Micron Technology, Inc. (MU)

Analyst Meeting 2012

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Oct 12, 2012

Alright. Good morning everyone. Welcome to the Boise State University School of Business And Economics in the Micron Building it's great to see you all here. It's a fantastic, facility. Hopefully, you enjoy it. They've got a a great program here, and so we're, We're very happy that Micron Foundation is able to help them put this building in place. And hopefully, over the years, as they continue to grow this program, we'll reap many rewards as a result of it. It's great see so many of you here today. We know the the Boise's not the center of the universe, but we appreciate you, coming out to join us, to go through our our fall analysts conference. We're gonna try a new format, which hopefully is very interactive, not only between us and you, but also, between ourselves relatively unscripted. We we have, called some general topics of questions, from information you send in in advance. That we want to try and address, but, but we want to spend most of our time actually then, responding to your response to that and and responding to questions that you have in an interactive way, to, you know, hopefully give you the the best use of your time. As a result of that, we don't have a a lot of, slides we're gonna go through with you today. We do have some that that will directionally help us with some of the points we want to make. But, but we, we, as always, we've got lots of that material available, for you relative to what's going on in the marketplace and growth in our markets, etcetera, etcetera. And that's all available as always. So, again, thanks for coming. And, let me just give you a sense of how we wanna proceed today. I'll start out here just with, a few a few thoughts and comments on the memory industry. And what's changing and and why it's such an exciting time for us and why we think, there are great opportunities ahead, also try and talk a little bit about, you know, what some of the challenges associated with that are. And I know that there's a lot of interest in the room, relative to, what's going on, with Alpida. Obviously, there are things I can talk about there and the things I can't talk about there. I'll try and be as responsive as I possibly can, to your questions. And as we go through those questions, by the way, I'll probably bring Mark Adams up in case he has some slightly different or additive views to my own. Then we, you know, we wanna spend a little time. Mark and I, addressing, questions you might have relative to my comments on the industry dynamic and micron strategy moving forward, jump into some market and product, Q And A with the various business unit, leaders, we'll have, Scott De Boire is here today, to also contribute, to a technology discussion along with with, the guys that are developing the products. And finally, Ron Foster is here to talk a little bit about, finances, how we're thinking about, our financial position, our balance sheet, and position the company from a from a financial perspective. And as we go throughout that whole process, hopefully, we'll be getting a lot of input, from you, to help draw out from us, the, the information that you need about Micron. So without further ado, I really do believe it's a fantastic, a time be in the memory industry unlike any time, in the previous 30 years, because the the dynamics that are driving the industry now on a go forward basis are so different, than that, which we've experienced. Many of you have been around the industry as I have for a long, long time, and you're, you're well aware of the technology treadmill that we all participate in, driven by our ability to add more bits per square into silicon, more efficiency, more value through scaling. And we're at an inflection point relative to technology. And and, Scott De Boire, can talk in much more detail about that and how it impacts the various products we're building and how it how it might play out, moving into the future, but I think, for now, I'll ask you to take at some level face value that over the next number of years, we're really going to see a change in the rate of scaling, not only for DRAM uh-uh, but for NAND flash, and we're gonna see the introduction of a lot of new memory types. And and what that does is it it it sets the stage for other levers on the business to become relatively more important. And we'll come back to that here in a minute. The other thing that clearly we've experienced, over the last number of years is consolidation not only in the memory sector itself, but also in our suppliers and in our, customers. And so the the graphic I have up here in the those of you on the web watch and can see. Really tries to quantify that with some bar graphs relative to, you know, where is 60% of the output going in terms of number of customers or where is a significant amount of the equipment supply coming from? And, you know, you can just think about them anecdotes relative to what's been going on relative to ASML. We can talk more in detail about that later if you'd like to or, you know, with the investments of certain memory suppliers into into the lithography area, and, and, and the indicative nature of that as to how important those supplier, customer relationships are relative to the capital equipment realm. But we've also seen, you know, a, a, pretty good consolidation in our customer base, with, you know, really, some pretty significant consolidation, not only in the, in the computing segment, the PC segment, but also, in the, in the, in the phone area and, you know, across the board, relative to the end applications, as well as the introduction, by the way, of, of new customers, that are much much, actually even further down the value chain than our historical ones. And, we've seen the consolidation that's that's ongoing here in the memory space that I know that you all want to spend a little bit of time talking about today as well. So so the net result of all of that is that memory suppliers are more important to customers because there are less of us And and because our capacity, will be such that we can individually, service end customers in ways we couldn't before. They are incentivized to get much closer to us in terms of driving, differentiated products, that are more tuned to their end applications and that create a strategic value for them. Now that wouldn't be possible if we didn't also have this, this, changing dynamic relative to the rate of change of of technology because in the world we've had historically where, next year, the customers can can count on a commoditized a DRAM product that's 30% cheaper than the one they got this year. The ability to compete with that ever, moving benchmark has been has been very, difficult by the time you get that custom product in and design and working in your system, the ability to extract value versus what your competitor may be using in a more commoditized memory, is diminished. As that trajectory of technology changes, we believe, that you're gonna see, and in fact, we are already seeing, and I'll come back to some examples here. We're already seeing an environment where the customers are much more thirsty to get very close with the memory suppliers and work with them on differentiated memory solutions and beyond that, even memory system solutions, that include, controller functionality, firmware software, etcetera. A few examples of that are things like the hybrid memory cube. Brian Shirley will talk about a little later on today. The 2a half D integration where we take where Micron can take bits of its, memory intellectual property, circuit elements that maybe have to do with with memory control or wear leveling and non billable memory or, testability or repairability of memory circuits and couple those with custom interfaces for a particular enabler. To give that enabler a strategic leg up on somebody that's not working with Micron. And so that whole relationship between the larger memory suppliers and the larger, memory consumers is really changing in in ways that that wasn't possible a number of years ago. One example of this is, is in the mobile area where where many of you, you know, maybe saying, okay, well, we understand there's LPDDR2, maybe there's some competition from a from a more commodity DRAM that's slightly smaller. How's that's gonna go? You know, the answer is different than it's been in the past. Different platforms are choosing different solutions. Some will choose LPDDR2 Some will choose a slightly lower voltage, commodity DRAM, and they're all trying to get a slightly different angle based on their exact application. And part of that because these these products are all going, to fewer customers, but to more applications. Now that doesn't mean that there's not a diversity of of good opportunities in to drive higher value. But it does mean that in those large volume markets, the product is going to become stickier with more value add. And it's part of why we're so excited particularly in the long term press prospects for the DRAM market moving forward. You know, coming back to the low power DRAM arena, what you're seeing on a go forward basis is that, you know, enablers out there, companies like TI or arm or Qualcomm, are all working, outside of the mainstream genetic process in terms of how do they think about memory. If you go to one of those guys and say, you know, what's your, what's your memory roadmap? Chances are they're not going to tell you. And, we look at that as a very good thing. Because what it means is, they really have embraced this, thesis, that, that working closely with the memory, of supplier on a go forward basis is how they can can drive a lot of value. You know, the the the lines on the graph down here are are directional I don't I don't mean by any means to say that that, you know, the, that, the industry structure has changed, yet. But I think that the dynamic is clearly there in place where, with the consolidation that's going on and with the behavior, that you're likely to see, from suppliers wanting to be close to, to, memory manufacturers and with customers want it to be close to memory manufacturers. More of the value is going to end up with memory manufacturers. And, that's why we're still excited to be in the business and that's why we think, you know, the future can be, can be pretty bright. Now To be successful in that world, we think we have to have, enough scale, that those consolidated customers and those consolidated, suppliers, want to be, or look at Micron as the partner of choice. It's no longer sufficient to be a great technology partner. They have to be able to look at you and say, Hey, I, I, I need, or I'm gonna develop a product And I'm gonna need 10,000 wafers a week for the next, year and a half or 2 years, from my partner. To meet my demand. And I don't want that to be 50% of their capacity because if if I if I asked him for that, I'm not gonna have any upside surge, and I'm not gonna have the, the, confidence that if there's some sort of hiccup in their system or, if some other opportunity comes along, that they're gonna going to continue to meet my demand. So in order to take advantage of these opportunities on both sides of the supply chain, you want to be a leading player. And and Micron is positioning itself, for that, with the LPTA acquisition. Now Will Micron be successful in this new world? You guys have seen these slides before. This is these are the companies that have come and gone in the memory industry. This is where we are today. Nanya has already told the market that they are less interested in being a major manufacturer going forward. And and they would like to establish a model, maybe that looks more like a wind bond, which, which, you know, over time, we think is a is a good model for a smaller company, but one that becomes less significant in terms of the overall marketplace. And so, you know, we think we've done a good job through the years from, using the levers that have been important in the past. We think we have the right core competencies moving forward and happy, by the way, to talk about what some of the new ones we'll need are as we get into Q And A because because clearly we'll need new competencies and we're moving in that direction as well, in order to thrive in the new world. But generally speaking, we think we're in pretty good this LP to acquisition, you know, obviously is is a is a piece of of cementing that picture. I just showed you relative to making sure, that we have the right, industry structure from a memory supplier perspective and that Micron has the right, wherewithal, internally in order to thrive in that environment. So Let me jump to LPDA here, just for a few minutes. And then I'm gonna bring, Mark Adams up, and we wanna chat a little bit about everything I've said because I know there's there's a there's going to be a lot of give and take on that. So, you guys have seen these five before too in memory presentations or or or, or, a quarterly analyst called previous conversations we've had with you before. This really does create the combination of Micron and LPDA really does create the world best memory portfolio and the world's strongest technology company. We have, together NAND, DRAM, nor face change memory, great capability, relative to new emerging memory technology development, and the technical resources to support, customer specific interaction and development on a go forward basis. We have scale. And in particular, combined with the, you'll recall, back in April, we completed the, the, transaction with Intel to grow the scale of our NAND business, our NAND business now already. You know, I anticipated coming down because we had some inventory sell through in the second quarter, but we were 20% of the NAND on a, on an NAND merchant market, for the first time in Q2. That number really is probably more stable in the 15% to 17% range right now But that change in our, in our, in our structure is part of this directional move we're making to become a significant supplier. We look at, at, at our capacity as sufficient as well as our product portfolio and technology portfolio is second to none. When you take Hynix and alpida, sorry, when you take Micron and alpida and put them together, you have one of the largest semiconductor companies in the world who has, as the suppliers look at us and say, ear expected by the way of whether or not we're making a a capital investment in a in a supplier with that. And I'm sure I'll get some questions on that. We don't think that's an issue for us. Irrespective of that, we're a big player, from a capacity perspective. We look at we look at our capacity as largely fungible. Across, across memory technologies. And, you know, we'll be well positioned in order to meet our customer needs, as well as be significant from a technology development perspective. Now I know there's gonna be lots of questions on on Alpida, so let me just say a a couple of things and then I'll and then I'll bring Mark up and we'll jump in on some questions, some Q and A here. One question, of course, as always, well, what's the timeline? Are you guys you know, gonna close this thing if so when. I will tell you that, I I think the timeline is still the same as it was when we announced the signing of the sponsorship agreement, we still expect to close this, in the first half of of 2013, exactly when that is I can't say with a lot of precision because I think that the, really, the key domino is when we get regulatory approval, from all the concerned countries. And, you know, that's just a process that that, is is not particularly deterministic in in all in all jurisdictions. So, we think that'll work its way through in the first half of the calendar year, and, we'll get to close. There there there have been, as you've read in the press, there have been, challenges from various classes of creditors, etcetera. We don't we don't anticipate any of that creating a problem, for us today. Really when you think about, who who has the wherewithal to provide a a meaningful, return to the secured creditors on a go forward basis. It's the Micron offer, and the other offers that are out there, at least in our opinion, and and we believe that the the court will come to this conclusion as well. Really don't give much assurance whatsoever that there'll be anything for anybody. So we still think it's a good deal for us. The market's been tough and, and I'm happy to answer any questions about the value and where we see the value here in the future. But We, we still think it's that we struck a good deal. It's got the right net present value that's got the right financing structure that will that will be beneficial to Micron shareholders and and give the the various stakeholders, and LP to the best possible return. When we put this thing together, I already talked about the, you know, the manufacturing scale and the R and D capacity on a go forward basis. We, we also expect that we will affect significant synergies in the LP to business. Those reside in a lot of different areas and I hope to have some more discussion about that with you. We, we think it's the right net present value. We think it's the right deal, and we think it really completes this picture of a, of a strong micron in a dramatically improving memory landscape. So Again, I know there's going to be a lot of questions on LP then we'll jump into those here in the future. Mark, before we jump into some Q and A, I think maybe I'm gonna maybe we we should sit. And, and, we have, I think, a slide here, with some strategic questions. Let me click through that. Oops. Sorry. Let's go back to here. And then we can we can jump into these the strategic questions here. And then we're going to open it up to Q and A on any of these topics. So, Mark, maybe I'll take the first one and then you can take the next one and we'll see how we're doing. And and, again, we want to keep this interactive. So I'll interrupt Mark and Mark will interrupt me and that's how we normally that's how we normally do business. So, don't take that as a sign of disrespect either way. Okay. So, the, you know, the, the, I think the first general issue is, you know, what's our primary focus And, you know, what are what are the challenges and opportunities associated with that or why is that our primary focus? And, you know, I think, 1st and foremost, of course, we're always focused on execution. We've got, we've got a tough market environment out there we've got to be very cognizant, about running the business that is the business today that involves, making sure we're, reductions, everywhere we possibly can. We're driving an efficient manufacturing operation. We're optimizing our existing capital. And we're running the business effectively. And and, you know, we're fortunate enough to have a great and deep management team here. And that is working very, very well for us. We're very proud of the way things are going in terms of the daily operation of the business to despite the tough market conditions, but that doesn't mean that we can just count on it to run on autopilot. So we can continue to stay focused on that. But, you know, I think the the the bigger the longer term issue for us is this is this issue that I just talked about, which is we need to make sure we're positioning ourselves, to be successful, with our customers in these in these new, differentiated product areas. And that means we need to have the resources, working on that, which means, we have to we have to allocate our company resources, differently than we have in the past, because the levers on the business are still the levers on the business, but they they they have slightly different magnitudes now. And, And so we're very cognizant of the fact that technology scaling, you always have to keep up with, because if you don't, it's fatal. But at the same time, that the size of that lever is is somewhat diminishing and the size of the lever that's associated with making sure we have the right customer partners and customer interactions and are delivering differentiated solutions to them in whatever format may come And again, the BU guys are going to talk a lot about what the detail around some of that is here in a little while. We need to be very, very clear that we need more of our resources working on that. And in some cases, we don't have all those core competencies today. So, as a management team, we're working to bring him in. You're going to get the opportunity to meet, Mike Rayfield here in a little while. He's had fantastic addition to our team. He's the kinda, guy that we're bringing in all over the company now, to make sure that Micron has the right interactions and the right, capabilities, to drive differentiated solutions into our customer base. Did you want to add anything to that? I just think that, you know, the question was opportunities and challenges, and any mark starting also hitting on the challenges for us. And I think we acknowledge challenge. If you go back 10 years and think about a company that is primarily DRAM selling to computing applications, and now we have the ambition to be a leader in enterprise storage There's a recognition on our management team that we need additional competencies that we haven't had maybe over the last decade and you think about that. And I think that that's the challenge for us as a company to move from a pure semiconductor play to more of a solutions orientation. Yeah. And and by the way, that comes in, you know, that that comes, not only in terms of how we define new hardware solutions or how we partner with enablers or foundries or customers, to create the right capabilities, interfaces, control, functionality, etcetera. But it also comes in the in the software and firmware area and, you know, whether it's SSDs or platforms beyond SSDs that our customers may want us to help them with. Mark, maybe you can take this, this next one. That's great because you get the nice, fun, strategic one. I get to want to, how do I cure the losses in the DRAM business? Well, good to be the boss. I think fundamentally what we believe is that when we look at our competitors and our place in the industry, we think we do a pretty good job of segmenting and diversifying away from the pure commodity play. And the PC DRAM question for us, when you look at our memory portfolio specifically on the DRAM side, Our success in the specialty market is really unrivaled. When you look at the share we have in server and networking areas like automotive. And so PC, I think, is now under 20% of our DRAM bits, if I'm correct, where it just less than 5 years ago, it was probably closer to 60, 70% of our business. So I think that we will continue to focus on other market opportunities to drive our DRAM capacity and overall capacity. And, you know, Mark kind of did a little foreshadowing today about what you're going to hear from some of the technology and BU teams around innovation and targeted performance and design capabilities to meet unique application requirements from our customers. You know, it's funny the slide that Mark talked to earlier about customer concentration it talked that the revenue piece that actually revenue consolidation around memory is focused on smaller set of customers as industries consolidate. But I would argue that chart on profit looks different. On profit, I would say that the channels and the customer are in that other 40% are as valuable or more valuable. And if you look take a look at Tom Eby's business around embedded, you're not going to find any of most of Tom's customers will be in the other 40% of revenue, but highly profitable because of the engagement we have is differentiated solutions, to a specific need. Yeah. I think that I think that's very true. That's the part of our business. It's already pretty good. Yeah. We already have a pretty good business, and some of these, more differentiated applications, more service oriented segment of the business where, you know, where the where the customer needs, you know, higher severance levels, higher quality levels that are more help integrating their products, etcetera, etcetera. That business is great for us today. What the historical problem has been in the memory industry is that piece of the business that can overwhelm you in a tough market. And, what I was trying to talk to or what I would like you to understand is that piece of the business, is going to be healthier on a go forward basis, than it has been historically. And it's not just, by the way, because it's all going to be, you know, more stickier products that are that are oriented to particular customers. You know, it's also going to be just because there's, there's consolidation. And my guess is, that on a go forward basis, you will see, the the surviving players be more rational in terms of how they approach the market. You know, there's not going to be, I don't think, there's not going to be a new DRAM company pop up in Taiwan, this year. And I, and I, and I don't think there are a whole lot of countries that are ready to jump in today either. So, because the, you know, the various entry are just very, very high point, the the and the capital is expensive. And so I think we're in a in an environment now, where that supply and demand will be better self regulating and will be healthier for the industry. I wanted to jump back here on this this first question around, you know, opportunities and challenges and just, you know, highlight one example which is this hybrid, memory cube solution that you've heard us talk about in the past. This is an extremely high end a solution for high performance computing and networking. And the buy in by all the customers in that space is phenomenal in terms of the interest in these types of products. There will be other folks that participate, but Hynix's solution will be different than Micron solution will be different than Samsung solution. And that's the point here is that the the customers won't just buy, a a micron memory that's that's compatible with one from Samsung. They will look to Micron to deliver something that works uniquely well in their application. And and and they will look to the supplier that they have a lot of comfort with, you know, and hopefully it's the one with great technology that doesn't compete with them. Mark, why don't you talk about, I'm gonna go here. There's a capacity slide. Why don't you talk a little bit about, capacity, at Micron and what you see going on I wanna go here. Next one. Yeah. I wanna go here. Why don't you talk a little about what you see going on with the capacity of Micron and maybe the industry generally to the extent we have something new. Sure. I think fundamentally if I look at yeah, especially coming from my prior role in sales, you know, the one big thing we had with our customers was that we weren't big enough. And we had about 10% of in 2011, as recent as 2011, we had about 10% of the NAND market trade NAND because the other half went to Intel. And then we had about 13%, 14% depending on output in the specific quarter. Of DRAM and fundamentally that put a limit on how engaged we could be with major customers. They like Micron. They love our technology. They think we have great engineering teams, but we just couldn't supply to a level that they wanted. Our biggest customers wanted us to be twice as big. And so I think 2012 was a significant year in terms of that loan feature of we've now got a roadmap to be able to supply our biggest customers to the level they want to engage with Micron. When you couple that with a portfolio of our conversations with our customers are dramatically changing. So you've now got a business that a post LP to close would be in the mid-twenty percent DRAM market share. And then when you look at the restructuring of our JV with Intel and this quarter, of course, was upwards of about 20% of overall NAND share. So that will go somewhere depending on output somewhere between high teens to 20%. You've got a company that's got the capacity to compete and engage much more strategically with a large customer base. And so from that perspective, it's pretty good. Now an obvious question would be, okay, but it's DRAM and DRAM hasn't been very healthy. You know, I think another message that we want to make sure we articulate today is that we have flexibility over time to adjust our output capacity, where we need it and what we need and what form. And the nice part about this capacity is it wasn't new. It was in the industry. So we think as we consolidate this capacity under Micron, we get tremendous scale. We elevate relationships with our key customers to be much more strategic because of that and the portfolio of products, on our roadmap. And we also think that with that scale and alignment with our customer base, we'll be able to drive just better business relationships and generate better operating platform. Let me, yeah, let me just make one more point on capacity, I think that, you know, the you cannot underestimate the importance of the fungibility of this capacity in the market we have today, you know, given the eventual emergence of new memory technologies and in particular, given strong growth in the NAND piece of the market and the relatively muted demand growth in DRAM. I think DRAM, of course, you know, it's soft right now, and we all know that and we all acknowledge that. But, there is still growth in DRAM bits and and and over time, that'll work its way out. But the long term, you know, the long term, the world's going to lead a lot more NAND capacity than it is DRAM capacity and this capacity, as Mark said, is definitely fungible. The only other point I'd like to make on capacity is capacity is becoming more valuable. Existing capacity is becoming more valuable, than it has been historically. And you would then you might say, well, so why do you say that, Mark? What, you know, what's different? Well, what what's different is, that because the rate of technology change is slowing, and because lithography is not changing as rapidly as it, in fact, it's stagnant right now. You know, at some point, EUV will come along and change. But today, lithography is really essentially stagnant. What that means is, and we'll talk more CapEx later today. But what that means is, that that, existing in place capacity has more longevity and therefore delivers a better return. You have more time to amortize that capacity. So when Micron goes out and buys cheap capacity, for pennies on the dollar, that can be upgraded relatively inexpensively, and the cumulative cost is much less than putting in place greenfield capacity. There's a bigger return than there would have been headway down that 5 years And obviously, this is a strategy we've employed through the years. It's been pretty successful for us. I think it's actually more important now than it's been historically, not extending the fact that the DRAM demand growth right now is somewhat muted. So that ought to be enough to get us, get you going and and get some good questions kicked off Obviously, Alpita, anything we said relative to industry landscape, anything you, anything you have on anything we've touched on, we'd love to get in now. You will get, you know, obviously, you'll get another chance, at both and me in particular, you know, later in the day. So if we don't get to it right now, we'll get to it later today after you get a chance to hear from some of the other folks. Yes. Thanks. You know, I just want to talk about DRAM. You talked about consolidation in industry, but we have seen that since last year. Right? Nobody added capacity last year. Nobody added capacity this year. So I give it that, but we are still seeing the condition where DRAM is in today. Right? Mhmm. So what do you think needs to happen? How do you see this market coming out of this downturn, this time. You want to take care? Sure. I think that there is a slide in there, That that one. Look. Alluded to the thing. You know, we talked a little bit last night at at dinner with some of you that We think that the industry on the supply side is doing all the right things for a correction. So we think we have pretty much a demand problem in the short term. And I think that demand shift is just technology shifting, from platform to platform. In the in the meaning from a pure PC segmentation on the commodity DRAM bits to other applications, IE tablets, and smartphones, and I'll talk to that in a little bit. But, you know, the other side of it right now is mean, if you look at the macroeconomic environment, I mean, I just read this week the IMFS, recent adjustment down as global GDP, you know, look at Europe, still got big debt problems. U. S. Isn't exactly now and then all cylinders. China has growth issues, right, contextually, we think it's a demand problem. And we're doing things structurally to make sure we're prepared for, whatever length of time this takes to get the demand in better shape. But structurally on the DRAM side specifically, because I think that's where your question is. We think that's all the things you just referenced. You know, lower CapEx. It's a chart talking about production shifts. We think that's all very healthy for the industry. We think it's demand driven, and we think over time, that will work its way out like other cycles. You know, if the question if the root of the question is do we think that the DRAM demand, bit demand growth will continue to be less than than, bit demand growth generated from through technology migration, you know, I think the answer is definitely not. Okay. You know, bit demand growth on a, sorry, supply growth on a go forward basis is going to be in this 25% to 30% range. And you know, when you look at all the other non PC sectors, which are a big piece of the total demand now, you know, they grow under the CAGR, 50% and higher. So, that it's not a long term issue. It's a short term issue. Now, you know, are there at some point, will DRAM suppliers take matters into their own hands if if if a catalyst is needed? Well, of course, of course, that that, you know, that's, We told you the capacity is all fungible. So of course, those are those are catalysts that that can come into play if we're wrong. But but, we actually see any sort of reasonable overall macro environment, this thing sort itself out pretty quickly. Along the same lines as the number of suppliers consolidates Can you see yourself unilaterally kind of running the fabs less than full? And when there were 15 guys who sort of always run the fab full, unless you get to cash cost, can you see a scenario where you're big enough that your own actions could have enough pricing impact that you can run the fab underutilized and see the market rationalize that way? Yeah, I think that's another way of what I just said, you know, one is to, to move the capacity where it's productive. The other is to, is to, is to not utilize the capacity if, if that's what makes sense. And and I'll tell you that that's easier to do if if you got the if you don't have a large fixed cost because you bought the assets cheaply. So or it's less painful for you than for the other guys if they're doing something similar. Your comments about waiting for demand growth to improve, how long is it before you take matters into your own hands and say, micron is does have a strong balance sheet. You can survive many, many quarters of, you know, 1% book value destruction. But but how long is it before you, the management team, the board say enough is enough and we have to take matters into our own hands? Well, you know, I'd I'd love to answer that, but there's 2 reasons I can't. One is if I if I knew I wouldn't want to telegraph it, and 2 is I don't know. You know, these decisions always depend not only on where are you today, but what's your view of the future at that point? And, I'd also say Doug, just just to the point about uncertainty, you know, I'll be the first one to tell you. I didn't think that the Iran market was going to recover, like a recovery in, you know, post holiday season in the spring of with the 2009, I think it was. So the uncertainty of trying to pick that of a March trying to project is that we're watching it really closely and we're trying to take a look at the broader indicators on demand, but it can be very uncertain when you see a chart like this and and DRAM production bits down to where they've never been, you know, who knows when that alignment comes up and the market goes into a tighter tighter condition? And we We want to watch it and we have the flexibility to act. I think the answer is we're just not sure how to call it right now. Yes. The other thing is, I think we do have a little bit of unfinished business here that we're working through relative to consolidation as well right now. Hi, there. I got two questions. 1 on your CapEx chart here for DRAM. You're actually down next year. I mean, are you suggesting that you do not plan to have any conversion and related shrink CapEx on your side because for just to think about that piece, It's actually tough to see for me why overall industry CapEx would be down again next year just because of Micron and Peter basically. And secondly, you talk about fungibility of capacity, but actually if you look at the process flows between DRAM and NAND flash with more and more different, So are you talking about the old fungibility where you had lines capable of switching reasonably fast between ARM and NAND? Are you telling us that you're actually about to switch out of capacity to non flash post the deal with LPM. Let me take those marketing jump Let me do them in a reverse order. You know, 1st of all, relative to this fungibility, issue, I think it's it's very inefficient, to ping Pong with high frequency. I'm talking about a low frequency response and a long term, retuning of capacity to meet market demand. I'm not a big believer other than small amounts of the margin in fabs where you're running maybe both technologies and we do have some fabs like that. I'm not a big believer that the sort of high frequency shifting to take care, you know, take advantage of, of, short term market perturbations is a particularly productive thing to do if you're running a a manufacturing operation. There are things you can do with the margin, but I don't think that's a big effect. Now the sorry, the first question again was to finish on that one. That means you are, you know, post flagship, Elpira, Yiroshima coming in potentially all of Inotia as well. Nania doesn't need the capacity anymore. What do you do? I mean, do you convert tech? Do you convert rack shape? Do you convert something else? What what what actually were you referring to? So so, you know, I think we should come back to the cap discussion in more detail later on when when Ron's up here because he's got some things he wants to tell you about CapEx generally, and that's maybe a good time to to to address that topic. But you know, relative to, you know, why we think DRAM CapEx will be, flat to down We're just showing you our market research relative to what competitors say they're going to do and what suppliers say our competitors are going to do And as our best guess as it always is relative to what's going to happen. So, and that incorporates what we plan to do as well. So I think there's a lot of diligence that goes into those numbers. They're always subject to change at Micron and at our competitors, and so you got to take them with the grain of salt, but it's our it's our best guess. Now relative to what Micron might do relative to changing its capacity, you know, we, we clearly have a 30 nanometer transition that's, starting in near completion. A 20 nanometer actually is is not going to be a big spend for us in 2013. It it it's more of a, that transition will happen for us a little later at LPDA. You know, they have a, they have a 25 nanometer node, that they have talked about publicly. And, you know, probably at this point, I can't say too much about, you know, what their plans are. And I don't want to say too much about what Micron's plans are relative to moving capacity around because as I told Doug here a minute ago, I don't know yet, what we're going to do there. And it's a It's a, there are lots of options. We have we're fortunate now that we've got a large network of 300 millimeter fabs And we have we have lots of options we're looking at. And and exactly what we do, will will depend on a lot variables, including our view at the is there a shift in timing relative to when we're going to get the LP to transaction closed you know, what are the latest data points on, on macroeconomic effects as well as, as, you know, the DRAM market health Yeah. So you mentioned, about, I guess, opportunities and challenges and you kind of said that, I guess, enterprise storage was one of the areas where, I guess, you wanna, you don't have sufficient capabilities that right now or you want to expand, I guess, in terms of debt there. Can you expand a bit more about that and what other areas you think that you still feel that you don't have all the pieces in the puzzle of other product areas that you think you you should expand to? Yeah. I'll I'll, I think we're going to have a lot more discussion about that later with with the BU folks about particular opportunities they see, but let me characterize it generally. Yeah. You know, I think enterprise storage is clearly a, an area where, There's a there's a lot of opportunity and there's a broad swath of different types of opportunities, different, you know, you know, different areas to go after, whether it's SaaS, or PCIe or or or, or, you know, some other, formats we're looking at they all require, significant resources, lots of, customer interaction. And so that's clearly an area where, you know, ants in building a Duke. But but beyond that, we need more folks that can go out and interact in the in the mobile arena, with the enablers, to really make sure we're driving, differentiated and value add solutions for them. And that involves you know, not only the, the circuit resources, to optimize those interfaces, and to get the right IP over on, onto their side of the, of the interface, but also involves you know, really folks with, with, with, deep knowledge of their system level challenges so that we can help them craft what that solution looks like. And I don't want to get a whole lot more specific than that, but the BU folks can maybe point you more specifically. We'll just do, one more question. Okay. Just one question with 2 parts. Do you expect, or do you see your competitors, reallocating more dollars of capital to M and A to build out infrastructure for some of the things that you're thinking of, and therefore, that would limit the incremental capacity added. And I have a follow-up. I'll let I'll let Mark answer this one too because he's got, you know, he's got pretty good eyes and ears out there in the marketplace. But I I would say, yes, absolutely. I think there, you know, there's a, there's a lot of interest, much more so than there has been historically by some of our competitors in the markets, but in the market memory market. Out there looking at what are the opportunities to grow inorganically into some of these new areas. So, so they get it as well, which, you know, it'd be, it'd be great if they were asleep at the switch, but I don't think anyone can can hope for that much good fortune. And the flip side of it is I think it validates the thesis that we're putting in front of you guys. From a big picture, with the memory cost of scaling de accelerating, and let's capacity added going forward compared to, in the past. What happens to the margin profile? I don't we go through these ups and downs in prices, especially in NAND, but with cost of scaling accelerating. Is that going to remove some of the pricing upside that happens when, when there is a shortage or how do you see the margin profile in the next couple of years, especially with the bottlenecks in lithography that is limiting the cost of scaling? I think that I think that answer lies in the level of differentiation, if you do not just in the silicon itself, but in the overall solution you're delivering. So to take the last question around enterprise storage, there is no DRAM exchange for enterprise storage class SSDs. It's a solution. It's got a number of different components to the solution, and it's valued much differently than a PC module. And so we think to the extent that we can keep on differentiating and adding value, not just in the core technology, but around the solution controller firmware software and working with our customer for custom features they need to deliver their performance, we think there's value in that that's not measured in cost per gigabit or gigabyte. Let me let me throw out an analogy you might you might think about. It's not it's not perfect by any means. But but, you know, I I think I would say that who knows in the short term, but the long term trend, I think, is to, a less volatility and higher margins. And the analogy I would give you is a is a NOR market, only a much larger market. It's not a small market. It's a big DRAM size market. But a model that looks more like the NOR market where the products are stickier, and and the rate of change of technology migration is slower, and the and the customers, wanna make sure the design cycles are longer and the customer isn't flipping from vendor to vendor as often because the products are all slightly different and with the system in a slightly different way. So that might be one analogy to think about for the DRAM business on a go forward basis. Only it'll clearly it'll be much bigger Alright. Hey, great questions. We got, you know, we got I'm surprised we didn't get more on LPDA, but, get another shot at me later and, and, we should probably move on now. Great. I'm gonna I'm gonna I'm gonna sit down here. Right? Great. Yep. So before we get into some of the technology, that we alluded to as far as, roadmaps and and and some of the BU focus areas. What I thought I would do is talk about something we don't spend a lot of time is on the kind of side of the market update. I'll give briefly is on the operations of the company. But first, let me just talk a little bit about, the industry. And I don't I think we we've already dealt with a lot of this in some of the Q and A. Clearly, right now DRAM is in a funk, pricing this quarter to date, you know, probably a little bit off where we thought it would be a little bit lower, slightly lower, not a major shift, but not in a great place clearly. And on the NAND side, I would say slightly opposite, but probably a little bit better than we anticipated quarter to date And so on the margin, nothing shifted dramatically in memory on the ISP side. We think inventory on DRAM is probably a little bit flushed around 5 or weeks in the channel. And we think NAND's pretty tight. But I think the overall message around the market condition is that, yeah, PCs are, you know, in a in a precarious place. If you look at the traditional players and PCs, they're struggling right now. But when we think of big consumption and we think of what I would call personal client devices, whether they're a consumer, or whether they're in the commercial environment, we think that there's tremendous upside going forward. If you layer on top of just generic desktop notebooks. You put tablets on top of that and you think about smartphones. And you think about what people are doing with smartphones. Searching, communicating, watching videos, playing games. If you think about that and you think about what's driving big consumption, we think that there's still a pretty good future here for DRAM. We're not in these segments. So right now, the PC market is pretty tough. And, you know, there's some catalysts like Windows 8 and there's ultra thin, and we think those are all positive. But beyond that, and the overall idea of look at the number of units that are being forecasted for this whole category of personal devices that's going to be consuming memory. We're we're pretty bullish on that. So right now, certainly in a downturn, especially around DRAM, But we think overall, the demand profile is pretty good as part of the DRAM industry. Not all, we have a lot of different segments we market to. We think the growth in terms of the big consumption is still there. It's not, it's not as dire as, as one might think. When you think of technology companies, the boring parts are how do you compete at an operating level? And again, we I don't think we talk about this a lot as a company. And we probably should do more of it because at the end of the day, in a relatively tight margin environment, how we operate can make a big difference in the bottom line of the company. So one of the things we're focused on at Micron is being much more efficient and what we do. And that that means tough choices. And as we think about, what's changed at Micron and the capacity we've had in the company, in improvements. One of the benchmarks is our capacity versus our overall headcount, which normally drives and leads to expense line. And we are very focused on becoming world class in our overall headcount optimization and headcount efficiency and expense management. And today, we I think we have room for improvement very openly. But you can see we've been focused on it. And you look at, as you look at our P and L, you look at SG and A as an example. You'll see SG and A manage much much tight, much more tightly going forward in these market conditions as we look at how we manage our business. But you see capacity going up and you're seeing headcount relatively flat. And part of that is just making tough decisions on who you are. One of the things that Mark has challenged us with is we have to stay core to who we are as a memory company. And sometimes, large companies, especially during the good times, a year like 2010, You get ambitious. You want to go do more things. And I would say that that, that, we're being, you know, guided with Mark's vision that we have to focus on the solutions aspect of memory and get away from the tangential businesses that might not be core to who we are. You know, another thing, inventory. In a business that I would argue that's much more complex, because we've got multiple different types of supply chain. We've got the traditional commodity supply chain around PC applications. We've got embedded, which is a lot more customers and unique requirements around product longevity, and delivery performance is wireless, which is a little more custom in nature than the PC business. And then you've got, our NAND business, which is definitely more of a solutions orientation, and newer opportunities around demand that provide us forecasting challenges. Inventory is going to be a critical piece of how we manage our business. And we put together a number of programs in the last 12 to 18 months to help us think about working capital management and how we drive efficiency in our company. And you can see here that, we're having some good positive results These two slides as an example of, we're going to be a much more focused, going forward on making sure that while we expanded these new markets, We are properly managing the business financially to make sure we're in the right businesses and we're doing them right. Let me see here. Go back to one slide here. You know, from our perspective, when you look at what we're up against in terms of not knowing the demand picture in the PC business and what have you in in in DRAM, we've gotta make some choices, and we've already made some. And let me give you a couple of examples. We thought we had a pretty compelling proposition to compete and enter the solar business. But as we look at the LPDA opportunity, yes, they trade us. And, you know, Mark and and and the team, we got together and we said, you know what? We are who we are. We are a memory business. And so we made decisions on memory and display, and we're looking at other areas that we can reshift allocation of resources to drive the best use of our capital going forward. And that is around what we're talking about today. Solutions orientations memory value add, marketing segments. So from that perspective, you'll see us today in our communication talk solely about that. And different app and DRAM and NAND and how we go to market and wireless and embedded, it's a much different approach than trying to be multiple technologies outside of the core memory business in which we're in, and that's a message that you need to understand that's critical to us going forward. You'll see also about technology leadership across all segments We have to be a leader and we have to innovate. And so that might come in the form of partnerships that might come in the form of redirected deployment of assets You've talked about kind of how fungible we need to be and react to the market conditions. That's critical to our business. Premium premium segments, a leader in server, a leader in networking, a leader in automotive solutions. We're going to continue to invest in differentiation. That's a theme out of today that we'll repeat and you'll see examples of as we go through the BU focus. That's critical to our business as well. We need to leverage how strong we are in those markets and the dependency our customers have on us as it shifts away from a generic standard part to something that's innovative for the customer and innovative that we need to focus on from a transition to a technology laden customer engagement model. And finally, I would say that Mark referenced Mike Rayfield, Mike just joined us within the last month and is leading our wireless business. We have another executive team member that, joined us within the last couple of months, on the supply days supply chain side, John Wade, who's, you know, we've never talked about supply chain in a form like this, but supply chain for us as it relates to customer delivery around optimizing inventory around the delivery focus and performance of meeting our customer requirements in different segments. It's critical to who we are and it's not the old DRAM company serving 10 PC customers. And so we are looking to round out our management team, whether it's develop people internally or going out and get the best possible people to run our businesses to help us lead us to these new market opportunities is critical for Micron. So as we look at the challenge for us and the opportunity for us, part of that is filling in the gaps on technology side, whether it be more solutions orientation capabilities or competencies, and then getting the right people in place and enabling them to drive us to that opportunity. I do want to talk each of the BUs and what they're focused on. So when you think about the message of differentiation, it sounds great, right? And it sounds like it's simply a nice place to be, but what does it really mean? And each of the BUs is being tasked to go to to take on this thought process about how we differentiate at the technology level and the market segment level. And if you think about, for example, in DRAM, there's a number of examples that you're going to see today around DRAM and Mark referenced hybrid memory cube as one of them. But as you look at more networking systems going out to support data center and cloud infrastructure, or you look at the server impact to that to this growing phenomena, there's more DRAM bits going in those systems than there ever had than there ever kind of going forward will increase. As we think about that, Brian and the DRAM team have to go deliver value to the customer in terms of how the memory fits into new architectures Right? It's not just a one CPU game anymore. There's a number of different CPUs that are popping up, across the business units. And how we deal with adding value and innovating where the memory fits and gets around bandwidth issues. These are unique challenges that are to new to the DRAM business. And that's really what you're going to hear from Brian today is how we're developing a roadmap around technology to drive those solutions to capitalize on the market opportunity. If you look at in NAND, NAND is a little bit different today because you think about the shift from where NAND came from. NAND came from where, photography cards, dumb USB sticks, it kind of evolved into MP3 music and some storage around video players, what have you. And so it was mostly consumer that drove NAND. And even today, consumer applications are still a fairly healthy demand driver for NAND. Now there's been a pretty dramatic shift, and I would say 2012 was a big year in that way. If you go back 2 or 3 years ago, we were thinking about what's the magic price that's going to drive SSDs? I think the 1st generation or the first guess of that was we got to get down to a dollar per gigabyte. And that didn't quite do it. And then we started to get down lower and lower and about $0.50 a gigabyte. We saw a pretty big shift And we saw our volumes go up. We saw industry volumes go up in SSDs, and that's triggered kind of a movement from some of the capacity that was more focused on consumer in the past towards some new applications. And the enterprise space is really kind of taken off. Shipments of enterprise products that continue to grow massively in 2012 and it's early in that game. And so what Glenn and his team need to focus on is how do we capitalize on that opportunity? How do we take those bits that used to be pretty commoditized, you know, supplying demand driven bits and how do we add value to solutions that are really part where the NAND is part of it, but not all of it, where your negotiations with customers are more about how can we add value to your solutions customer? How can we add value to that rather than how do we look at gigabyte cost and pricing? And the phenomena around enterprise storage is really interesting because we just met with a startup company, in the last week that's got a It was a 20 or 44 terabytes system that can daily chain into 250 terabytes system, all NAND. Serving a government application, serving large massively parallel mainframe applications with with large corporations. I mean, the idea that we even talk about NAND in this type of environment 5 years ago was going to be hard hard to imagine. So Glenn's got an opportunity in NAND is how do we take what's traditionally been a consumer model and then go out and engage with customers and deliver that? And I think we're on our way got great partnerships. He'll talk about the elements of NAND that's going to lead us to winning in this environment, but you've got controller development capabilities, both in house partnerships. You've got firmware and software resources that are needed. So the NAND business is actually similar to where DRAM might have been before we drove into the specialty and differentiated markets. And I think that that's the opportunity for us, and that's what we got to go execute too. On the embedded side, it's a little bit different. I think the technology pieces are in play. I think what you'll hear from Tom is more about a leadership position with a lot more opportunity to go down certainly a leadership in NOR in the embedded market, and what we've capitalized. I remember what we talked about at the time of the Mnemonics acquisition was we can take a portfolio of products this segment. And we've actually gone off and done that fairly well, but we think there's much more opportunity, meaning that we've got DRAM and NAND driving the embedded market And we have access to that market through Tom's team and the Embedded Solutions group, but there's a lot more growth for us there. And we talk about the cash flow capability of NOR DRAM and NAND solutions go into that market. So we've got a pretty good roadmap there. It's more about channel execution and how do we get a company that's traditionally been an OEM engagement model to go in and distribute customer environment distribution segments or smaller customers that are more high margin, low volume opportunities, a lot different than maybe the PC So Tom's opportunity is more about how we go to market, how do we service this customer, and how we drive more accelerated growth, and we think there's a for us to drive that business. As you can see from our earnings announcements, a very high margin good business for us to be in. And finally, our wireless group, I would say that that one has been the most challenge of the 4 business units for us. I think at the time of the acquisition, we had a customer concentration that was more heavily focused on feature phones. As a result, our product alignment wasn't necessarily, lockstep with the rapid growth over to smartphones. And surely we're in trust of doing that today. And we think that we'll have great results in 2013 2014 in terms of moving our product direction, our customer engagement down that path, but we're coming from a place where that shifted pretty quickly. And we had some legacy, technology that was not deployed or deployable to smartphones, and that's something we had to So openly, that's why we went out. We feel like we've got the best guy available to us in the industry, someone to come out and help us rethink about how we go back and win in this business. And by the way, winning doesn't mean we're going to be the leading market share in mobile. So I think the mobile business, if you're not careful, has characteristics of the PC Commodity business. Winning means, how do you be profitable in this business? And there's a fine line between customer engagement just for market share and being smart and how you engage with customers. And we think that our product portfolio is catching up We have some exciting low power offerings coming down the pipe from, from Micron, certainly around the MMC, MCP offerings. We think we're getting more aligned with the right segment in the wireless business, but we have a long way to go from an engagement, customer engagement model and go to market. So from that perspective, this is a little bit of a turnaround in our business. And openly, we feel pretty good about where we're going, but it's been a disappointment for us. And we went, we're trying to fix it on a number of different levels. So, that's the challenge for Mike in his new role is that we're in a business that's kind of coming from the wrong customer mix and some product misalignment to engaging with the right set of customers and making sure our product roadmaps in place to drive that customer model. So, With that, I'm happy to take any questions about what I presented. There was certainly some overlap from, from what Mark and I but happy to take any questions about that before we move on. Yes. Just with regard to the LP acquisitions, how does the LPDA acquisition help the DRAM business unit in terms of the capabilities and what you're trying to do there? Well, I think that, 1st and foremost, the point I talked to earlier in the Q and A with Mark, was that the customer engagement to know that Micron has a scale going forward to be a significant potentially number 1 supplier is very material for us for new opportunities. Secondly, we're not nearly tapped out on our ability to penetrate the specialty markets And I really think that's the opportunity. If you go back and look at where El Pito was coming from, they primarily were in the PC and wireless business, And we think in one of, you know, one of the opportunities is to take that capacity and put it in better homes. And we don't think that's a impossible chore. We think that's kind of what we do well. So we like that capacity in the markets we serve. So both in scale and additional capabilities to drive specialty business or two ways I would answer that. Can you elaborate on the Nora business? You talked about products that, you had the wrong products. Exactly what does that mean and how do you turn that into the right product? Or is it basically you discontinue it and you develop new products? Well, I think, maybe to clarify, the nor wasn't necessarily the culprit for why we didn't succeed. I think with the overall portfolio that was featured on a segment in the market that didn't grow as fast as other aspects. And so you saw basically some shifts in winners and losers in the mobile business. So you think you think about Apple and Samsung have done the smartphone segment And you think that some of the players have struggled, you've seen a major shift in terms of who's the winners and losers. And so from that perspective, it's not about Nord DRAM or NAND. It's more of the package solutions and the architectures of what they want in their phones. And so, Nora wasn't SID loan culprit. We think actually Nora's got place going forward because the smartphone business really is now even segmented itself. There's now kind of a lower end of the smartphone business, that you're seeing people kind of generate some technology platforms around the entry or value smartphone that you're going to take to emerging markets. So don't think it's a nor DRAM NAND question. We think it more is just overall product roadmap alignment to a specific category feature phones and we hadn't advanced the ball fast enough on the smartphone please? Market for NOR in low end smartphones? I think there's potential for leverage of that, yes. Okay. One last question. Great question. How do you actually differentiate your SSD offering from your competition? And what are the things that you need to do to just stay ahead of your competition. Thanks. Well, I'm going to let Glenn speak to that when he's down here, but when you think about SSDs and you think about things about reliability and performance. And those are some of the attributes in the application space they serve, whether it be client or enterprise but I don't want to necessarily steal Glennsteiner. If we don't answer that during that session, we'll come back to it. So what I wanted to do next, was, I wanted to bring up Mike Rayfield, who, again, just joined us within the last couple of weeks I wanted to let Mike tell you a little bit about his background and also give you a perspective of the wireless business and his assessment views in very short time of where Mike Brown might sit. Thank you. So, so I think I've I've worked with a number. Wow. I wouldn't wanna I wouldn't wanna see that early in the morning, so I apologize for that. So, I'm gonna talk a little bit about, you know, there's people have asked, you know, what's the opportunity for Micron and the mobile business? I thought, you know, I've worked with a bunch of you guys for a long time. You know, I'm a pretty direct person and, and, you know, you've asked me a number of questions over the last day. Most of them are, you know, why did you come to Micron? So I think if I answer that, it'll, it'll shine some light on on what the opportunity is. So, you're gonna hear a little later from Scott about sort of the core technology, NAND, Nord, and DRAM that we've got in here in Micron. And I think what you'll see is the the core technology we've got is leadership. We can we can go toe to toe with anyone on that technology. And what was highlighted a little bit earlier, the real key is wrapping the right stuff around that technology, whether it be firmware, whether it be IOs, whether it be developing a relationship with the SO suppliers or the end customers to go off and make that technology compelling. So if you look at the the mobile opportunity next year, it's about $18,000,000,000 or $20,000,000,000, pretty significant. Our business last year in mobile was about $1,200,000,000 And most of that is highlighted was within the, the the feature phone or the entry level smartphone. It's mostly newer technology. So that was probably $3,000,000,000 of that $20,000,000,000. So we've got a pretty good chunk of that already. And above that, you get into higher end feature phones and super phones and tablets. And we've got the core technology in DRAM and NAND and nord to go off and service those. And if you think about China. Right? So you get entry level, smartphones in China. They want a lot of these MCP products. So you take a look at what we've got in the 30 nanometer DRAM, you stack it with, with, NAND, you've got a great solution to go forward in China. And that's a huge market. We're already starting to win designs and starting to ship on that. All the way spate in that upper $16,000,000,000 of market. And then finally, when you look at, at NAM, you do, eMMC, managed NAND. You put that together. And any of you have got kits. They've got, you know, all of these media devices, tablets, phones. They've got a staggering amount of manage, NAND on it. So, it gives us a way to differentiate. We do a little firmware. We do a little software. We put a bunch of our NAND technology, and we've got the ability then to participate all the way up through the marketplace. And then as you go forward, I think the, yeah, this slide here, the reality is the top three bars are mobile. Right, what they require is mobile sensibility. So if we've gone off and aligned with the people that drive that mobile business, whether they be ecosystem partners or end customers all of a sudden, those top three bars become a place where we can go off and have great success hunting. And, I think that the most exciting part about coming here this is probably the largest single opportunity in the industry to go from, you know, a $1,000,000,000 business to many, many $1,000,000,000 business with a core technology we've got. And then you add LP to that. It gives us scale. It gives us a great customer relationships. And, it's a pretty exciting opportunity. We, I mean, where where are the things like networking server and other applications? So the sorry, this chart was more around kind of, yes, probably there's the infrastructure devices, the client devices. So really probably could have been better labeled, but it was more around it wasn't necessarily around the higher end data center cloud component of DRAM. It was more around the client or the or portable devices that interplay there primarily or included in that also is anything in the enterprise client commercial corporate desktop and that type of stuff? Not in there. That's right. That's right. Okay. I think we're all set except for anyone to have any questions. I might before we let and go to And just on the if I look we look at the wireless business operational class 4, 5 quarters, it has posted losses, right? Kind of, how do you see we come out of that situation? And when do you see that kind of turn around in that business? So, it's it's been about product focus, right, and we've got a, I think there was a little bit of innovator's dilemma you get focused on the NOR business in, in, feature phones, and you just sort of follow that thing into the ground, right? It's not, It's not going to go away. We've got products to service that going forward, but fundamentally, somebody backing up and looking and saying, let's use the rest of the core technology we've got. Let's start shipping into these upper classes of devices. We can do that pretty quickly. And we're already starting with, with a 30 nanometer LPDDR, 2 DRAM We're starting to do it with the MCP products in, in, in China. We'll have the, the EMMC or the managed NOR products in the latter part of this year. So we can very quickly, I think have a pretty significant, presence in those markets. So I I'm optimistic we do it pretty quickly. It might be a little early for you to answer this question, but when you look at the mobile market, it doesn't peer that we've seen sort of demand elasticity related with pricing. How should we think about the mobile customer and the way in they approach buying memory. Is there a bill of materials they're targeting? Is there any chance you're ever going to get these guys to sign up to long term contracts. They seem to be buying more unique solutions than I think the market net necessarily recognizes. And that's because they're constantly getting market based pricing. So let me answer it from a mobile industry standpoint. Because on my 3rd week anniversary, I'm probably not gonna be able to go much deeper than that. So, there are a bunch of phone customers that say I need to build a phone for a 1000 RMB. And then it's a question of what you can supply them in that, what sort of uniqueness. And I think we have the ability to unique solutions together with SoC suppliers that can maybe get somebody more capability or more functionality in a given price. So I think there's an opportunity there. I think after that, from an elasticity standpoint, you have to move fast and be able to differentiate, whether it be firmware on on managed NAND, whether it be unique interfaces on DRAM or NOR, like SPY on NOR. I think if you just stay close to the, to the people that are driving the market, you can find a way to add more value to them and therefore, get more value if you can go off and have the right product mix. And in the end, I think that's the right answer. Maybe one more question. So, in in targeting this China opportunity, I'd be curious, how important is it to have relationships with the baseband vendors over there to mediatex spreadsheets of the world and how would you rate where Micron is relative to the relationships with Qualcomm and the rest of the day. So it's very important to have relationships with all those guys. You name probably the 2 guys, the 2 key guys in China. As well as, you know, all the North American people. I think that I think we do okay. I was lucky enough to be a partner with Micron on the other side till a couple months ago. And, I think there's more we can do there. And, ultimately, what that does is creates, you know, a huge worldwide virtual sales organization that's what we're going off and doing, have them go sell our products, right, we'll support the hell out of them early on and make sure that they help design us in, and we'll do we'll be pretty aggressive on that. Okay. Thanks, Mike. So, we're good with that. So so so far, we've actually talked about a lot corporate initiatives. Mark talked a little bit about the industry landscape. What we wanted to do next was to bring up our BU leadership team. To talk a little bit about the market conditions and our response to that and some of the themes we've driven home already that they can actually add some more substance around that Bryan Shirley and Tom Eby and Glenn Hau. Thanks Mark. Okay. Good morning to to everyone. By way of introduction, up here on the stage, we've got, Glenn Hawk, representing the NAND solutions group. Tom Eby, representing the, embedded solutions group. And I, Brian, Shirley, representing the the DRAM Solutions group. So I think what we wanted to do today, is, is take a stab at the, the submitted questions, see if we can lend some insight to those and then, a little bit of an abbreviated session from from what we've done in the past, and then have a chance to get some more, some more direct Q and A as well. So, with that, I'm gonna go ahead and kick off. The, the first submitted question was, how does Micron reposition its DRAM business with a lack of growth in traditional PC applications? Now as you've heard, Mark and Mark talk about, for us, the answer is pretty easy. It's it's really, a threefold strategy, but at, at heart, the you know, the big picture answer is you go where the bits are. That's number 1, wireless, client applications on the DRAM side, as as my indicated. And the second big area, which I'm going to spend just a little bit of time on, is really an infrastructure DRAM. This is not a new area for us. This is the the conjunction of of server and networking DRAM and it's an area that that frankly, we feel like we're, we're doing pretty well in. I'll tell you on the networking side, the demand remains insatiable out there. It it has a, it always has a feel of it, of a segment that's a little bit difficult to forecast. Quite honestly, there's questions about CAP extenditures and LTE rollouts, etcetera. But when you look at the the continued push on mobility, when you see what's happening with data center switching, networking continues to grow by leaps and bounds. And frankly, Micron's pretty well represented there. By our calibration, we have over 40% of the DRAM dollar revenue, in this segment flowing through Micron. And it's been a good segment. It's been a very profitable segment and and frankly, the, the rest of the vendors in there are are disproportionately fragmented. This is a segment, by the way, the this is not a small segment. It actually is nearly in large in terms of revenue, for Micron today as the, as the server segment. So we've we've been pretty pleased with that. And some of the solutions you've heard us talk about in the past, such as rldram, have really provided a boom. The second area is servers. And and there has been a little bit of a shift out there. Some of the traditional server applications are a bit on the slow side. Some of the news reports out recently. I I will tell you in aggregate servers, remain, very, very strong. There is a shift in the in the model out there. However, where a lot of the direct vendors, are taking over share. And and it's the, it's the data center applications. They are building their own servers and and stepping in full of memory. We like what's happened out there up on the screen. You will see a picture of a motherboard that that support, the, the Romley, Sandy Bridge and Ivy Bridge platforms. What we like about this is that, those blue and black slots, those are slots for DRAM modules. That has recently grown, from roughly twelve slots up to 16 with the advent of, of Romely, and I'll tell you that data center vendors are using every single one of those slots. You know, the the driver for that is that, as has been represented, by others in the industry, speaking to the the goodness of mobility driving server CPU growth, frankly, that's just as good for the DRAM guys. As a matter of fact, it's better. 600 smartphones, 120 tablets, driving a new server, And if you go through the math, if you look at the silicon area on a server motherboard, frankly, there is anywhere from 10 to 20 time the amount of DRAM silicon on that motherboard as there is CPU Silicon. So that's a that's a pretty good thing for us. Not a you know, there's a, there's a good growth in the number of servers, but frankly, the, the DRAM content per server is what's really staggering here, and it's it's been a good thing for us. I'll I'll also add that in the, the big data set, a lot of, sounds like a little bit of a buzzword. I'll tell you that it's real. These are applications that try to sort through all of this data that's been created. And by and large, it's a DRAM problem. These these millisecond transactions that you hear about these are systems that are loaded up with literally a terabyte of DRAM, because that's the only way you can sort it through it fast enough, and you're starting to see some of these words out there. I won't go through the particular vendors, but if you if you pay attention to the space, in system memory, several other other forms of of ways. What that all gets to is loading data set into DRAM and making sure you can sort through it quickly. So we we like that trend. The third area quite honestly is that as Mark and Mark indicated, this this shift of TC growth being a little bit slower is is more than counterbalanced by the rise in in NAND silicon going into the client application. And and Glenn is gonna speak, a bit more to that today as well. Yeah. Exactly, Brian. Exactly. Good opportunity where there's a lot of synergy between what we're doing on the DRAM side and the NAND side at Micron. So the second question, what is your outlook on DRAM for next year and beyond? There was a question earlier about where was infrastructure here is a, graph that actually includes infrastructure, DRAM bits. And what you can see up here frankly is that, going out to 2016, infrastructure is not a, not a corner, piece of the market anymore. It's a pretty large piece. Which when you combine that with tablet, mobility, and the Ultra tens, you've got a pretty diverse set of applications out there, driving still pretty hefty bit demand on the DRAM side. So, yeah, overall, 2000 12 to 16 tough to to perfectly prognosticate these things, but, we are seeing, overall demand bid growth, pretty consistent between 35 to 40 percent CAGR year over year. 13 over 12, obviously a difficult thing to to project. As Mark and Mark indicated, the PC market slow today. You know, that's a big piece of that is the global economic situation out there. But but, you know, we do tend to still be somewhat bullish on, a pickup after 2012. With Windows 8 and Ultrasins and what that's doing. So, you know, some rough numbers to keep in mind, we think 13 over 12 somewhere on the order of about 45 percent big growth, year over year. Lastly, on the DRAM side, as as both Mark and Mark indicated, just really a a completely different landscape from the, you know, the the the 25 years I've spent in this industry, things are changing in a way that makes it feel like this business is in certain ways almost turning into an ASIC like model. The drivers for that are not just, industrial, frankly, it's technical. As as you load up systems with a lot of DRAM, DRAM becomes an increasingly large part of the power budget. And frankly, when you put a lot of silicon in a system, things slow down, and that that, hurts this, this trend of of memory not keeping up with processor speed. So there are big r textural trends driving us both on the power side, as well as the, the performance side, both in client and infrastructure. Couple modables up here on the left. Micron, has introduced something called DDR3rs. We were the first to validate this with Intel this is shipping today. It's it's a feature that has to be enabled by DRAM, as a way to get lower power out of, ultrastan applications. And on the right, you have HMC. Some pretty good stuff happening with HMC. We've we've spoken about it in the past, and I'll just tell you, going to the next slide. We have formed a consortium out there. It it did what we wanted it to do, which was establishing HMC see as the upper end solution, in the infrastructure space for upper end DRAM performance. All of the major DRAM developers have joined up. There will be a final spec released, coming up here in the about the next 4 months or so. In 2013, you'll actually see us releasing engineering samples of the full production HMC with volume to start in 2014. So pretty, pretty pleased with how this has gone and, see it as a huge area for future growth. With that, I'm going to go ahead and turn it over to Glenn. Alright. Thanks, Brian. So, you know, I'll keep this, brief just to get to the Q and A quickly, but at the same time, I wanna do justice to some of the questions you were thoughtful enough to send in ahead of time. And we had a couple of questions up front, the other on the screen right here. One's about what's happening with overall industry growth and what are the some of the segments that are driving that. And I think Mark, Adam started us off with the beginning of story, because I think this is a situation where the past is a pretty good reflection of what's going to happen in the future. The story of NAND Flash to date has been that it's changing the world. When it changes the world, that creates more demand for Flash. You know, the, of course, the sharing with everybody was the disruption to film and CD ROMs. And, you know, now most of us, you know, can't remember a day when we didn't have our MP3 player. And probably most of us don't have a lot of CD ROMs or 8 track case or those kind of things. That was in the 90s. And, what's shown on this chart here is that more traditional NAND flash market, it's shown by the gray bars. And guess what? It's still growing, okay? I think the next wave of innovation came from the mobile handset it's no secret that mobile handsets wouldn't be as thin and light as it's fun to use if you didn't have a lot of flash in there. And the light green section on this graph represents that growth. And if you just look at the top of that light green line there and you do some, compounded annual growth math on this. It turns out that that's that top green line is, growing at about the same rate as Moore's Law. So, you know, Mark Durkin, had talked a little bit about the, the challenges that the memory industry has, keeping up with Moore's Law. Scott Dibor is gonna come say a lot more about that. But the point here is that even if the NAND market were only capped at that top green line, we would still have to treadmill to let those just as fast. To to stay even. The big growth story for for NAND and that the things that have happened more recently have been shown in in dark green here is the the tablet phenomena. Obviously, that's consuming a lot of flash. We think that on the right hand side of this graph, out around 2016, that's going to be more than 15% of all the NAND bits in the world. And the other big growth driver, of course, that we're very excited about are the solid state drives for client devices. And as Brian mentioned earlier, some of the opportunities we see in the cloud. And, we think that the SSDs are going to comprise over 20% of the bits out in time. So those are 2 huge new disruptive innovations that are occurring. And I think that we've just started on a couple of them, by the way. And so what this means is that over time, the industry is going to have to add capacity. And of course, we'll do that in, in the right way. So, there was also a question on, you know, what's our product focus and, you know, how, especially there's another, question about, how do we see the, synergies between the DRAM group, you know, particularly in cloud computing And, you know, this slide just makes it pretty simple. We're going after, the real growth, real exciting opportunities of those 2 new disruptive trends I mentioned. On the, on the client side, there's a lot of portable devices out there in the world today, whether it's, I see some thin and light, notebooks out there in the audience. I'd like to see a few more of those. And, and, as you get indulgent thins or tablets, I think this looks a lot like some of the products we see in the embedded market, right? I'll a little bit. Yes, some of the migration we'll see from tablets applications processors into embedded is something we can take advantage of. And that's real good. Yeah. Down to the core technologies that we're delivering, whether it's the NAND silicon of the controllers, it's a nice fit for both these markets, nice synergy here for the, for us at Micron. And I think at the bottom here, you know, the, I think it's pretty well known now, well known now that, flash first made its entrance into the data center into cloud computing, mainly on the storage side. You know, it was pretty easy to take a flash solid state drive with a satter, a south interface and slide it into the storage racks and seeing immediate benefit from power reduction from liability. And you know, that's certainly where the the, you know, the revolution has started, so to speak. But, you know, now there's a lot of excitement about server side flash we have some PCIe SSDs that have made a pretty big splash here. And this, you know, comes back to Brian's point about the the it's so nice be able to walk into a customer with leading edge, flash for servers as well as DRAM. You know, and in fact, I think DRAM Brian and his team, got our foot in the door, at least with a lot of the work they've been doing on the DRAM. That's right, Glenn. The, a number of these customers, frankly, they, put up only they wanna be working with one company on the entire memory subsystem. That's, that is a real issue these days. All of the is getting re architected, and that's just much easier to do when you can go to one company, and handle both the DRAM side as well as the NAND side. Everything that we've learned about providing high quality, reliable, consistent supply, you know, to, mission critical applications on the DRAM site in the data center. You know, we that's those exact same principles apply to solid state drives. It's more about the tech a lot more than the technology that distinguishes us or differentiate some of the competitors as was asked earlier. There were also some questions here specifically on SSD, a big focus for us, so I was very glad to see that the, competitive environment, etcetera. And, just to, show you a few proof points of where we're at on solid state drives, the client, solid state drives. We've been shipping for a couple of years now. We're in the, you know, mid teens in terms of market segment share. That really helped us, get our R and D and our manufacturing, lined up in this new, more highly integrated system level solution. From that, you know, we've started to work on enterprise. I mentioned that PCIe solution, a photo of it here is shown at the bottom This is, our P320 product. One of the fastest PCIe SSDs on the planet right now is definitely targeted at the the top of the top high performance server site flash applications, a nice couple of announcements this year from EMC and Dell using this product but in addition to those solid state drives, you know, we're also finding a lot of success of selling our components into other innovators that are there. There's so much innovation that's driving product proliferation at the system level now. Sure, we can do a lot of SSDs and, PCIe cards or SSDs ourselves, but there's a lot more going on out there. And, Mark, Adam had mentioned one of those companies earlier Skyera is the one that has that 44 terabyte storage box that he mentioned. There are 3000 individual, micron flash chips that make up that solution. And you know what? It was only pop solution. And that was a big reason that they selected us. And of course, all the other experience that we had delivering, enterprise, great NAND to the mission critical applications. And the thing I wanted to point out here was that it is about the SSDs for sure, but we're also having great success selling our NAND components into people that are doing similar things. It's created sort of this virtual cycle for us. The more and the, the more of the SSDs that we make and the system level solutions that we deliver the more we learn better. And a lot of those feedback we get from our customers is that our NAND Flash works better in these kind of enterprise applications or even SSD applications than some of our competitors. And I think this, climbing of the value chain, and the work that we're doing to deliver more fully integrated system level solutions is a big part of why all this works together well. Here. The first one probably the a little bit more remedial. What is the embedded business and how does the how does the Micron portfolio apply to that in very short order. We sell the full portfolio of a nonvolatile and DRAM products to automotive, industrial, medical, multi markets, in other words, for everything else. And then we focus the non volatile portfolio primarily on the balance the segments in networking and storage consumer and in PCs with at the highest level of value proposition that leverages the full line customers want to buy from one guy, stability across financials, across roadmap, across supply, because particularly on the left side of this chart, people are making decisions that may last for 5 or 10 years, they need to be able to count on you. And then last but not least, a very wide range of unique requirements in the embedded market. And I'll talk about those a little bit more shortly. But before I do that, just a quick comment about why I get to be the last guy up here, and, you know, in, I guess, somewhat flipped terms is because I get to take advantage of mooching off all these other guys a lot, right? We'll let you mooch. Yeah. And Mike may not have figured that out, but he will, he will quickly. You know, it's at a component technology level in NAND and DRAM, and it's increasingly at the memory subsystem level, both in NAND and a little bit further out on the DRAM side. And the point of it is that the ideal embedded business cannot exist outside of the cocoon of a large multi technology leading edge high volume manufacturing memory company because all the customers up here, including the ones on the segments on the left, they want leading edge cost effective high volume manufacturing, right? But they also have a whole host of unique requirements. And so that's where the embedded group comes in, right? Whoops. And, and so, you know, so what are some of those, right? Certainly at a product level. We take an EMMC solution that was developed for wireless. Well, we're going to ship that to an automotive guy And part of their qualification is to build a couple hundred cars. And I'll send 100 of them up to Northern Sweden and drive them around in February for a month take another 100 of them and drive them down to Morocco in July. And it's got to work. And so there's issues at a component level, at a firmware level, at a software level, where we've got to basically adapt and modify at a product solution so that we can meet that need. There are services Again, more to the left side of this chart, automotive, industrial and medical, these are products that need to last for 10 years. And so we have a product longevity program that guarantees not the same litho node, but certainly from a functional point of view, a 10 year lifetime And so we have to work, with the fab operations to make sure we understand how to do that in a way that works in the network. And of course, as Mark referred to at the beginning, there's a whole bunch of channel activity because particularly in that industrial medical multi market arena, there are 1000 and 1000 and 1000 of customers. And you can't get to them with a direct sales force. And so you need to work very carefully with a rep and a distribution channel organization because individually they're very profitable they're just also individually quite modest inside. So, a number of the areas where we need to work. I go on to the second question, just real quickly, the one area where we do contribute a bit more from a technology development perspective is NOR. It just got back from our fab in Virginia, we call it MTV a couple of weeks ago. We've seen our first 300 millimeter, 45 nanometer, nor wafers out of that fab We think that will help us extend both from a technology and a cost perspective. Our leadership there and of course continue to gain share. And our CapEx to be clear going forward will be predominantly in the north space on 300 millimeter going forward. So the second question is, hey, how do you grow, how do you defend and how do you extend your value in this market. You know, there's certainly a whole host of issues there and channel being a very important one as Mark alluded to, but the lifeblood of the embedded business is design wins. And over the last about 18 months, We've had a very focused effort with the field sales applications and of course, business unit resources to reinvigorate a design win process that frankly probably got ignored a little bit right after the close of the NeuMoDx acquisition. And so we're now able to track on a by segment basis, on a by technology basis, on a by region basis, how we're doing as a future predictor of design win success. And clearly, the traction that we're getting here was part of the very significant growth that we saw in the second half of the recently completed fiscal 'twelve, including what were record revenues and margins in the fourth quarter. Where we're, I think doing a reasonable job, but frankly expanding a bit more is at the reference platform level. If you can get upstream of the OEM design by getting to the chipset guy first. And as Mike said, let their sales force be our sales force that can be that much more effective. And so there's an increasing level of focus there. Perhaps what's most exciting though is we're starting to to bring up and make operational a series of regional embedded focused systems engineering lab. They're in tended to be in region close to the chipset partners, customers, in some cases, end customers like automotive. So a good example is our lab in Munich, which amongst other things is focused on the automotive business. And the objective there is to be working with reference platforms or actual products sometimes from a chipset partner, sometimes from a, supplier. In some cases, even end users, so we are starting to work increasingly with the automotive guys. And part of it is presale. Let's get Let's get the customer to market faster. But I think more exciting is, is understanding how the customer is using the memory. And back to Mark and Mark's comments about how can we differentiate and create tighter relationships. As an example, the automotive guys as they look to their experience post Japan earthquake and Taiwan floods, they want to understand the downstream players. And so there's and increasingly tight tie to the automotive end users and understanding what they're looking for and how we can adapt our systems is a great way to continue to add value. And to borrow on a comment that Mike made as well, there's sort of a new dimension of mooching that we see coming in the future because the SOC manufacturers a lot of them are taking a high volume segment and then redeploying it for, lower volume, higher value embedded segments, right? So a PC graphic subsystem gets adapted to be an automotive display solution, right? A little further down the road, supercomputing architectures are getting going to get adapted and shrunk because they got to fit in a rearview mirror for advanced driver automation and safety solutions. And very much more broadly, the mobile apps processors like we were talking about show up in a whole host of embedded applications certainly including infotainment in automotive. And so to the extent that we can get that much further upstream, be thinking about not only what is the graph subsystem guy want, but what is he going to want when he converts it to the automotive display? Again, that's that much more opportunity to influence and tune that subsystem and add value, so that we can not only grow the business, but hopefully grow the value of the business going forward as well. And so with that, I think we're going to turn things over to Q And A. Back on slide, I believe it was 38, Glenn. You showed the different market segments. And clearly, those are forecasts, which always end up wrong. Alright. So my question for you is, is which one of those categories do you think you will be wrong the low side, meaning it will exceed your expectations. And then conversely, which one do you think has greatest risk of falling short of of the the forecast? But you know, I think, the enterprise SSD that top line is the 1 I personally think is significantly underestimate it's going to take a long time to get going, but the innovation and disruption that we're seeing in the data centers, I think we've barely scratched the surface. We've got all these high performance flash bits trapped behind this legacy hard drive interface and we're getting away from that and people are starting to see the value. So I think that one would be willing to bet is going to see higher growth. I think where we might see a little bit of pressure is on that traditional segment that Mark Adams talked about the stuff that's related to film and music storage, the USB to SD cards. I think that one, you know, is one that's because for the, for the most part, a lot of that storage is ending up in some of these portable devices in the cloud. And relative to the enterprise, given that there are very significant economic advantages to to the server company, you know, to the server farms. Is it possible that that will end up being bigger than the consumer SSD? Wow. I would love that. I'm, you know, from a dollars perspective, I think that's possible. This might be, a different different answer, you know, the the prevalence, the ubiquity of personal, people want to carry a lot of content with them. I think that's going to continue for a long time. So for from a bit capacity, I think the the portable computing client stuff will will exceed that. You know, we'll just add that these data centers are they are performance driven, you know, there's there's been some some, public discussion about the kinds of metrics that the large data center operators, look at specifically for response time. And frankly, that just drives a lot of silicon, a lot of memory silicon, both in NAND and DRAM. And potentially others in the future. It's a it's a very dynamic space. And I'm hoping, Adele, allow me one more question for Tom. The, the embedded design wins, ended up in every case exceeding what your goal was listed, as if we understood the diamonds correctly. What is it that you all are doing that, that is allowing you to exceed, the expectation or your internal goals? Yes. I think it's, probably in simplest terms, it's focus. Again, a couple of people have commented on the shift from 10 years ago, when, you know, when Micron was a PCD Ram company for, I don't know, 75% of its And the mindset of going after 100100 of designs and the work that's required from salespeople and FAEs and CU marketing is just very different when you're going after this much more granular approach. And so I think it's been one of, it's just been one of training setting the right goals, the right reinforcement. It's a lot of fairly mundane blocking and tackling. Because when we can get the product, in front of the influencer, be that a chipset manufacturer, an OEM or an ODM, We've got pretty good product, right? And it's getting the team focused in the right way. And so I think, it's it's been that effort and that focus that's allowed us to be successful on that front. Yeah. Just a quick one on the server segment. I mean, you obviously rightfully said that we're moving more to, you know, generic servers. We've chance of respecting them directly. In that context, once you qualify, let's say, by interimly, what is the most important for you in terms of generating out this engagement with Google, Facebook, etcetera, is it to work with the quantum of its word to make sure you're actually there where the manufacturing happens. Sure. Great question. 2 notables that the the first is to your to your point on on, enabling and qualifying, you know, the the big issue is still, frankly, high quality bits. There is, these applications do require high quality bits. We are over shipping, relative to our market size in that space. It's been a good space for us. Relative to the other guys. We have been supply constrained in that sense. So that's, that's that's part of the reason why we're excited about new capacity. I I will tell you though that also with part of the data center bring up, there's a change in the model where the orders come in, a little bit with with less predictability. So the the average size of the business is growing by leaps inbound. It's a little bit clumpier than it used to be. And what that means is frankly good supply chain operation, and being ready to supply that business as it comes in. It's you know, say, a lot of these customers will will call up and say, look, it it, it turns out we're going for it on this next data center. So it you can supply X number of dims, in the next 3 weeks, you've got all the business, and we don't want to mix and match. So either get all of it or you get none of it. And so that has taken some supply chain retooling, that that frankly, we think we've, we've done a pretty good job at, but but the business has changed. Okay, guys. We're going to go ahead and take a 15 minute break now. So everybody can pause for a few minutes. So we'll come back in the room here at, 9:45 and then we'll get things going again. The I'll that's to do Hello. On. Okay, everybody. If we if we can get everybody seated, we need to get started again. So go ahead and take your seat. And the, the next section up will be Scott Dvor. So I think you guys have a lot of good questions for him. Brentwoodwood. You're the main event, man. Okay. Is this working? Yeah. Okay. So, we'll we'll get started. My my 2 counterparts here already been introduced today. So I'm I'm Scott Diboram. I, in chartered technology development for the company. So I'm trying to focus on a set of questions and and from from, from the focus of these questions, they're pretty relevant. We could ask these questions quite a lot. So I think we can, we can get the answers on some of these. And Brian and Glenn will both have some some thoughts on on how these are impacting our our product line. And then hopefully we can we can get over pretty quickly to to some other things. So the first the first question is is really related to a technology wall. And and that's a a, a discussion point around the industry right now. From from our perspective, there there isn't really something that is a specific technology wall. There is there's a a a a slowing in the pace of a potential slowing, at least, in the pace of the cost reduction, for both NAND and DRAM. And this I I put one graph here that shows, at least a perspective of of what we think this may look like going forward. But in terms of a wall, I from from our perspective, we have clear visibility into 2 plus more nodes of of both of our our primary product, in DRAM from a from a technology level. Not that there aren't significant challenges to make both of those happen, but but we believe we know how we're gonna how we're gonna do that. And what what this graph does does indicate, where we show the, kind of, the the change and the pace of the cost reduction over time, is, is really the, the trend. And, and, actually, it's, it started, more with NAND over the last couple of years, maybe kind of surprisingly when we think about it. But When we look at our technology notes historically, we've done we've done significant big shrinks, on, on a periodic basis to lead to this cost reduction. And if you look at the, at the NAND technology graph and you look at where today is and you see the line kind of coming off off of it, In reality, over the past more than 1 year, our our competition has has not shrunk in both directions anymore. So we're not doing a a shrink of the magnitude that's that's been done historically. Now up to 20 nanometer, Micron has still done that. We've so our 20 nanometer product is is a 20 nanometer by 20 nanometer square. When the industry talks about this one node, which is 19 nanometers. That's really only 19 in one direction and it's 20 something more than 20 in the other direction. So Our 20 nanometer dies is extremely competitive. It's actually the smallest die, and the only 128 gig is is Glenn talked about before. So it's comparable to what a 1x node was going to be. So when we look at, at the next node, our, our, 15, 16 nanometer type node, That will again be what we believe is the smallest die in the industry, and and it'll come in along the the curve somewhere between the solid line and the dotted line. In the NAND space, the the interesting thing there is is is, vertical NAND really brings a different dynamic to to where the cost reduction path goes, and I'm I'm not really forecasting other than to say that it it falls some place closer to the dotted line. And then, and we see a scaling path on that also. So from a a technology wall point of view, that's the the first question. And and really on the the the second piece of that, on the pace of of cost reduction, the pace of these nodes, depending on how big of a shrink a company chooses to do, the pace can be moved a little bit. If you take a big aggressive shrink on, on the technology, that's the thing that is extending out Now different people right now are making decisions to do small, 10, 15% shrinks and try to pull them in time wise. But if you look at something compared to historical pace, We believe that the the technology node migration is is gonna slow. Okay. And then Those are the those are the main 2. And I I think one of the things that I was gonna do here is just kind of talk to the or ask Glenn and Brian both to talk to kind of how that the strategy of this node migration, if you impact both of their respective areas and where we sit know. Sure. I can I can kick off? I, you know, I think one of the notable, is that as DRAM continues to scale, it's it's fair to say that there is some of the non idealities that you start to see in the silicon, do do pop up in is true of just, not not just Micron, but everybody out there. And at least on the DRAM side, it's it's giving rise to something, concepts where, the DRAM can be more intelligently managed. And it's akin to thinking of how NAND is managed today with controller silicon. Part of HMC, part of the appeal, and and you'll start to see this in the other segments as well, is the use of management block inside of a controller or inside of the the host that tried to hide these non idealities. It's it's more than just error correction. There's there's other techniques to do that that hide the the fact that we're we're, you know, we're dealing with a small number of molecules and atoms here and and, if you can do that intelligently, which by the way speaks to the value working closely with the, the customer and the the enabler, you can you can overcome a number of those idealities. Or non idealities. Yeah. Same for the same for NAND. I think the the more difficult it gets, the better it gets for us in a lot of ways. It we can do it. There's a lot of innovative things that we can do within our controllers, to, you know, address some of the some of the scaling challenges that we have. And when we do end up making the transition 3 d that Scott talked about. That's going to put us in an even stronger position to hit the ground running. We can either deal with new issues that that new technology brings with it or if we get a little bit of margin back, we can use that to increase the performance and maybe get a little bit closer to that, curve that Scott was mentioning. Okay. Then the next couple of questions here, and I've been asking these quite a lot also around our our view on, EUV first off and and specifically for DRAM and NAND and how is that different? And and does does EUV specifically not, the the timeline of EUV specifically impact the technology migration? And and generally on on on this topic, we view EUV as as a technology that is really cost per performance space. So we don't have if I talk about the 2 plus nodes that that we look out, we we don't have a position there where we say if EUV does work, we can't make those nodes work. So what what we do know is that, our technology can be more cost effective, but obviously our competitors' technology be more cost effective also if EUV comes up and meets the performance spec where we can enable it for certain levels. So it's more of a cost question for us. We're we're we're working closely with, with, the supply chain on, on UV, which is a short supply chain. We're working closely with them. We have we have partnerships. We have we have time and engineers working at at NYMIC and in Belgium, on an EUV tool there. So we're engaged on this. We're just closely working with, with, obviously, ASMLs as we go along to pick the right time for us when it's cost effective. And I'm sure that may lead to some other questions, but The second the second kind of big topic there is is timing for 450. And this is another topic where we're carefully watching it. We're not we're not, out there as a a portraying ourselves as an industry leader on pushing 450 forward on on prefunding it on I'm really trying to, to push the ball. What we are doing is, again, washing it carefully to make a judgment the right time for, for our significant engagement. And I think a lot of you who've, who followed us for a long time, we've talked in the past about not being as aggressive as as potentially we should have on the 300 millimeter conversion. And and I think we've we've learned from that. Although we, we certainly didn't want to be too aggressive on 300 millimeters that didn't really pay off for all the memory companies who did that either. So it's a another judgment call. We're going to watch it carefully, and we're going to we're going to make investments at the right time to for Micron there. Okay. Then The next two, let me move this slide forward. So on on general barriers for Moore's law that that are, their impact us and and and are relevant to both the question and the and the first part of the topic. There are absolutely physical and electrical challenges and limitations of of the material. And those those things, while they're not necessarily a wall, they're things that change the performance of the devices and things that we have to look for unique solutions to, to, to go try to work around and improve. So, you know, an example of that when we talk about scaling in challenges in NAND, we we look at this 1y nose that we're doing And certainly, that's going to come in. It's going to be a cost effective note for us. It's a it's a it's a a note that we're looking at maintaining a leadership position on. At the same time, we have we have the majority of our development resources and focus on on vertical NAND. And we we think that's where the the big win in this game is. And it's going to be different for different companies because there's different approaches for how vertical NAND is being done across the industry. And obviously, we think our approach is the best one. So we have a lot of confidence in that path going forward. And it's it's so you could call planar NAND scaling a physical limitation, but when we look at our scaling path, we found a way around it. Equipment capability We talked about EV and it not necessarily being a barrier, but the things that are challenges on equipment capability are more around control systems for the process. So our challenges on equipment capability are down to atomic level control requirements and how you maintain that across the huge volume of wafers multiple fabs and make it the same every place. And this is a major challenge across, many equipment type etch clean, film deposition. All those things are are are strongly challenged with just fundamental ability for what, for what our requirements are today and going forward. And then the last one that we spent a lot of time on now that maybe was more straightforward 10 years ago for sure, is is the balance between how much complexity we have to add a time to make we can add before the note is is really, kind of reaching a point where the returns aren't where where it pays back. And that's that's, I think, a a challenge, but it's it's the same time by planning it that way, we we feel much more confident about the notes that we're picking in the future. And kind of this 2 plus notes into the future, we believe we have a strong path to those, really either with or without EV. Okay. So those were those were the big questions on on that one. And then the next one is really around emerging memory, and these guys will have some more more to talk about there. From a first piece here, the the, the the dynamic coming up now is these new memory tech technologies being capable of enabling new kinds of system solutions. They have different kinds of properties They have a different kind of cost structure, which is somewhere in between NAND and DRAM. They're not going to be better than NAND. And they provide opportunities and and maybe both Glenn and Brian can talk a little bit about, some of those, some of those things that they're thinking of, of what the new memory technology coming in. And then I'll talk a little bit more specifically about a couple of them. Yes. I'll start on this one. This is pretty exciting from, from my perspective because, there's a nice progression or sequence of events. Scott and his team have a very nice near term scaling path for us on on 2 d NAND, than the introduction of 3 d NAND in these emerging technologies. They all sort of build on one another. And I think it, it plays nicely with our, progression of the value chain. And, you know, Daniel, I think question earlier about, our, I think you called them our puzzle pieces and which ones didn't we have yet. You know, I would phrase it a little differently. I actually think we have all the puzzle pieces today to do the vertical integration And, I think the puzzle is not big enough yet. There's just so much innovation out there. Our development bandwidth isn't there. And one of those important puzzle pieces is the controller technology, the IP surrounding that, the stuff that we're learning on the NAND technologies today, it applies not only to the next generation of NAND technologies, but also these emerging technologies. And, and some we are experimenting with, for example, our phase change memory technology that's used on the mobile side. In the lab, we can take those devices, put them in an SSD, and, and, you know, show some customers some interesting things with it we can do. And so we're already getting, you know, innovation ideas for that those next generation of system appliances that are going to dovetail with the technology roadmap Scott and his team have played out before us. That's it, Glenn. And, you know, we just add on the DRAM side, there's really no perfect memory out there. There's the it's a continuum. It's it's a big space. There are there are, different memories that that can be better for certain applications, better better price points than others. And so really you have to look at this as a, as a continuum and the memory as a subsystem. And that, that again, speaks to what Glenn mentioned on on having the controller point in there specifically to manage those non idealities and make sure that, you're getting, the best out of what each memory technology is really good at. I think we're maybe a little bit behind on that. So we've covered several parts of this as topic. I think the big thing relative to these kind of of memory, new memory technologies coming in is the application space that they enable in and being able to think about actually modifying the the architecture of of the memory system. And and when you bring in memories that are are significantly faster than NAND, still nonvolatile and at a cost point, somewhere between NAND and DRAM, you can start thinking about, different system architectures, and that's a probably another topic for for Glenn to mention a bit. Yeah. I think that that's, you know, interesting thing is, you know, I think some of the emerging technologies that we're looking at, they don't not necessarily replacement technologies in the classic sense of the world, where I think that the NAND scaling path that Scott and his team have before us is going to deliver the low cost per bit, you know, nonvolatile memory technology for a long, long time. I think what you're going to see is some of these emerging technologies emerge and create new levels of memory hierarchy in system level applications. I would add as well on the DRAM side that as some of the scaling starts to slow down, some of these technologies through silicon Vias like assembly technologies, lower power transistors, lower voltage logic transistors. These become more important both to the app application, as well as the, you know, the overall system. So that's a pretty good piece of our focus right now on the DRAM side. Things may be slowing down on just the traditional bit shrinking, but there's so much more that has to happen when you have all of this memory in that application. You gotta get the form factor right. You gotta get the package right, and you gotta keep the power down. Okay. And I think I think really for the last couple of questions that we got beforehand, both these guys have kind of touched on on the role of memory in the future through the previous session and and now. So I think we could probably take questions. 450 millimeter is pretty far out. Do you think there's a need for more 300 millimeter high volume fabs and is the U S a likely place for it? Well, that's going to that's going to depend on the way the markets evolve. I think at the moment, and as Mark mentioned, I think earlier also, We we don't see the need, and I don't think anybody in here would say there's a big need for a new DRAM high volume fab right now. As as time goes on and you look at the, the market projections, across the non volatile space and some of the the specific mobile applications, you know, I don't think it's out of the question that that the capacity grows for some of the emerging memory options and for, certainly support for the volume required for the enterprise drive. So that would be that in the timing point of view, that would will still be a 300 millimeters based on, 2017, 2018 kind of pilot line timing for 450 right now. Do you see the US as a likely place for a new memory fab by a, US based company? Well, I think I think it's kind of speculative on on what the dynamics, 2 or 3 years from now when when that kind of thing would be would be contemplated would would be So I think it's hard to judge what exactly would make sense from a financial point of view 2 or 3 years from now when a when a greenfield fab is going to be built. Yeah, pretty pretty speculative questions. And and, obviously, we can only speak for ourselves. And, as Mark and Mark indicated, we're, you know, we're happy with with our capacity plans going forward. We we have a, you know, well honed out strategy, of how we work these cycles to the extent that new capacity out there is required. Obviously, we we look at the total cost of ownership of the the fab and and would make a decision at that time on the best to be. I thought we were gonna talk about the election in November there for a second. I have a question on EUV. You know, you talked about EUV, EUV being cost effective before you can adapt it and the DRAM scaling. So what is the throughput you think would make cents would be cost effective for Micron. And then also how long you could skip beyond 20 nanometer for DRAM. You think you would need EUV. And also, is it possible to kind of give a comparable start saying, okay, if EU leaves 60 wafers per hour, it is better than double patterning or triple patterning or quadruple pattern, something kind of that. Sure. So, obviously, this is a a a concept that we study a lot internally. And, I think to the to the first part of the question, some rough numbers from us are probably at at 75 wafers per hour. It starts becoming a bit interesting is that it really needs to get, to 115, 125 wafers an hour for it to be very clearly, cost effective relative to double patterning for sure. And if you I'll get a little more technically deep here just for a second. Okay? If you look at what really is driving the roadmap, is not pure line edge resolution, it's it's overlay. So it's it's pattern placement relative to other patterns. And at the moment, there is there is no piece of the roadmap on immersion versus EUV that says EUV is going to be better in terms of that pattern placement. So when you're scaling down below 16 nanometers, looking at that, it's all about how how well you can control where the pattern is actually placed. We can make lines extremely small. Putting them in the right place is the urgent thing. And that's that's got to be addressed between UV and immersion going forward. And that's the technology limiter actually. And then to that extent, if EUV were to fail or never materializes, whether the contingency or whether alternatives to to continue with the cost curve. And then, second question has to do with the silicon Truvea. I'm assuming that the the the throughput for TSB's single digit. And what would need to happen Is that a equipment vendor or is that customers that would need to make sense of changes? And what are the changes that would need to happen to help improve the throughput and economics of TSB? Okay. So the kind of two different spaces there. On EOB, for the next for the for these 2 plus nodes that I'm talking about, it's a it's a pure cost question. And the the actual I guess if you'd say interesting point about the cost piece of that is the technology we're using for outer doubling. Is extendable. And if we if we have to do more pattern doubling, you're not buying all the stuff that you already had over again. So from a cost point of view, you know, some of this stuff is is fully depreciated assets out there at at that point in time. And you're just buying the next piece to expand the amount of pitch doubling that you have to do. So relative to buying brand new scanners for a node, like we've done in the past, I think the economics still aren't too bad as as long as you keep building on the same technology. So you have to pattern quadruple instead of pattern double by the time you get to that point, the pattern doubling infrastructure is already in place and you just have to add more of it to get to the quadrupling. So it's actually more expensive to buy brand new scanners. At that point. From a complexity point of view and how long it takes to get away for out of the fab, obviously that increases the amount of time the way for spending the fab. On the on the TSB point, the infrastructures actually made a lot of progress over the last couple of years, but it's still, 3di and and TSB technology are both still areas of big challenge for the equipment industry and for us in terms of of, of building a more cost effective process. And especially in areas like metrology for, 3 d interconnects, those type of things. The technology is still very immature. It's it's made a lot of progress over the last year and a half even. But I think it's on a pretty good pace to continue to meet the challenges as we get to a point where we're really in a high volume position with a product like HMC. I think we're pretty confident that between what we're doing and what the equipment industry is doing, it'll be in a good cost We're we're well past single wafers, though. I mean, it's, even today, it's, you know, the the TSVs are actually relatively easy. Those are just big deep contacts that in the DRAM industry we got pretty good at, you know, getting things bonded together and everything. There's some challenges there, but it's, you know, even today, the throughput is, you know, it's nascent, but but there are reasonable throughputs out there. So at least I have Brian convinced that the technology. Yeah. So I had to lend in on that one, Scott. A quick question. Can you give us an update on where you stand on your free RAM? So we we have, we have a lot of internal focus on, resistive RAM right now. And I think as I mentioned at our our winter analyst conference, we we have a partnership with Sony, that we're working on, resistive RAM technology. And we we view that as a, as a, One of those emerging projects that can come in in kind of the 2014, 2015 timeline where It takes a different space. It's not a NAND replacement or a DRAM replacement, but it's a it's a technology that we're we're confident is going to have, the best performance of any of the resistogram options, out in the world. It's one of the major project. I don't know if you're going the R and D fab tour today, but it's one of the major projects in the R and D fab that we've built over the last year. I have a question for Glenn. Historically, you've been able to drive demand the growth in NAND by price declines as Moore's law slows how do you maintain that same demand of the growth or do you see that slowing as well? Well, I think a big part of that strategy is climbing the value chain mean, a big way that we can, you know, deal with the scaling limitations. He does, as Scott's, one of Scott's team members says is currently, we're almost on a first name basis with the electron in some of the cells that we have. I mean, that's few and far between, but, you know, we're doing a lot of work in our controller technology to help deal with that. And so between, what we're doing there, not just at the NAND component level, but when you're delivering a system or an appliance, the degree of the freedom that you have to deal with those kinds of issues they, it's a whole new, you know, a whole new set of knobs become available to you at that point. So I think that's our first response. Other than that though, I think Scott and his team have some pretty good things up, up their sleeves. They're gonna help, you know, help help keep this path going for a long time. The very quick one on the ecosystem for TSB and 3 d packaging and referring back to Mark's comments before on the collaborating ecosystem and foundry. So how do you see that on your side in terms of the investment Micron has to do on the R and D side event capacity? Versus how much actually the logic foundries will do hopefully in close partnership review or should we think about who's going to drive these going forward? Do you want me to take that one? Well, I can take it from a capital equipment, but I'd like you to take the other part of it. On the one one thing is if you if you compare strategies relative to how the the, through SiliconVIA technology actually built, there's an option to build it late in the flow or earlier in the flow. And, Micron builds it in the middle part, front end part of the fab, part flow. So from a TSB point of view, our strategy is not to outsource that piece of it. As we go forward and we look at Vowel at at volume and interaction with other people, and I'll let Brian comment a little bit more on this part of it. But from an infrastructure point of view, as we ramp this up, it's a question that is somewhat still open as we figure out exactly how we're gonna how we're going to most efficiently, deploy the technology. Yeah. And it's a great question because there's a lot of interest out there, both with but also with, as Mark indicated solutions where you can take high density DRAM and put it directly next to an SoC or even on top of an SoC. And you know, frankly, it does call for close partnerships with the foundry directly. But it's also worth saying that that's much more of an ASIC type model the SoC enabler. So it takes very tight partnership, to get the memory enabled correctly with the with the particular SoC designer in terms of who does what in the annual the actual manufacturing flow, you know, we're we're well advanced in some of those discussions, and then and at the partnership level. And I just tell you that there's there's some obvious ways things fall, you know, who we do the DRAM stacking. That's an obvious, when you talk about getting that, you know, place next the SOC on some kind of a substrate. For instance, there's some obvious ways to do those questions just based on what's good for that that supply chain. So some good partnerships with the foundries solve most of those issues. Okay. I don't know where Ivan went, but Where did I grill? He's out in the hallway. Okay. So I I yeah. I think so we're done with this section and moving on to the next one. Thank you. Okay. You want this one? Okay. This is close. We just had the white shirt team. Now we got the blue shirt team. First question we've got is, discuss your capital structure, including the use of, capital leases and other instruments Well, we have a pretty simple, and I'd I'd submit a healthy capital structure. We use 2 principal forms of financing, in Micron today. One is, capital leases, which are secured by our, CapEx investments around the globe. And the second one is our publicly traded convertible debt. Now when we think about our capital structure, we're focused on several variables. One is, the minimum minimization of cost of capital. Another one is the profile of debt repayments that we we try to manage over time. And and also minimizing our covenants associated with those financing instruments. So if you look at our our convertible bonds. We use both structure as well as, anti dilutive cap calls to minimize cost of capital and to manage the payment schedules. And on our leases, we use our property plant equipment assets to get very, favorable terms. So we find these give us the best cost of capital and best structure for the, for the overall company. I would add that we, just last month, secured a, and a, 3 year $255,000,000 AR backed revolving credit line, very favorable terms and with no covenants on the borrowers, it's available to us now for short term cash cushion or short medium term capital needs as we go forward. I'm sure you've all noticed that in current markets, the straight debt markets are pretty available right now and quite affordable. We and Micron have a practice I mentioned to to minimize covenants given the volatility of our market environments. And so, we have not historically engaged in straight debt kind of financing and and probably would not do so unless they were essentially covenant free. So that's roughly the structure we have in our overall financing in Micron. I'll move on to the next question. What is the, maintenance CapEx and what do you need just for shrinks without adding new capacity, how much bit growth does this imply for DRAM and NAND? Mark, I might let you kick that one off. Okay. There's a there's a slide up here, which is, historical directional data, relative to CapEx, spending. And you can see that there's you know, there's sort of a dotted long term trend line on there as well as some peaks. The peaks obviously associated with when you add greenfield capacity, you're going to spend more capital because the capital dollars for greenfield capacity are obviously much more significant than when you're adding bits relative to technology migration. So keep that in mind. Relative to those numbers themselves, by the way, just some sort of general markers for you, I think I would say, you know, DRAM for greenfield capacities in this sort of, $50,000,000 per 1 k per month, around for greenfield capacity in NAND probably closer to 40 $1,000,000 per 1 k per month. But but when you when you talk about a go forward basis for scaling technology, the the CapEx associated with that is lower on a percentage basis than it has been historically for your installed base. And there's a, you know, we I think we've talked about all the reasons for that. One is, technology is migrating a little bit more slowly. So longer between the nodes. The other is, lithography, as Scott just talked about, is really, stag right now. So as we move to new technology nodes, we're not we're not, replacing existing lithography solutions with new lithography solutions, we're adding small amounts of incremental capacity to handle flight additions to the overall number of more difficult layers. And the net effect of of those trends is that the long term capital associated with upgrading capacity be it NAND or or or DRAM is more of a a 5 to 10% of greenfield capacity addition number than it is, something that's maybe closer to 15% that we've seen historically. So, of course, it all varies depending on what your installed base is that Microns 30 moving to Microns 20 or LP does 30 moving LP to 25 and the size of all those things. But think in terms of a of a range of 5 to 10 percent of the, greenfield cost of the installed base to keep that current. And you know you can work through the math. I gave you sort of the greenfield numbers to think about. But what this means is that just keeping up with technology today and staying at the leading edge, is not as demanding, treadmill as it has been historically, by a significant, increment. Now, on top of that, you know, obviously we have CapEx that's associated with Oh, by the way, also, something to keep in mind here is, you know, we talk about fungibility and taking DRAM capacity and moving it from state of the art DRAM capacity, state of the art NAND capacity actually turns out to be a lot cheaper than taking state of the art DRAM capacity and migrating it to the next that DRAM node. So, within that 5 to 10% range, it's actually, you know, can be can be on the low end of the range. When you're talking about transitions from one technology into the nonvolatile area. Now there's a bunch of other things we spend capital on obviously, in the business. And maybe, Ron, you want to chat a little bit about some of those? Sure. Yes, just to quickly break down our CapEx structure in a typical annual CapEx budget, we run-in the range of $300,000,000 to $500,000,000 of our CapEx is what I characterizes maintenance CapEx. It's R And D, capital, IT infrastructure, and all the other miscellaneous capital applications, maintenance capital, etcetera. Then for techno transitions, we, we typically run, and it varies a lot partly for the reason Mark mentioned that DRAM NAND mix matters. In fact, that slope of that line for Micron is partly affected by increasing mix of NAND over time. But, in general, protect transitions on average, it runs around $700,000,000 to a $1,000,000,000 per year, current run rates for techno transitions. So that's the way to think about it. I think another part of the question was, How much does this apply for growth that you get from techno transitions? Rough numbers, DRAM, we get low 30% kind of bit growth from our techno transitions. And you saw the projections from the the you guys that, you know, DRAM is in the mid to high 30s range. And that's why the view about not maybe needing a lot more wafer capacity comes into play. On the NAND side, the, bit growth from tech transitions runs around high thirties percent. And, projections for for NAND bit growth in the market are in the, you know, high 40s kind of range. So it would infer probably some more wafer capacity over time. So that's a rough way to think about our our structure. And obviously, our capital budgets last couple of years had a Another item, as Mark pointed out, and that's additional capacity expansion notably on the NAND side of the business. Okay. The next one is is a complex question. How do you plan to improve your capital efficiency and ROIC? I've got a slide here. First of all, we're we're obviously not, where we wanna be for the long run in terms of, financial performance, but I thought it'd be useful to primate comparative here. This graph shows a free cash flow for Micron in blue and some other relevant pure play comparisons over the last 12 months. This is operating cash flow minus CapEx. So, even in the challenging years, my Micron does reasonably well, you can see it's performed significantly better than than Hynix. And, even though DRAM was a more challenged business, this last year, was very comparable to Sandisk, which, if you compare on operating cash flow basis, Micron actually did better Obviously, we have more CapEx because we have all the fabs in our consolidated structure. So any rate, just a point of comparison for you, but In terms of what we want to do going forward to improve things, obviously, we want to continue to improve the operating performance of all of our operations as Mark Adams commented on earlier. I would just add that we strategically focus on joint venture leverage and mentioning a couple of key ones for us that have been brought up several times. The Intel joint venture, which was recently expanded and extended, gives us significant leverage, both in terms of, manufacturing scale as well as R and D, leverage. And, that was that's a valuable, addition of capacity for Micron as we purchased that this last year and have more trade bits that we can move into the market at trade margins. Another one is in Oterra, which we bought in 2008 their performance is significantly improving, in the last 12 months. As you can see on the graph there, they also have positive free cash flow in the last year. Their their output performance and yields are competitive with our other fabs today. So good progress there. Obviously, you've heard comments about premium product mix and our multiple technologies and the leverage we get from those activities. And and a lot of comments about how we expect to improve on that going forward. With an expanded footprint. So, that's clearly a driver of improved performance as we look forward I would mention, I guess, one one last thing, and that is that Micron has traditionally, leveraged its capital capabilities and scale through acquisitions. And if you look at the one of the more recent ones, I already mentioned in the Intel acquisition of capacity. But in Oterra, that was just over 2 years 2 or so years ago, we bought April 2010. In the last couple of years, we have generated $3,000,000,000 in incremental revenue, just from the NOR part of acquisition alone, we've generated $1,000,000,000 in free cash flow, and that compares to a net purchase price for the entire acquisition of about $550,000,000. So obviously, the NPV on that is a neighborhood of $300,000,000 at our cost of capital. So We focus on opportunistically investing in acquisitions as part of our strategy. You heard from the PUs about how that really leverages our business and expands our our capabilities. Looking forward to, the LPDA structure, typically as, as Mark mentioned earlier, we find that, if you take the full purchase price of the acquisition plus the cost to convert to the merged technology, whether it be DRAM or NAND, is about half the cost of of acquiring greenfield capacity. So that's one important baseline as we think about our strategy and leveraging acquisitions. Another piece, and this is obviously in the very stages, but our initial assessments would indicate that the cost to convert LPIDA capacity, to a, a merge DRAM roadmap or Micron's NAND roadmap is roughly equivalent to what we'd incur converting microns' capacity to a next tech node. It's within the range of our estimates right now. So important data point is we think that it'll be a great economic leverage for us going forward. So in summary, I'd say we've got a lot of a lot of, opportunities to leverage our return going forward. Yeah. Yeah. Very thorough. Not a lot to add there. I I will say that, you know, I have read from time to time reports about about the LP to situation and and, potentially large amounts of capital required in order to make that capacity competitive. And I'd just like to reiterate what Ron just said, which is Even if we were to take all that capacity and move it to the next DRAM node, it is it is on the order the same it is not significantly different than what we would be doing with our own internal capacity. And obviously, we've talked, with you earlier today about, no matter where in the network, it may or may not occur in whatever the timing is, you know, clearly over time, we're going to need more NAND and less DRAM. Which is cheaper. Yeah. Good. Next question, please discuss your access to capital situation in light of planned investments Our capital markets, from our vantage point, are liquid and healthy and certainly open to Micron today. In the last fiscal year, we raised $1,600,000,000 in financing, a $1,000,000,000 in a publicly traded convert and about $600,000,000 of various forms of lease financing, including leasing up some of the IMFS assets after the acquisition of IMFS or that's IIM Flash Singapore, I should say, if you don't know our acronyms, from Intel. Another thing I'd mention is we proactively addressed our 17 H Convert that's coming due in 2014. As you probably know, we've exchanged and repurchased some of that in the past. We're continuing to look opportunistically at at taking other structural actions with the remaining approximately $900,000,000 of that, of that convert And as we go forward, we we may or may not make some moves in terms of, restructuring or or, exchanging part of that. Another element in terms of, our capital situation in in light of, planned investments is we've been very transparent with the rating agencies. And in fact, they expanded our involvement there. We've had p ratings for a while. We we recently added Moody's rating. They just, both rated double b minus. S and P with a negative outlook and Moody's with a stable outlook. And we also recently added RNI, the largest Japanese rating agency who, rates us, double b plus and stable. So, we're beginning to increase our connections there as well. And I guess the last thing I'd mention is that, in in in light of, plan investment activities, we've we have typically had, access to, low cost of capital in support of our acquisition activities. We did that in, 2008 with the Anotera acquisition and got some low capital as part of the support of that arrangement. Likewise, with the purchase of capacity from Intel, we got favorable financing arrangement. And as we go forward and look at the LP structure, we're we have some favorable financing is associated with that, as we look forward to that acquisition. So that's, I don't know if you have anything else to add to? No. Okay. The 5th question is, how will the, the LP to deal impact credit metrics sort of a segue from the my earlier comment. The the short answer is that, the LPD acquisition is viewed generally as a very positive catalyst for Micron by the credit rating agencies. They they view, on a pro form a basis, the combined Micron plus LPAs you've seen will be, the number 2, pure play memories supplier, that we have got a significant scale, which has been an observation, from prior ratings reports that that was an issue for Micron. And, it would also provide a stronger technology roadmap and, significant leverage across our our total infrastructure as well as some of the other comments that you've heard about being able to move more, volume into premium markets, such as, server and mobile and integrated solutions with mobile MCPs, etcetera. So lots of opportunity viewed there. And, I also the fact that microns back end assembly and test is a big synergy, we look at the combined capacity because it's a competitive advantage for Micron and we'll be able to leverage that across the old PETA volume as we go forward. So lots of positive catalysts, from the rating perspective. Do you have anything else you want to add? Nope. Nope. You're doing great. I, I guess I just add one one thing and that is that, you know, Micron's still committed to having a very healthy capital structure. And if you look at the, LPDA financing construct, it's It's interest free. It's spread out over 7 plus years in terms of the repayment schedule, and it doesn't have covenants. So, it it it fits nicely in terms of keeping our our capital structure in in in good shape. Also, our our total capital structure across all of Micron, is covenant free. We, focused very hard on on ensuring that's the case. We've also focused on, broadening our financing base and we have a lot more financing around the globe, consistent with our increasing global footprint. And finally, we've worked a lot on cash management to make sure it's all accessible and also fungible to move it where we need it, all of which are the case in our structure today. So In addition to that, we focus a lot on liquidity management. I think you've you've You've already heard that our, our capital, investment strategy is somewhat discretionary we can back down capital investments and, if we need to in weak environments. And also, you can see, and if you look back through history Micron has consistently every quarter produced positive operating cash flow, even in the most difficult market times. So we continue to focus on liquidity and ensuring that we have, the right, balanced sheet that we need to manage our business going forward. Did you want to mention anything about recent credit activity you undertook? Go ahead, recent deal on Singapore. What was it, the AR? Well, I mentioned the I mentioned earlier. Yeah. I mentioned the output. That was the credit revolver I mentioned earlier. Yeah. Okay. And, let's see. The the, the last question is, what are the mechanics to account for LPDA in Micron's book value and, future depreciation. So basically under current accounting rules, the net asset net asset values are fair valued in an acquisition. We have not done this work yet but it's a it it will be future work to be done, and they're and they're fair value. If the purchase price is less than the fair value, then you, you recognize a gain at closing similar to what happened in mnemonics. And you put the fair value on your balance sheet, and then that is depreciated over time if appropriate. If it's a depreciable item. So, we anticipate, similar to mnemonics where we had a fairly significant gain that is this transaction we will also have a gain. We just haven't done the homework on that to figure out the range. And with that, I'll, open it up to questions. We've talked I've been talking about fungible capacity all day and going back to your capital intensity. How much would it cost to migrate a 30 nanometer DRAM to 1xoroney nanometer NAND. I'm assuming that that's the future of NAND migration like a year from now. It's in the it's in the range I talked about, but it's in the low end of the range. So, you know, 5 to 10 percent of greenfield installation cost, is is the right number to think about in terms of taking a leading edge DRAM fab and converting it to NAND. That same range also covers taking an existing leading edge DRAM fab and converting it to the next DRAM technology node. Think about the bid capacity or incremental bid capacity added when you make that conversion. Well, the, you have to you have to take a look at, you know, the the the one one why, I guess, is what we would be talking about a NAND node. You know, the bits per square into silicon there is obviously dramatically different than the, than the, than the 3x or the 2x, DRAM, a bit more weight you'd be converting it from. So because it's it's on the order of an order of magnitude or more, you know, you almost discount what you had in terms of DRAM bits and just think in terms of you have that much new NAND capacity created. Can you guys take a second and just remind us what your CapEx budget is? And then if you could offer some color on to when you'll make purchase commitments. So when you'll place the bookings for that CapEx across the next four quarters, So the next fiscal year, CapEx budget is about in the in the range of $1,800,000,000 16 to 18, uh,000,000,000, and it's a little bit front end loaded in terms of the first half. So in terms of purchase commitments, we're already in our fiscal year, and some of that's already occurred. But, that's the that's the rough range we're dealing with. Hi. Yeah. If I could just question about the NAND bit growth without wave as you said, the high 30s, it seems to be quite a lot lower than historical and quite a lot lower than I expected than what I've been hearing from other players. So could you clarify that and why is it so much lower than, historical? Sure. Well, again, I think the the trend is gonna be, longer between notes. It is true that that many people are talking about making a more, some of the competitors anyway are talking about a more significant step from a roughly 30 nanometer node down to 20, skipping to 25, and the timing of that is is actually getting pushed out. So you have to look at, not necessarily, what are they gonna do in their increment, but what are they going to do on a time weighted average as they move forward? And I actually, you know, believe that this, you know, the numbers over the longer haul is actually lower than that and not higher than that. And again, it's the challenges, are relative to scaling a DRAM, which are, you know, around capacitor aspect ratio and how you even, drill out hole and how do you store enough electrons on it, at, you know, the low voltages we're operating at all those types of just very difficult scaling issues moving forward are going to drive that economics. As you come closer to the LPDA acquisition, I wanted to find out what is Micron's real strategy on the mobile DRAM side? You know, are you going to still pursue your product offering or how is it going to change the landscape for you guys? So, so, you know, we've, we've been pretty public about saying we think LPita's got a, got a good low power DRAM offering. We also now have you know, as, as Mike Rayfield was talking about earlier on, we have a pretty good 30 nanometer low power DRAM offering ourselves now. So we have some optionality there. LP has got a good follow-up, a roadmap with their 25 nanometer node. And, you know, clearly given where we are and the uncertainty relative to the the exact timing. They will continue with their existing, product roadmap and product technology migration, prior to close. And we have this joint development program in place that allows us to, make sure that that offering, post closes as cost effective as possible and take advantage of some of the backend efficiencies Ron was talking about, etcetera, but we will run, for a period post close a NAND low power DRAM portfolio and a Micron low power DRAM portfolio, just because it's inevitable, and because while we have a high confidence in close, you know, we don't have 100% confidence yet. And, and, and, anyway, but between now and then we have to deliver products to our customers and couple them with our own internal NAND portfolio. So longer term, yes, we'll have a we'll have a merge roadmap, and that could happen as early as 20 nanometer, if we are nimble. Their process flow for those of you that but like to dig into this kind of thing and and look across sections and stuff is is is not that different than ours. It's it's amazing how, and this is sort of the funnel we're all being forced through that's also driving this this, flowing in the right of, in the rate of technology migration. If you go back, 10 years and you looked at everyone's designs, they were all very, very different relative to process, integrated process technology. We're all being driven, you know, kind of down a funnel here as this thing gets tougher and tougher. And so when you look at what's going on at LPDA from a process technology perspective, relative to what's going on at Micron, the roadmaps are already, reasonably well aligned, and that's a big piece of why, Ron says you know, early indications are that to convert an LP to fab, to the next technology node are not that different than what they would be for our own internal roadmap. And to the extent we collapse those 2, it becomes even more true. Hopefully, I answered your question. If there's a follow-up, happy to see you. There's a a a report in the press, which says that Rexhips register was not able to pay its banks on a on a timely basis. And they were looking to try to extend those loans, right? So given that you're paying, you know, close to 300,000,004, someone who doesn't have the money to pay $10,000,000 for equity for someone who doesn't have money to pay its debt, right? Is there a risk that Rexchip files for bankruptcy And, what does that mean for Al Peter's sake and Rexhip and, and, and your potential stake in Rexhip? And how does that you know, impact your valuation on LPDA. Let me, I want Ron to address that, but let me let me, first, make sure I clarify that, that microns, write an obligation to purchase rectum shares only happens at a closing of, of the LPDA transaction. So, you know, prior to that, if, you know, if the train comes off the tracks, we'll all bets are off but, I'll let you talk about, Rexchip situation here. Yeah. I may need to give you, a one minute, a piece of background in case you're not all up to speed on this, but one of the, interesting, structures in this, sponsor agreement is that we are actually providing pre close financial support for LPDA. And, support means we will we will help them, which is kind of interesting in a in a in a pre close with antitrust issues, but this is a situation where we're actually helping a get financed. Why do we do that? Because we wanna make sure, as Mark said, they're on the road map that we want them on. And so there's a there's dip financing and there's CapEx financing that was provided for. In, it it so happens that that debt financing is all is already in place. Financing and the CapEx financing is in place or or being put in place. And ideally, it'll be done, by by LPDA itself with some support from Micron, necessary to be determined, but it would be Nopita level financing is the is the intent. Now as part of that arrangement, for for a number of reasons, we can't, I should also mention we we, we can't, by Japanese law, actually do direct financing into into Japan. So, it has to be done in other forms of support from from Micron. And also as part of the arrangement, it was specified that, our, our support for LPDA would have to also transmit. They would have provide support into Wrec's chip to, if if and when it was needed. So, I think both companies, Rexchip, NL Peter, are doing what they can to keep their financing intact. We are actually interacting with their financial teams on a very regular basis, almost daily, which is unusual, but because of these financing interconnects, So, our anticipation is that LP is is working with, a backstop support from us to get necessary financing direct ship and those approaches are being evaluated. At the same time, Wrexchip's doing all they need to do to try to get their financing taken care of, and that's probably where you hear her to press report. But I wouldn't draw any grand conclusions from it. And I think it's all being worked, by the teams. I really just got one more one more comment on that, which is, you know, I'm not sure how public, Rick Ship's finances are. I'm probably shouldn't comment too much on them, but, you know, Rick Ship itself is, is a is a pretty healthy company in terms of got a lot assets and not much debt. So to the extent you're reading something about, you know, some, issue relative, to a, bank repayment. It's, it's a, it's likely a relatively small liquidity issue as opposed to a, you know, financial viability or issue where you would say, Hey, I don't want to put my equity into this thing. Okay. Just going back to some of the comments you made earlier on the two tracks for mobile DRAM, low power DRAM for LPLAN. So if I understand you correctly initially, you said that after the close or at the close of the deal with LPDI would start converting everything to Micron Technology. Now if I hear you correctly, it's probably more likely, but Hiroshima will do mobile DRAM on LPDAR technology for probably a full node after that. And when everybody comes together in the middle of 2014, And I guess in the meantime, your poly will convert Redshift to, to unprocess. I mean, am I reading correctly, what you said, or am I exaggerating? I don't think I said any of that. I've been I've been I've been careful not to say exactly what we're gonna do. At least I've tried to be. The, you know, it is, it is for sure the case. That, that LPDA, and or Rex Chip because of, really, we think of them as, you know, this is a This is a deal that will close simultaneously, and we look at that capacity as one big chunk of capacity. So between LPDA and WEXHIP, they're going to be providing low power DRAM in the marketplace for for quite a while. And where that might happen, I can't tell you. Now, as Ron said, we are today supporting Alpida, with, you know, backstop financing to enable capital migration along their own, process technology roadmap. Which will support their existing low power DRAM ramp as well as next generation node, low power DRAM ramp that doesn't mean that post close, we wouldn't take some piece of the capacity and immediately start moving it towards, something else that's either Micron or or a NAND or more of a merge road map. So I've been very non specific about that. So soybean specific, Ben, but I was trying. But with your significant operational background, what I don't quite understand is let's say you decide to run a lower EBITDA process until mid-twenty 14 for argument's sake, would you actually run a different process in the same fab? I mean, I've actually never seen this in the past, it's 41 struggling a little bit to imagine this kind of hybrid in a process flow, creature, I guess, for your I'm not sure I understand the question. Let me let me try and address it this way. LPDA has an existing technology node that they're running low power DRAM on. They have a next node that they're gonna run low power DRAM on, and that next node is their process technology node, but we are doing work with them today. We have entered into a joint development program that will allow them to implement, certain pieces of Micron intellectual property that will make that next technology node, and those next low power DRAM products more cost effective than they otherwise would have been. So we're not going to get into the nuts and bolts prior to close of trying to modify, their process technology roadmap, but we're certainly going to, we certainly are going to an R working with them already, to help, make sure that we hit the ground running at close with the most cost effective possible solution. Is that helpful? Last question, guys. Thanks. There have been some some reports that would, indicate or or say that you guys overpaid or are overpaying for LPA. And, when you look at at the acquisition cost, all in, including the, the node transitions to get onto the on technology relative to historical transactions, it seems that the, the price you're paying is higher. And in addition to that, the the DRAM market has not only deteriorated, but deteriorated somewhat significantly since you originally announced the acquisition, How do you how do you respond to, to to the to the thought that it appears like you you might be paying more than you than you need to, frankly? Let me let me answer that first and then maybe, Ron, you you want to add some some additional comments. First of all, it is, it is undoubtedly true that the market is much weaker now than it, than it was. When we sign the deal. So for those out there that maybe think that they're, you know, they're going to, intervene in this process and get a better offer or something. You know, that's just loony tunes. That won't that will not be happening. Having said that, we still think there's compelling value in this deal. In terms of the value of the assets. And we've talked all about why we believe those assets are valuable to us from a go forward basis. Albeit, we don't think it's, as good a deal as it was when we struck it. We, we also think there's a lot of other value elements, that are valuable, frankly, to Micron, but maybe not to others. You know, and there's a lot of value elements we bring that actually make the assets valuable. It wouldn't be there otherwise. For instance, you know, the capacity is a lot more valuable, to a, to a micron that would be that really anyone else in the world is not a memory supplier because They don't have a roadmap or an ability to help LP in the interim develop a more compelling forward looking roadmap, etcetera, etcetera. So, so we're uniquely positioned in terms of being able to provide more value to the creditors when we make this acquisition. And we're also uniquely positioned in terms of being able to leverage what LPDA has, to the benefit of our shareholders. That's why sense to us and that's why we're still interested. Are we going to renegotiate the product? We have no intention to renegotiate, the price of the acquisition today. It's a, you know, it's a bankruptcy process, as you might imagine, is very, very complicated, and, you know, we'll have more information when we get to close as long as the LPDA continues to plan and the and the wheels don't come off the world economy. You know, we still think this is something that's gonna make sense for Micron, but, it's because of all the value elements we talked about, not just the assets. And there is a lot there, that's not that hasn't necessarily been there in the past when you just pick up a pure capacity play like a, you know, a a Manassas fab from Toshiba or whatever else. So Ron, did you want to add anything? Good coverage. I think I think it's, if you look at it, it's very, very valuable to Micron at the prices we're looking at right now for all the assets we're considering. And when I made the comment about the accounting, we actually go through a process of fair fair valuing every single element and then comparing it to the purchase price. And that's why I gave the indication even in today's environment. And I think it's quite competitive with with prior acquisitions, as Mark mentioned, we're buying a lot more than just fab capacity. Their technology capabilities, their customer connections, their product portfolio of a lot of value there. So it's a good arrangement. Okay. So we're all done. Alright. Let me, let me just thank you all again for coming. Hopefully, hopefully you like this format, we'll, obviously, you'll get a lot of opportunity to give us feedback and, you know, whether we should try it again or or or ping pong it or whatever. We're we're open all your suggestions on that you know, our goal obviously was to make this as interactive as possible and, and try and provide the, you know, the best possible information to you and hopefully you got that out of the day today. So thank you all for coming. It's been a great pleasure to see you all again, and we'll look forward to seeing you again in spring. Thanks.

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