Micron at Citi Conference Notes

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Ernie Maddock – Chief Financial Officer and Vice President, Finance

Experiencing ASP improvement, strong demand and weak supply growth

“we are experiencing the ASP improvement in the spot market as well as the contract markets. We’ve seen some nice stabilization in the PC sector and the other markets continue to be robust, the mobile market is robust, graphics, servers, so we’re coming into a good period here. It’s occurring, I think, at a time when inventories are fairly lean from an OEM and a channel perspective and then we’re entering into a period of relatively slow supply vis-à-vis what has taken place over the course of the year so far. So we think in calendar fourth quarter we’re going to see flattish sort of supply growth and I think we’ve all read the same data points that suggest on a going forward basis we’re going to see supply growth that is a little bit below, I think, what many had been expecting and consistent with our prior commentary which suggested that somewhere under 20% should no new wafers be added and there are again an increasing number of data points to suggest that you’re going to see very little wafer addition, if any.”

Spot above contract pricing suggests that further pricing opportunity

“So I think we’ve seen now a couple of consecutive months of mid to upper single digit price increases. There are no current indications that that is going to reverse itself, but we don’t make the market, we participate in the market. You still have spot reasonably above contract pricing which tends to be a good sign. So that would suggest some further momentum and further opportunity. And what we’re trying to do is make sure that we pay attention to those execution targets, so we have the bits to supply those markets and whatever the pricing environment is.”

No inventory overhang

” we think that inventories have actually been pretty well managed”
“we don’t see any excess inventory that would create a sort of negative overhang in the environment that we’re seeing right now.”

Optimistic view of the mobile demand environment

“So we’ve always had a fairly optimistic view of the demand environment out of the mobile business. We continue to have that. We’ve gotten past these qualifications, which is great. We’re in the process of sort of working through the inventory that we accumulated over the last couple of quarters in the midst of a bit growth environment that continues to be quite strong. And so we have a lot more coming out of the factories. We’ve got a couple quarters worth of inventory build that we have to work our way through.”

I think the outlook for PCs is less negative than folks expected

“I think the outlook for PCs is less negative than folks expected. We’re coming into a period of time where for the next couple of quarters I think the overall outlook is better, although still negative. So I mean I think you’re seeing all of the – a number of different factors sort of playing into the pricing environment that we’re currently seeing.”