Micron Technology, Inc. (MU) Q3 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call highlights strong financial performance, with record-high cash and investments and positive gross margin trends. The company is well-positioned for future growth in the HBM and NAND markets, with strong demand forecasts and strategic capacity expansions. Despite management's lack of specific guidance on some aspects, the overall sentiment is positive, supported by optimistic growth projections and a solid shareholder return plan. The stock is likely to see a positive movement, driven by strong HBM demand and strategic investments.
Key Financial Performance
Total fiscal Q3 revenue $9.3 billion, up 15% sequentially and up 37% year-over-year. The increase was driven by growth across end markets, including record data center revenues and strong sequential growth in consumer-oriented markets.
Fiscal Q3 DRAM revenue $7.1 billion, up 51% year-over-year. Sequentially, DRAM revenue increased 15% with bit shipments increasing over 20% and prices decreasing in the low single-digit percentage range, primarily due to a higher consumer-oriented revenue mix.
Fiscal Q3 NAND revenue $2.2 billion, up 4% year-over-year. Sequentially, NAND revenue increased 16% with bit shipments increasing in the mid-20s percentage range and prices decreasing in the high single-digit percentage range.
Compute and Networking Business Unit revenue $5.1 billion, up 11% sequentially and a quarterly record. This performance was driven by a nearly 50% sequential increase in HBM along with growth in high-capacity DRAM and low-power server DRAM.
Storage Business Unit revenue $1.5 billion, up 4% sequentially. This growth was primarily driven by an increase in consumer-oriented revenue.
Mobile Business Unit revenue $1.6 billion, up 45% sequentially. Sequential revenue growth was due to reduced customer inventories and strong demand from DRAM content growth.
Embedded Business Unit revenue $1.2 billion, up 20% sequentially, supported by growth in industrial and consumer embedded markets.
Consolidated gross margin for fiscal Q3 39%, up 110 basis points sequentially and up 250 basis points versus the midpoint of guidance. The improvement was primarily due to better prices for both DRAM and NAND, partially offset by a higher consumer-oriented mix.
Operating income for fiscal Q3 $2.5 billion, resulting in an operating margin of 26.8%, up approximately 190 basis points sequentially and up 13 percentage points year-over-year.
Non-GAAP diluted earnings per share in fiscal Q3 $1.91, above the high end of the guidance range with 22% sequential growth and up over 200% versus the year ago quarter.
Operating cash flows in fiscal Q3 Over $4.6 billion. Free cash flows in the quarter were over $1.9 billion, the highest quarterly amount in over 6 years.
Ending inventory for fiscal Q3 $8.7 billion or 139 days. Inventory was down $280 million sequentially, and inventory days were down 19 days sequentially, driven by strong sequential bit shipment growth in both DRAM and NAND.
Cash and investments at quarter end $12.2 billion, a record high. Total liquidity, including untapped credit facility, was $15.7 billion.
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Operating Highlights
1-gamma DRAM technology: Achieved milestones with 30% improvement in bit density, 20% lower power, and 15% higher performance compared to 1-beta DRAM.
HBM4: Delivered samples with 60% higher performance and 20% lower power consumption compared to HBM3E. Volume production expected in 2026.
G9 QLC NAND SSD: Announced new SSD with 4x faster write performance, expanding QLC SSD market.
LP5X DRAM: Began shipping qualification samples for flagship smartphones, offering 25% faster recommendations and 20% lower power consumption.
Data Center: Achieved record revenue for the fourth consecutive quarter, driven by HBM and high-capacity DIMMs.
Automotive: Introduced 1-beta dual-channel LP5 DRAM for ADAS and infotainment systems.
Mobile: Secured design wins and ramped production of G9-based UFS 4 products.
Strategic Reorganization: Reorganized business units to focus on AI growth opportunities.
Manufacturing Investments: Announced $200 billion investment in U.S. manufacturing and R&D over 20 years, including new fabs in Idaho and New York.
AI-driven Memory Demand: Positioned to capitalize on AI growth with leadership in HBM, DRAM, and NAND technologies.
EOL for D4 and LP4 Products: Transitioning to newer DRAM nodes, with plans to support longevity customers for several years.
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Risk or Challenges
Tariff-related pull-ins and macroeconomic conditions: Potential unforeseen demand changes due to macroeconomic conditions or evolving tariff-related situations could impact operations and financial performance.
End-of-life (EOL) product transitions: The transition from D4 and LP4 products to newer generations may lead to shortages and allocation challenges, potentially affecting customer satisfaction and revenue.
Regulatory and environmental reviews: Delays in state and federal environmental reviews for new manufacturing facilities in New York could impact production timelines and strategic plans.
Global minimum tax adoption: Singapore's adoption of the global minimum tax in fiscal 2026 is expected to increase the company's tax rate, potentially affecting profitability.
Supply chain and inventory management: Tight DRAM inventories and significantly reduced NAND inventories could pose risks if demand unexpectedly fluctuates.
R&D and capital expenditure pressures: Increased R&D investments and capital expenditures for future technology nodes and HBM product development may strain financial resources.
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Guidance & Outlook
Revenue Expectations: Looking ahead to fiscal Q4, Micron expects to grow revenue by 15% sequentially to a record $10.7 billion at guidance midpoint. For fiscal year 2025, the company is on track to deliver record revenue with solid profitability and free cash flow.
Market Trends and Demand: Micron anticipates a robust demand environment for fiscal Q4 and the remainder of calendar year 2025. The company expects CY '25 industry DRAM bit demand growth to be in the high teens percentage range and industry NAND bit demand growth to be in the low double-digit percentage range. Over the medium term, industry bit demand growth is anticipated to be mid-teens CAGR for both DRAM and NAND.
Capital Expenditures: Micron's fiscal 2025 capital spending plans remain unchanged at approximately $14 billion, with the majority allocated to support HBM, facility construction, back-end manufacturing, and R&D investments.
Product Development and Technology: Micron is making excellent progress on its 1-gamma DRAM technology node, with yields ramping ahead of the record pace achieved on the 1-beta node. The company plans to leverage 1-gamma across its entire DRAM product portfolio. Additionally, Micron's HBM4 is expected to ramp volume production in calendar 2026, aligned with customer plans.
Segment-Specific Outlook: - Data Center: CY25 server market expected to grow mid-single digits in units, driven by significant growth in AI servers. Micron expects HBM shares to align with overall DRAM share in the second half of calendar 2025.
- PC: PC market units projected to grow in the low single-digit percentage range in calendar 2025, with AI-enabled PCs and Windows 11 upgrades as key growth catalysts.
- Mobile: Smartphone units expected to grow low single digits in calendar 2025, with AI adoption driving DRAM content growth.
- Automotive and Industrial: Increasing adoption of AI and advanced driver-assistance systems (ADAS) expected to drive memory and storage content growth.
Operational Changes and Investments: Micron plans to invest approximately $200 billion in the U.S. over the next 20-plus years, including $150 billion in manufacturing and $50 billion in R&D. The company expects first DRAM wafer output at its Idaho fab (ID1) in the second half of calendar 2027, with customer qualifications to follow. Ground preparation for a New York fab is expected to begin later this year.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:How do you see the HBM TAM scaling with the accelerator TAM, and is there a limit to HBM attached to GPUs and custom ASICs?
A:HBM demand is expected to grow significantly, with revenue increasing from $18 billion in 2024 to approximately $35 billion in 2025. HBM bit demand growth in 2026 will exceed overall DRAM industry demand growth, driven by transitions to 12-high HBM and HBM4. The trajectory of HBM remains strong, with further advancements like HBM4E and customization expected in 2028.
Q:What is driving the upside in gross margins sequentially, and is this the new baseline for gross margins?
A:The upside in gross margins is driven by better-than-expected pricing, strong sequential volume growth, and favorable cost performance. Favorable mix effects, such as more DRAM growth than NAND and higher data center demand, are also contributing. While the market environment remains constructive, gross margins are expected to improve further, but future performance will depend on pricing and product mix.
Q:Can you clarify the DRAM market share for HBM and its revenue implications?
A:Micron is already at a $6 billion run rate for HBM and is ramping up production of 12-high HBM. The company expects to achieve its HBM market share target earlier than anticipated due to strong execution in yield and capacity ramp-up. The focus remains on meeting customer requirements and maintaining a strong product roadmap for 2026.
Q:What are your plans for HBM market share and NAND utilization in the coming years?
A:Micron plans to manage its HBM product mix and share based on ROI and profitability. Investments in HBM back-end capacity, such as in Singapore, are planned for 2027. For NAND, the company is structurally reducing capacity by 10% by the end of fiscal 2025 to achieve capital-efficient node transitions. Leading-edge NAND is fully utilized, while some legacy NAND remains underutilized.
Q:What is the status of HBM supply and pricing discussions for 2026?
A:Micron's HBM supply for 2025 is sold out, and the company is working with customers on their 2026 requirements. Bit demand growth for HBM in 2026 is expected to significantly exceed DRAM demand growth. The company is focused on executing its product roadmap, including HBM4 and HBM3E 12-high, to meet customer needs.
Q:What are your long-term CapEx plans, and how do they align with the current market opportunities?
A:Micron is investing in greenfield capacity and new node transitions to capitalize on generational tech opportunities. The company expects CapEx to increase in the fourth quarter and remains committed to maintaining technology leadership while managing its balance sheet effectively. The focus is on building capacity to meet growing demand.
Q:What is the trade ratio for HBM4, and how does it compare to previous generations?
A:HBM4 has a trade ratio greater than 3, compared to approximately 3 for HBM3E. The trade ratio is expected to approach 4 with HBM4E. This progression reflects higher performance and larger die sizes, which increase the value proposition of HBM products.
Q:What is the margin profile difference between selling HBM to GPU versus ASIC customers?
A:HBM commands high value for both GPU and ASIC accelerators, with increasing content and value proposition over time. Specific margin differences between the two customer types were not disclosed.
Q:What is the impact of tariff-related pull-ins on customer inventory levels and bit demand?
A:The impact of tariff-related pull-ins is relatively modest. Customer inventory levels are healthy, and demand trends remain constructive, driven by AI-driven data center demand, automotive, industrial, and distribution channels. Bit demand is expected to grow in the second half of the calendar year.
Q:What is the status of HBM4 qualification and its power performance leadership?
A:HBM4 has been sampled to multiple customers and is on track for volume ramp in 2026. The product maintains strong power performance leadership, critical for AI applications, and uses cost-effective 1-beta technology. The company is confident in its ability to meet customer demands for HBM4.
Q:What is the outlook for data center SSDs and their role in AI servers?
A:Data center SSDs experienced some inventory digestion in late 2024 and early 2025 but are expected to see better demand in the second half of 2025. Micron has achieved record market share in data center SSDs and plans to focus on higher-value NAND products to support AI server growth.
Q:Review of Unclear Management Responses
A:Management avoided providing specific guidance on Q1 gross margins, long-term HBM market share beyond 2026, and detailed margin differences between GPU and ASIC customers for HBM. Additionally, they did not disclose specific customer inventory levels or the exact impact of tariff-related pull-ins.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI opportunity
AMD
CY
DIMMs power
DRAM technology
EOL
ID
Idaho fab
Micron plan
Micron record
NAND node
NAND record
New York
PC
QLC
Research Division
SSDs
adoption AI
alpha DRAM
beta gamma
channel
customer
digit percentage
gamma DRAM
information
investment
manufacturing
memory storage
mobile
pace
qualification
sample
segment
server
smartphone
technology node
terabyte
website
MU Transcript
Micron Technology, Inc. (MU) Q1 2026 Post-Earnings Analyst Call Transcript
Positive12-18
The earnings call summary indicates strong financial performance with a 15% increase in operating cash flow and record gross margins. The Q&A section reveals modest sequential growth in bit shipments and increasing demand for SSDs, particularly in AI servers, which is positive. Management's responses indicate a strategic focus on data centers and maintaining a strong balance sheet, with plans for dividends and share repurchases. Despite some uncertainty in CapEx details, the overall sentiment is positive due to strong demand, leadership in technology, and optimistic guidance on margins.
Micron Technology, Inc. (MU) Q1 2026 Earnings Call Transcript
Positive12-17
The earnings call highlights exceptional financial performance with record high free cash flow and significant growth in EPS and operating margin. The Q&A indicates strong demand for Micron's products, particularly driven by AI applications, and strategic long-term agreements. Despite some ambiguity in management's responses, the overall sentiment is positive, supported by strong financial metrics and optimistic guidance. The lack of specific market cap data limits the precise prediction, but the indicators suggest a strong positive impact on stock price.
Micron Technology, Inc. (MU) Q1 2026 Earnings Call Transcript
Unknown12-17
The earnings call presents a mixed outlook. While there is modest shipment growth and strong gross margins, uncertainties in supply-demand alignment, and unclear management responses on CapEx and data center exposure create concerns. The Q&A reveals a focus on diversification and strategic customer support, but lacks clarity in some areas. Overall, the sentiment is balanced with both positive and cautious elements, leading to a neutral rating.
Micron Technology, Inc. (MU) Presents at Global Technology, Internet, Media & Telecommunications Conference 2025 Transcript
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MU Slides
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