joint venture with Intel, and more recently, the expansion of our Singapore NAND fab and the build out of that, in the 2011 timeframe. So, but overall, you can see the capital intensity is moving down over time. And if you compare that to industry averages, industry CapEx as a percent of sales, average runs 8 to 12 points higher over these corresponding time periods than Micron. So that gives you a rough, idea of how how Micron has been able to perform on OpEx to sales. Now as we look forward, Scott D'ebour, mentioned in others as well, that it's, getting harder to migrate tech nodes as we go forward. They're actually getting more capital intensive. But they also have a longer life for the reasons that we're described. So when you look at that combination, we still expect capital intensity to continue to decline in the industry and for Micron as we go forward. Turning now to capital allocation, there's 4 elements in this diagram here I wanna cover. Again, I wanna reiterate that our top priority in our financial architecture is to support the business priorities. Part of the way that Micron has got to where it is today is a result of having the capability and flexibility and efficient capital model such that we could support the business as they move forward. We have very robust processes to evaluate return on assets and ensure that our steps and moves that we make as a company at every level, top strategic level down to detailed product level are, have a high return and are well above our our cost of capital. On the CapEx side, as I already mentioned, we're We're guiding $3,600,000,000 to $4,000,000,000 in 2015 timeframe. We in the same general range. We've been running 20% to 25%. But as we go forward, as I mentioned, we expect that the CapEx intensity a percent of sales will continue to go down in the future. We're targeting on the balance sheet side. If you look at the right side of this diagram, minimum cash balance that we have to support our business and to be conservative on our balance sheet structure. So we have the flexibility when opportunities are in place. This uses a target range of, 12 months of our operating expenses to cover that as well as our current debt maturities. Today, that put us about $3,400,000,000 as a target cash balance, that we'd like to have on our balance sheet. We can, of course, evaluate that over time, and it can vary based upon those parameters, but that's a range that we want to target at this point. And then in the lower quadrant, continuing access to low cost of capital is obviously very important to our business. We are a capital intensive business, although it is declining over time, it's still a very, very significant component. To keep low cost of capital, We have a target leverage ratio that we want to try to maintain. We want to get to, investment grade crossover credit as we go forward. And part of the element of that is a debt to EBITDA ratio below 1.5. So we want to stay in that kind of range. We're below that level a little bit today. Also, low cost of capital comes from our global footprint where we can get access around the globe and we will, in fact, move to capital sources and opportunities arise. I'll expand on that in a bit then, our joint ventures and strategic partnerships actually help us with capital access and cost of capital through our, very valuable partners in many respects. So if you look at our cash balance, and this is a pro form a fiscal q314 adjusted for the high yield bond that we just executed. And, the, the retirement of notes that we also recently noticed our our our our B notes and the Cs and D notes that we, are in the process are actually repurchased already. So it's a pro form a fiscal Q3. Our total cash balance is about 5,300,000,000 on pro form a basis, $2,500,000,000 of that is in our Japan and Taiwan subsidiaries. So these are the subsidiaries we acquired in the LP DAC was position. And, it is in place there to support, both our installment payments, in the sponsor agreement as well as CapEx required in those locations. We've also converted at the beginning of this calendar year to a cost plus model. It was an important part of our sponsorship arrangement where it it, it has a more predictable cash flow albeit albeit reduced into those locations, but also reduces the the risk, to to the Japanese subsidiary in terms of supporting their CapEx and installment payments. So most of that cash that was put in place prior to the implementation of our cost plus model that we put that we initiated in December of this last year. If you look at other on cash, $2,800,000,000 out of the $5,300,000,000 total that I just gave you in that pro form a. About over half of that is, is in the US, to give you a rough quarter of magnitude there. And obviously, the cash out side, the US is in place to support our operations, around the globe and technology migrations that have been described previously. And if you build it up in terms of our, target cash, I just showed you to cover, 12 months of operating expenses and current debt maturities. That leaves us with a global cash cushion around the world at about $1,900,000,000 It was Lyrio. It's a little delayed response there. So some things that have been going on in terms of our access to capital. Profile. We were recently upgraded to BB and VA2 by Standard And Poor's And Moody's. And we began migrating from convertible notes and underlying the equity premiums associated with those convertible notes towards a a straight debt option. This lowers our long term weighted average cost of capital. You can see, in the graph here, the bond indexes for, B through BBB rated bonds. And, they're at, historically low levels. We've capitalized on that opportunity first in February for the 600,000,000 dollar inaugural high yield offering. And, we just consummated in July, a 1,150,000,000 high yield offering that came in 10 10 a half year terms, 5 a half percent rate, within investment grade covenants. And I mentioned we support our business with our financial and we've been able to make very good strategic moves throughout market cycles historically. So the investment grade covenant package is important to us. We were able to get that along with slightly better than double b, terms on this latest high yield bond. And in terms of dilution management, we've also been focused a lot in recent months. This breaks down by quarter, the metered approach we've had in place to our convertible dilution management. And we're managing our convertible dilution and trying to work that down within the target ranges for for debt and cash that I just mentioned. You can see that in each quarter in open windows, we have exercise moves in terms of taking out some of our convertible bonds. We have moved in the highlighted yellow there with the high yields to help with the funding support some of that. And we have exercised every call option we've had as they became available to us in this in the flexible structures we put in our converts, in the event that, the stock price would move up and we needed to move on them. And to see the results of that in terms of dilution management, we've spent about 83% of our free cash flow year to date on, convert repurchases. That's about $2,100,000,000 through Q3 'fourteen. And In total, we've reduced our share dilution at a $32 stock price by about 102,000,000 shares, as a result of all those moves, including the benefit of the CAPP coal we put in place with our with our converts. And finally, in summary, I just want to give you a summary view of we're focused on long term value creation. It's important to us that our financial structure support, the investments that we need to make for operating efficiency. I mentioned the CapEx structure we have in place. Our CapEx is is certainly flexible as I commented on. We have the ability to adjust our CapEx over time, as returns warrant. I can tell you that, the current CapEx plan, as Mark mentioned, has a has a projected very high return on invested cap that's why we're moving on it the way we're moving on it. As market conditions change or or the environment's different, we can, of course, modulate that as as required as we go forward. And investing for value added solutions in the business expansion of our markets that you've just heard about, from several speaker In the returns of the capital framework, we've done several things. One is we've established our target capital structure. I've shown you the cash and liquidity goals, leverage goals. We're aiming towards long term investment grade, crossover credit profile in those in those metrics and how we perform as a company. And we're continuing to migrate our debt to a straight debt as those, the cost of capital on that debt has been very favorable in the marketplace, and we wanna get in the in the low to mid single digit range in terms of dilution exposure from our convertible notes. Secondly, we've been focusing on dilution management as I just showed you and we'll continue to do so until our targets are achieved. We've done a lot in 20 team. And in 2015, we'll continue to focus on dilution management, again, with convert repurchases as appropriate, and and or stock actions, to help us with dilution while we continue to reshape our balance sheet. And annually, we will review our return of capital policy as we maintain our cap our target capital structure and excess cash will be available for dilution management, share repurchases and or dividends as we go forward. So with that, I'd, to my last summary slide, I'll open up for any remaining questions you have after several question sessions, but do need to show you this is the reconciliation schedules that are also available on the website. I got to some of the numbers I just showed you on the non GAAP recons. Given the previous presentations and opportunities that have been highlighted in the storage enterprise market as well as embedded. Are you comfortable with the market share in NAND? And going forward, if that's not the case, how are how should we look about it and what are the strategic alternatives you look to expand that NAND market share if you do? Well, if I comfortable with the market share now. I think Darren already summarized that, reason reasonably well that that, where market share is important and we're not happy necessarily with where we are unless you're talking about overall NAND in terms of our scale of our business? Oh, okay. I think one way you need to look at scale of the of the of a memory company is the is the aggregate. As you know, we already made some shifting between DRAM and NAND in Singapore, strategically, and we can adjust that. So we measure scale across the whole, memory enterprise. And as a matter of fact, I think it's highly valuable that we have all three platforms DRAM NAND NOR to, to utilize as you've already heard how memory technologies are migrating and you're even getting high technologies between them. So having, having the scale and crossing all the memory platforms is highly valuable we can adjust, strategically if we need to over time, but we think we're in a pretty good place, both in terms of DRAM and NAND and recent moves we made with our structure. I'm just coming back to the to the earlier question. In about more customized product. I look to understand how it impacts, 2 areas in the financials. The first is working capital, does it require more working capital going forward or not? And the second is the ability to forecast revenues. Does it become easier or more difficult. So you've got a more one on one relationship with customers. But as you know, customers in a time of will often overbook or else put out a bigger production forecast than they actually are looking forward to secure supply. So I'm just wondering how you kind of factor that into your own kind of budget? Well, as Mark Adams already mentioned, we we're in several different market segments and market types today. So it's not like we're moving into an area we don't seen notably since the NeuMoDx acquisition and also in the mobile market space, markets that are more somewhat more customized than our historical commodity, DRAM marketplace, for example, or or commodity NAND, So even today in our business units, we are engaged in evaluating working capital requirements and, managing projections on, revenue, etcetera that are structurally different. I would say that that for the more customized product segments, it's been a learning experience for Micron, but we've been going through that learning experience already for 4 years now. And we've learned, I think we've learned a lot in terms of managing customized products, both in terms of forecasting and managing that in a customer relationship for active and was also commented, it it it does require a different type of customer relationship. And I think you typically build those out in those product areas where that matters a lot. In terms of working capital, we have to be, more certain of our of our projections that we make on on customized products. But there's things we can even do there. For example, we can stop it, at partway through a process, what we call a design ID level or that sort of thing. And we have altered paths we can go on and actually hold it at that point, and still because of faster cycle time Mark talked about, we can get it to the customer within timelines that are needed. So we are actually designing all those capabilities into our business or the various business units dependent upon the characteristics that we're dealing with. Thanks for all. Thanks Ivan. So this question is regarding your JV strategy. It seems now your JV is generating a higher gross margin than than yours. So, are you going to negotiate a price during the, the renewal of contract. And if not, what would be the reasons? Which JV are you referring to? In the terror. That was a joke. So, I can tell you about the mech mechanism we set up. I I I I can't tell you about us of renegotiation with arrangement with Innovara. But first thing I'd mentioned is that it's a highly valuable partnership. We we put it in place at a time when we were actually making, big moves with both an LPDA acquisition and in Oterra doubling the capacity, taking virtually all their output. And we needed the financial flexibility, which we had to do with our balance sheet and our financial to be able to accomplish, all at the same time. And so it's usually valuable partnership to us also because, for example, we get low cost of capital access in that location for our partner in Oterra, and that's highly value to us, financially. So when you look at the financial value equation, first of all, you look at risk and return. It's been highly valuable. Secondly, cost of capital and and and asset utilization, it's been phenomenal. So one of the things I regularly do the management team is go through and show the return on asset calculations for our joint venture relationship and their very competitive, with with our with our, our business averages when you adjust for all those variables. So, the first point I'd wanna make is that it's a highly valuable partnership to us. We have a great relationship with our partner, and, we do have an annual a plan to review and revisit, terms and conditions, which you will have to just stay tuned on that one, but that's how it works. Thanks. Eran, would you just summarize for us some of the key assumptions you're making, behind the CapEx guidance you gave for fiscal 2015. One example might be expected capacity additions in DRAM and similarly in NAND from the industry? You're referring to industry expectations. So, may may I think I'd let me back up to maybe a a prior question that was asked because I think it contextualizes what you're asking we have a significant ability to modulate our CapEx. There was a question asked earlier because it's technology related, does that mean you have to spend it? Well, the fact is that we we can cadence and modulate the time phasing of CapEx expenditures, both in terms of rollout as well as how much we convert per period of time. And you also heard that we face fabs we roll them out, all that can come into play in terms of how much hits a fiscal year in terms of CapEx. So right now, we have a very rigorous and robust process to look at return on invested capital on every element of our capital plan. And what I can tell you and and others have already commented, we have, right now, a a a great return projection for everything we're doing, and that's why they're there. Obviously, if that equation changes, We even have a triggering process to That can be a meaning, a deceleration or an acceleration depending upon the economics. But I can tell you right now what Mark was referring to is we see a great ROI on the capital we're putting in place. And to your question about the industry, that's tied to the supply and demand assumptions that we just went through previously. Okay. Thanks, Ron. Just a a couple of follow-up questions regarding your CapEx number. You know, I think that your DNB CapEx NAND CapEx not much increase year on your basis next year. However, the solution area you know, when I look at your charts for page 9, I can see the sort of a new CapEx increase for technology and product enablement. You provide us some coral or is sort of a more controller development or in house controller manufacturing or any other software development and plus when I look at the Zendesk in the SSSC area, they've been very active in the M and A. So are you planning to do more active in the M and A for the solo certain areas. You know, this is my question. And then my last question is the the text. The matching number is very low text. But how long and how you can maintain maybe only the 10% effective tax rate, even 5 years from now? Thank you. Okay. A lot of questions there. So in terms of the, the, capital question, if you if you look at the if you well, let me let me hit the tax 1 first. Just get that on the way. So if if you look at our cash tax rates today, they're low single digit rates. And, Now on a book tax basis, that's a little bit higher because we have DTAs and the LPDA acquisition, etcetera, that come into play there. And, so you have a higher book tax rate, but cash taxes are in low single digit rates. To your question about, you know, how long does that last? We have NOLs of significant magnitude in the United States, and we also acquired them in in Japan. And our tax structure with a Singapore principal structure in place and enables us to utilize those NOLs over a longer period of time So it's, it's years even at, fairly high cash flow rates as you go forward. And so I I can't give you a a precise number because it's a function of profitability, but we do have a structure set up that'll optimize those low cash tax rates for a period of time. And what was your your first question was, Yeah. And how much that that other category? So yep. Yeah. Sure. Yeah. So the question is about the other bucket, which Mark mentioned was about 30% of the CapEx spend next year. And first of all, as has already been commented, we've got a lot of new technologies we're developing working on. So, that includes our R and D technology CapEx, and we are expanding in a number of new areas in terms of our future memory technologies. It also includes infrastructure investment and other categories, you mentioned such as, CapEx associated with solution space back end processes, which are somewhat, varying as well. So, that that's the reason for for the expansion in that category. And, as I mentioned, we can modulate these CapEx categories based upon market conditions, but that's That's our our scoping of that of it today. No. That was the second part of your question is that that, again, just to be clear what what, has been, said previously, this is all, tech node migrations. Which can be, phasing if needed, but our current estimate is that our we have a very good return for this level of cap and given the market supply demand equation that's been characterized to you. So, we we can adjust it over time, but but right now, that's our view is that that's the best ROI for Micron moving into the market environment we've we're looking at. Thank you. Is that it? K. I'll now turn it back to Mark Durkin for wrap up. Alright. Thanks. Thanks, Ron. I want to, I just want to wrap up here quickly and then, take a few additional questions on anything we've covered today. But before I do, we've we've talked to you about, the industry structure, and we really do believe that, we're in an environment that's that's very beneficial on a go forward basis given not only the consolidation that's that's occurred, but but also the dynamics in the overall, memory industry vis a vis technology migration and product and end market diversification. We're very, very focused on making sure we make, well rationalized decisions relative to our spending that really drive cost efficient manufacturing and value added products for the marketplace. There's been a number of questions around market share that have come and gone here. I want to make it absolutely clear. Micron feels like we got plenty of scale we got plenty of market share. When Darren talks about market share and value added businesses, he's talking about revenue market share and really what he saying is I wanna get I wanna make sure I'm getting micron bits into the most value added segments, and that's true across the whole market. We don't need we don't need more share. We just need to make sure we're getting our bits into the most value added segments, and and we continue to be very focused on that. We also wanna make sure we stay efficient. This is a tough business. It's always been a tough business, and we'll make more money for our shareholders if we stay operation lean and mean. And, that's what we're gonna do. Mark talked about, you know, cycle time and all the virtuous things relative to yield learning and and, ability, for market demands that come with that. But we're also focused on on our whole supply chain. How do we get a a more cost effective back end into some of the legacy LP to products. So how do we get, the most effective distribution, mechanisms for our products, whatever it is across the whole gamut of inputs to our to our supply chain. We're very focused on operational improvements. We're not just a component company. We think of ourselves as a memory systems company, memory subsystems company. And, we're developing leading edge technologies to to support that, whether it's NAND or DRAM or whether it's emerging memory. And I did hear some questions around k. So so reRAM, and where does that fit? And and how does that all play out? You know, the early deployment of some of things is, of course, it's going to be in value added sockets. So when we talk about investments we're making, from an R and D's perspective to to support the future, that not only supports our future, growth and relevance to our customers, but it also enables us to deliver more value added to solutions, because we have, a broader spectrum of of end products today. If you think about, about who's got the product portfolio in the memory world. It's Micron, bar n1. But we wanna make sure, that we're there in the future with some of these advanced, memory products as well. We are we're the most global company with the best customer relationship and we're leveraging those across all the market segments. We're not we're not focused on any one segment. We are very, very deliberate and making sure that we maintain the opportunity, to play in all those segments. So we don't care about market share in any one, but we we wanna make sure that we're positioned in all of them so that over time, as the markets evolve, we remain, viable and valued supplier to all those customers in all those segments. And finally, as Ron, talk to you about, we think we've got a a a differentiated financial model and business model, that, that, has served us well, and we'll continue to, to drive those types of, efficiencies moving forward. So we're very focused on on the memory on the memory space, but we're also very, very focused on how we drive return for our shareholders. And I think you can expect continue to to have that thought process and mindset as we move forward. I did wanna do a little bit of redirect on the capital that I talked about upfront because I heard a number of questions in the back of the room around, around some of the things I said. First of all, this whole category of flexibility and precision. You know, how precise of these numbers and how flexible are they? They're not precise in any given time frame because we spend capital when we accept tools, and we have tools coming in. And, we never know exactly how those numbers gonna play relative to fiscal 14, we told you on the last earnings call would be toward the upper end of the range of of what we had forecast for the whole year. That that is still true. So we'll fall in that, in that upper end of that bucket. And the precision in that, you know, I I can't tell you exactly which tools we accept, but but that's sort of the the spend rate that we're targeting for 14. And then and this 3 point, this this range I just gave you, for this year, again, we don't know precisely what that's going to be, but it's all very well justified on an ROI basis. And in particular, this top bucket these things that that you look at, and it's it's sort of my other category that that's emerging memory, technology. To support value added products for the future. So think of those not as something that's impacting supply in any big way but but not insignificant investment in the future and future and in future value added products, whether that's, potentially, early REM to to to produce, best in class storage solutions or to support, new memory architectures out into the future. There's a chunk of that that is around back end efficiency, whether it's some of the packaging things that Scott was talking about or whether it's the enhanced test flow that drive lower costs across the mobile DRAM product portfolio. That there were some questions to Mark Adams about. So, whether it's whether it's emerging memory or or back end, there are things in that value added bucket, which is bigger than it has been historically that, clearly have a return for Micron, and that's why we're making those I think there were some there were some questions around, around, supply also. And in particular, you know, I think around are we in any way concerned that the, supply growth in 24 team is coming a little higher, than than we had originally projected. And what does that mean for the future and for the assumptions that are embedded in our capital plan going forward. And what I would say is, we actually think it's positive. What it means is, that the 20 nanometer nodes that people have been rolling out, the thing that's driving the bit growth up a little bit higher is that is that that technology has gone relatively well in the manufacturing at at some of our competitors. And and by the way, that's true for Micron as well. We're very happy with the way our 20 nanometer, technology is coming together in the way that's, starting to to fold into the into the manufacturing tabs gives us confidence that the that the art that the capital spend I told you at least that bottom bucket, that 50% that's going into DRAM still will make sense. We'll look at those numbers and adjust them if market conditions change or if or if we learn new things about our yield learning, but we feel pretty good about that. And we feel pretty good that the the growth that's happening, in the second And Third quarters relative to to DRAM supply being slightly higher than we thought we think that actually is very, very positive because it it it says, yes, the memory market's robust and can easily absorb all supply and still have a positive market environment. And yes, that means there's less supply growth coming out into the future because that transition has already taken place more quickly than people anticipated. So let me stop there, and answer any additional questions out there in the room, John. Mark, Micron was very early on the around industry consolidation, and you were also very active in consolidating the industry. Now as you guys talk about systems, subsystems, value add, you're saying all the right keywords. The under tone is don't think of us as a cyclical commodity. And yet, when I look at your margin profile, gross margins of 34%. If you look at your R and D as a percent of revenue, it's 8, 9% those to me don't indicate non commodity value added business fees. And so you guys have gone out in the limb now in even as a revenue forecast on a quarterly basis. I'm kind of curious, as you think about pulling this whole strategy together, how should we think about the longer term margins of this business as sort of a benchmark of success as to whether or not you've you've been able to transform this for more than just a cyclical commodity Sure. So first of all, if you think about gross margins, I think, I'm out there saying, I think this business can sustain much better gross margins, going forward. I'm not going to jump on the hook as to what that is exactly and when. But I do think there's room to improve margins. And in particular for Micron, I think there's room to improve gross margin. Having said that, there are some things that structurally drive to lower gross margin. And some of the things around the Innotero relationship and the relationship that that Ron alluded to. So, yes, I think we can improve all of that. We have grown our R and D spend, roughly 30% here in the last year and a half. And I'm very happy to do that. And by the way, we can do that cost effectively because we we have much larger scale than we used to. So you know, when I think about what Micron is able to do today relative to, driving advanced memory solutions relative to what we could afford historically. We're in much better shape, than we've been historically. And I'm not opposed to spending more money, but I wanna I also wanna be efficient. You know, I'm I'm not gonna go out there and and and waste the shareholders' money on on R And D spend that I can't, be very, very comfortable is gonna generate a turn. I'd rather do is go create joint venture relationships with Intel, for for emerging memory solutions or with Sony for emerging memory solutions or with IBM emerging memory solutions, and try and get more done with less. And that's what we've done historically. And we'll continue to do some of that, but but, we will we will, we are I am prepared to spend more, to to make sure we're delivering those those solutions effectively, whether it's advanced components or systems. Did I did I cover everything there? Yep. In the front here. Oh, sorry. All the way in the back. Yes. Thanks. A couple of questions, a bit more longer term in nature. First of all, some of the people who talked before you talked about, memory getting closer and closer to the process, now we have in package memory. A little bit further out, how do you think that evolves? Are the IDM companies or logic companies starting to invest in memory is it going to be, some of your customers are talking about monolithic, process itself? Is it going to be a joint venture road, like, exploring with Intel. That's part one of the question. 2nd, especially for high volume applications, now memory is probably the 2nd most expensive memory plus storage combined, after the screen for a smartphone or a tablet. At what point do some of your customers, especially the customers who have very deep pockets, think about putting in some more capital to work either through a joint venture with some yourself, you have entered into those kind of partnerships in the past or maybe somebody else? And how does the dynamic work? So, let me handle the first part first. You know, relative to this whole, memory processing convergence, I'm a big believer that that is that is the future of the electronics industry. But I but I I think of it as a this is me because I'm a memory guy, but but also because I think it's true. I I think the future is a memory centric, computing architecture, as opposed to a processor centric architect And that's just because of the, the, the diversity of the end applications, that we're serving today and the, and the diversity of the processing requirement and all those end applications. I think what you're going to see is, yes. This is important, but but the square inches of silicon, in memory, continue to grow. And the processing requirements relative to the memory requirements, in all those applications, have a very different balance on a go forward basis than they have. And so I think you'll see is you'll see Micron continue to work work on on things like automata processors and and other ways of getting processing into the memory, but you'll also see more and more bits of processing that that don't require the absolute leading edge logic process, get embedded into the into the memory itself as opposed to the other way around. I think that the the, there there will be some level of of onboard memory, that's not SRAM, in the future with processors. But I think the the bigger trend is more in the other direct for all of all the internet of connected things, that'll be out there in the world. The second question around, you know, I think broadly, I could describe it as new entrants into the marketplace, whether it's customers or new entrants from wherever they come from. It's very, very difficult. It's, you know, I think getting into the memory business is probably the toughest place for anybody to get into because the technology requirements are so high. The R and D spend is so significant. There are intellectual property barriers. There's a there's a very uh-uh deep capital spend, very capital intensive, to create new capacity today. It's one of the reasons I'm so happy that Micron has this this very solid, installed base that that, you know, that we've acquired over the years very cost effectively now. For a new entrant, you've gotta be willing to lose a lot of money. And even well heeled, customers, I think, are unlikely to head down that path without, thinking it through very, very carefully. Oh, okay. One more in the back, and then we'll come up front. Sorry. Hi. Thanks, Mark. For the cash return, so one stated now that Micron has fixed its target capital structure. And considering that you now have a 1,900,000,000 additional kind of cash cushion in addition to the target capital structure, target cash you need. So I'm just wondering, you know, Ron obviously said about, continued focus on dilution management into fiscal 'fifteen I'm wondering if that might include something, a little bit more aggressive such as actually, buying back stock or even, dividends. So I think, 1st of all, you should understand that as we've gone through this process of capital return over the last year, the capital structure of the company has already changed. And so as we move forward, we'll continue to think about those different ways we we can potentially return capital in the future, our thinking on that will evolve over time. And so while historically, we've been very focused on the converts, obviously, as we buy those back the calculus will get different, as we think about the future and future ways of of returning capital potentially. Having said that relative to the existing cash cushion, that, you know, that cash obviously is distributed all over the world. And, we wanna main we wanna make sure we maintain flexibility, as Ron alluded to, to make all the moves we need to make in our business. As we navigate through what's a pretty, interesting time in the memory business with lots of opportunity, to invest for the benefit shareholders as well. So, we're we're not in a in a rush, to go out and and spend our cash cushion down to 0. We're going to continue to be measured, methodical, and prudent in terms of what we do with our cash and how we return it over time. In the front finally. Probably the last one here. Maybe my question is over the competitive landscape, because everybody's saying memory industry is well consolidated. But for me, I count the number of the language makers, Samsung Hines to Shifasen is micro, partially, inter there. But the question is, as long as Samsung really, really paved the way for the three d area, there already seems to be 1 year ahead of the micron in terms of the three d. So once you have some technology bottleneck dealing with, 3 d from next year versus something already build up the in China, and then they already took the 1 year track record for now, but not really impressive so far anyway. The question is what you're gonna do with the NAND business if Samsung becomes more powerful in Sweden next year. And the meanwhile, the Huawei will be the QR contingent plan if the 3 d does not work unfortunately, in your fabs. This is the maybe first question. And then secondly, when I look at the DRAM, you know, we've been hearing that maybe ASML or others will deliver to EUV, but I never seen EUV in the dealer manufacturing side. So but you are already talking about the 1 X node for next couple of years. But what would be the your contingency plan if the EUV does not work? Maybe what patterning possible? Maybe. Yeah. Thank you. Right. So, you know, 1st of all, relative to to three d NAND and the path forward there. I am very, very comfortable, that the technology Micron has is not mind where Samsung is. Our technology, we are, very excited about. And, we believe that it will be relevant, to the marketplace, as relevant, if not more relevant than than anything any competitors are gonna deliver. So we feel we feel pretty good about that. Do we have backup plans or contingency plans? Well, be flexible on our CapEx spend. So we'll continue to evaluate our assumptions going in and make sure that those still make sense. We are also, Micron is very deep technology capability in the memory under development. And while those are not replacements for NAND Flash, as we alluded to earlier, those are more, storage class memories that sit between NAND and DRAM and may eventually, coexist with both of those or or replace some level of of DRAM as opposed to NAND. We also have a a lot of different activity going in those, different types of that can also be, a value added solutions for the future. Now sorry. The second question was again. Oh, EUV. Yeah. Yeah. Micron is not dependent on EUV for any part of its, technology roadmap going forward. We would love to see EUV be cost effective. For deployment, in the memory space. It's not there today. When it is, we'll be happy to deploy it, but the barrier gets higher and higher because even today, if EUV were to start working, in almost every case, we would have to use it in a double patterning scenario. So it's not a a a automatic that you you cut out a lot of a lot of costs, even if you could deploy it immediately. We do have other techniques that will allow us to continue scaling, without a UV, but would still like to have it, available. Having said that, the the other thing that's difficult for EUV is that as time goes on and we and we install additional patterning technology in order to move to 20 nanometer and 16 nanometer and to deploy, advanced emerging memory technologies, then that capital is already spent. And so the cost equation gets different relative deployment of EUV. So as time moves on, it gets more difficult. We we're still very hopeful we'll have it in our in our portfolio in the future. Alright. I wanna wrap up. Thank everybody for coming today. We think we've got a a a very bright future. We're very comfortable with the conditions, and we're very comfortable with our internal capabilities and abilities to deliver Advanced Memory solutions to our customers moving forward. So thank you very much for attending.

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