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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: We're also thinking a lot about Micron. Shares of Micron

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Speaker 2: at a record high, biggest jump since twenty eleven. The

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Speaker 2: outlook for the fiscal third quarter a recovery and commoditize

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Speaker 2: d RAM prices, but also a ramp in the next

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Speaker 2: generation HBM three E that is the memory that supports

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Speaker 2: the GPUs in training AI. That is the conversation that

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Speaker 2: we'll have. Let's dive right into Micron's earnings with CEO

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Speaker 2: Sanjay Morotra as Sanja, good morning to you, and that's

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Speaker 2: how I'd frame it. Let's get right to the outlook

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Speaker 2: for the fiscal third way up the factors for us.

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Speaker 2: Was this all about the recovery in d RAM traditionally

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Speaker 2: commoditized or is this more about the ramp up in

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Speaker 2: HBM THREEE that is going in support of things like

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Speaker 2: the h two hundred from Nvidia.

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Speaker 3: First of all, thank you Caroline and Ed for having

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Speaker 3: me on the show. Here I wanted to come is

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Speaker 3: really driven by a demand related to AI with tight

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Speaker 3: supply and actually demand that is strong across most of

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Speaker 3: our end markets, particularly data center driven demand, and Micron

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Speaker 3: has a strong.

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Speaker 1: Portfolio of products.

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Speaker 3: Very excited about our latest offering of HVM.

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Speaker 1: Three E that you refer to earlier.

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Speaker 3: We have just begun shipments of this and we see

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Speaker 3: strong growth in the several quarters that are ahead of us,

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Speaker 3: and supply is tight, leading edge nodes in particular, and

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Speaker 3: and tight supply that's leading to.

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Speaker 1: Price increases as well.

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Speaker 3: So as we look ahead at twenty twenty four, our

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Speaker 3: year of recovery, we see increasing prices driven by the

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Speaker 3: demand supply fundamentals, and we look at twenty twenty five

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Speaker 3: to be a record year for Micron's revenue with significantly

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Speaker 3: improved profitability as well.

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Speaker 4: Twenty twenty five supply also mostly already allocated. You sold

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Speaker 4: out on twenty twenty four, Say just let's dig in

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Speaker 4: on the high bandwidth memory because was it Jason Whyang

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Speaker 4: over at in video calling this.

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Speaker 1: A technology miracle?

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Speaker 4: Will it not get commoditized? Will prices remain elevated?

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Speaker 3: First of all, sr HBM product that is sold out

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Speaker 3: for calendar year twenty four, and a vast majority of

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Speaker 3: the supply for our twenty twenty five is allocated as well.

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Speaker 1: This is a critical product.

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Speaker 3: HBM three E is in very very early stages here

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Speaker 3: and it's key enabler of what AI platforms, generative AI

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Speaker 3: platforms are able to do.

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Speaker 1: Just think about it.

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Speaker 3: I mean, the latest Blackwell platform that has been announced,

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Speaker 3: it has sixty four die of memory in it, so

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Speaker 3: tremendous amount of silicon.

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Speaker 1: HBM is growing fast.

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Speaker 3: Expected to be about fifteen percent high teens mid to

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Speaker 3: high teens of the industry revenue over the course of

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Speaker 3: next several years compared to being just half of that

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Speaker 3: last year. And as you look ahead at the new

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Speaker 3: platforms being announced Nvidia earlier this week, Broadcom yesterday, they're

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Speaker 3: all placing tremendous emphasis on the performance and the power

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Speaker 3: of HPM memory. As AI becomes bigger, data becomes bigger.

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Speaker 1: Data lives in.

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Speaker 3: The products that Micron makes for AI applications, lives in

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Speaker 3: the kind of products such as HPM three E, but

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Speaker 3: high density DIM modules as well as other products that

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Speaker 3: Micron makes DDD are five memory and data center SSDs.

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Speaker 3: So AI is really driving tremendous growth trajectory. HBM THREEE

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Speaker 3: is absolutely going to be critical. This is in very

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Speaker 3: early innings and even if there are any perturbations in supply,

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Speaker 3: they will get absorbed over time. And what's important to

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Speaker 3: understand is because HPM three E product is extremely silicon

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Speaker 3: and intensive across the industry, it is really leaving not

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Speaker 3: enough supply for non HBM products and those are in

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Speaker 3: tight supply and that's what is driving tremendous strength in

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Speaker 3: terms of demand supply fundamentals in pricing trajectory for memory.

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Speaker 2: And the question is, Sanjay, how do you keep up

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Speaker 2: right HBM THREEE running at five point two gigabits per second.

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Speaker 2: You've already mentioned Blackwell, you're going to have to bring

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Speaker 2: that next generation HBM nine gigabits per second faster. Just

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Speaker 2: walk us through the real term ramp of your products,

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Speaker 2: getting them into the real world and when they show

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Speaker 2: up in your financials in the near and medium term.

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Speaker 3: Well, we talked about yesterday in our earnings call that

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Speaker 3: we have begun shipments of HBM three E product. It's

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Speaker 3: an industry leading product. It has the best performance in

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Speaker 3: the lowest power in the industry, which you know for

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Speaker 3: data center applications power is critical. Thirty percent better power

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Speaker 3: for our HP and three E product. So we have

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Speaker 3: really long legs in this HP and three E product

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Speaker 3: for foreseeable future. Here and HPM three E has begun

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Speaker 3: shipments and we mentioned in the call yesterday that it

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Speaker 3: will be a creative to our gross margins and we'll

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Speaker 3: have several hundred million dollars of revenue of this HPM

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Speaker 3: three E product in our fiscal year, which will end

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Speaker 3: in August timeframe. And of course we look at significant

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Speaker 3: growth ahead for HP and three E as well. Our

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Speaker 3: production has begun, we are extremely focused on continuing to

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Speaker 3: ramp this product. Our target is to get our share

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Speaker 3: in HBM three E equivalent to our dram industry share,

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Speaker 3: and we're going to remain extremely disciplined. Key will be

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Speaker 3: absolutely managing the supply and demand fundamentals overall for the

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Speaker 3: dram industry. So we look at strong growth ahead for

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Speaker 3: our HP and three E. Keep in mind that HBO

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Speaker 3: is expected to have a kagher greater than fifty percent

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Speaker 3: over the course of next few years. In terms of

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Speaker 3: bit growth that HPM will be driving. Of course, it

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Speaker 3: will be all the GENAI applications that we'll be driving

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Speaker 3: this and I just want to add here that of

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Speaker 3: course data center is a big driver of our growth.

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Speaker 3: We are shifting our business more toward data center given

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Speaker 3: the demand and the profitability profile of that part of

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Speaker 3: the market. We are doing that with our data and

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Speaker 3: products as well as with our SSDs. But just want

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Speaker 3: to point out that other markets such as smartphones and PCs,

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Speaker 3: they too are implementing AI enabled devices and you'll start

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Speaker 3: seeing them coming out from later this year, and of

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Speaker 3: course twenty twenty five will be the first full year

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Speaker 3: of all these devices on the edge, such as smart

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Speaker 3: AI enabled smartphones and PCs. They take much higher memory

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Speaker 3: content than their prior generation devices. You're really really exciting

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Speaker 3: about the opportunities for that AI enables for US enables

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Speaker 3: for memory, which is at the heart of AI revolution

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Speaker 3: in terms of from data center all the way to

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Speaker 3: the edge.

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Speaker 4: Going back though to this high bandwidth memory and going

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Speaker 4: back to that market share that you say you want

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Speaker 4: to own, can you articulate exactly what that share is

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Speaker 4: going to be for our audience right now when we

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Speaker 4: have Heinix, Samsung likely to be unveiling their products at

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Speaker 4: the first.

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Speaker 1: Half of this year.

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Speaker 3: Our share in DRAAM today in the industry is approximately

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Speaker 3: twenty three percent, and we are targeting that our HBM

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Speaker 3: share would be in line with that DRAM industry share.

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Speaker 3: Of course, it will be ramping gradually over time. Sometime

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Speaker 3: in twenty twenty five, if we expect to be getting

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Speaker 3: to our shared in HBM equal in to DM share.

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Speaker 3: It's a product that has greater profitability and as we said,

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Speaker 3: it really will be a driver of our revenue and

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Speaker 3: profit growth along with the rest of the market that

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Speaker 3: has strengthening fundamentals as well.

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Speaker 1: For a Bloombag television right, and let me.

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Speaker 3: Just point out the most important thing is that our

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Speaker 3: product has leadership specs and that's why it's getting a

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Speaker 3: strong customer pull leadership products again in terms of performance,

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Speaker 3: bandwidth being about ten percent better than other competitive products,

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Speaker 3: power being thirty percent lower. Data centers today take up

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Speaker 3: about three percent of the world's energy over the course

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Speaker 3: of next several years, expected to continue to increase, getting

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Speaker 3: too closer to high single digit percentage. That's where memory

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Speaker 3: becomes extremely important in making sure that these accelerators for

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Speaker 3: Jenai are running lower power, low power memory are thirty

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Speaker 3: percent lower power. Solution is extremely attractive to our customers.

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Speaker 2: Sanjay, for our Bloombag television and radio audience worldwide, you

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Speaker 2: can point out a lot of things. We have a

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Speaker 2: lot of questions for you, So bear with us. Let's

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Speaker 2: go back to on device because you clearly want to

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Speaker 2: talk about that. We talk about on device a lot

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Speaker 2: on this program, the smartphone and PC context. You are

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Speaker 2: saying that there is a tangible benefit that you're seeing

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Speaker 2: in orders for that, But is that happening right now?

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Speaker 2: There is a lot of skepticism that on device processing

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Speaker 2: of llms and generative AI tools is somewhere away. Are

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Speaker 2: you telling us that this is material now or you're

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Speaker 2: predicting that it's coming soon.

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Speaker 3: Well, earlier this year you saw Samsung S twenty four

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Speaker 3: getting announced at Mobile World Congress.

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Speaker 1: On it announced its Magic six Pro.

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Speaker 3: And these are great examples where EI is being implemented,

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Speaker 3: great examples of influencing on the edge AI is being implemented,

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Speaker 3: that's intent based, and that's really going to drive tremendous opportunity.

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Speaker 3: Of course, these kind of high end next gen AI

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Speaker 3: capabilities and PCs and smartphones we'll start getting into the

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Speaker 3: marketplace later this year, twenty twenty five will become the

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Speaker 3: first full year. Over the course of next few years,

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Speaker 3: next few short years, we would see that AI enabled

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Speaker 3: devices will be representing let's say about a third of

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Speaker 3: smartphones and PC markets, and they take much more content

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Speaker 3: anywhere from forty percent two hundred percent more content in

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Speaker 3: flagship AI enabled PCs and smartphones versus flagship AI in

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Speaker 3: PC devices. Today, Sanjai, we've got flagship smartphone and PC

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Speaker 3: devices today.

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Speaker 4: We've got a couple more key questions. We're going to

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Speaker 4: keep it tight fee Sunday, because we have been thinking

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Speaker 4: about the chip SAT. We've been thinking about Intel getting

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Speaker 4: that money. We've been thinking about you still building out

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Speaker 4: in China and in India. Will you still be committed

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Speaker 4: to putting money into Boise, into New York as well?

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Speaker 4: Are you going to get the money from the government.

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Speaker 3: Well, with respect to the Chips Act and our previously

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Speaker 3: announced plans for leading edge memory manufacturing in Boise and

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Speaker 3: in the Syracuse area, our application for chips ACT is

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Speaker 3: underprocessing with the Chips Program Office making good progress there.

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Speaker 3: Of course, we will make the announcements when that process

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Speaker 3: is completed. Important thing is that chips Act enables us

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Speaker 3: to bring with CHIPSACKED grants sufficient level of CHIPSACK grants,

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Speaker 3: investment tax credits, and local state government support. It helps

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Speaker 3: bridge the cost gap with Asia operations, so it helps

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Speaker 3: us bring leading edge memory manufacturing into semiconductors, and of

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Speaker 3: course that creates many jobs. It supports economic as well

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Speaker 3: as national security, and memory is pivotal. We just talked

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Speaker 3: about how pivotal memory is to AI applications.

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Speaker 1: Think about it.

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Speaker 3: Today, only two percent of world's memory total, world's memory

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Speaker 3: production is here in the US.

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Speaker 1: Of course, it's all.

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Speaker 3: By Micron at our facility in Manassas, Virginia, with CHIPSEC support.

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Speaker 3: As we expand our leading edge memory manufacturing in Boise

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Speaker 3: and Syracuse next decade, sometime in next decade, we'll be

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Speaker 3: able to get to ten percent over ten percent of

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Speaker 3: world's leading edge memory production here.

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Speaker 1: In the US.

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Speaker 3: And that's really Sunji significantly moving the needle, and Micron

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Speaker 3: of course is committed to that.

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Speaker 2: Sanjay, we're running out of time here. Bloomberg's reported that

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Speaker 2: the US is considering restricting one of your Chinese rivals, CEXMT.

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Speaker 2: My understanding is that Micron has been in support of that.

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Speaker 2: Could you just outline Micron's position on the US restricting CXMT.

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Speaker 3: Look, the governments make their own decision and we are

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Speaker 3: not going to speculate or speak on behalf of any

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Speaker 3: of the government actions. What we can tell you is that,

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Speaker 3: of course China is an important market for us, just

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Speaker 3: like China is an important market for the entire semiconductor industry,

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Speaker 3: and we are well engaged with the customer ecosystem there

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Speaker 3: in terms of bringing value of our leading edge products

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Speaker 3: in memory and storage, helping them drive their innovation road maps.

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Speaker 4: We want to thank you so much for your time

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Speaker 4: today walking us through your numbers through the industry with

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Speaker 4: which is growing at such pace. Micron CEO sanjay Erroltra,

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Speaker 4: thank you.