Micron FY 4Q17 Earnings Call Notes

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Sanjay Mehrotra

Expect industry to be undersupplied in DRAM through 2018

“Moving on to the demand and supply fundamentals, we expect the industry to remain moderately undersupplied for the rest of 2017 for both DRAM and NAND. We see DRAM industry supply bit growth of about 20% in calendar 2017 and expect it to grow at relatively similar levels in calendar 2018. The DRAM industry supply demand balance is expected to stay healthy throughout calendar 2018, driven in part by ongoing strength in data center and cloud computing trends”

New CEO

“As I begin my first new fiscal year as CEO, I would like to outline our strategic priorities. First, we are focused on driving our cost competitiveness to best-in-class levels, primarily by accelerating the percentage of our output on leading edge technology, in both DRAM and NAND. Second, we will drive execution excellence, delivering solutions to customers quickly, predictably and in line with their product launch windows. Third, we will accelerate our transition to high value solutions.”

Demand trends remain strong

” we remain very bullish about the DRAM market environment through the 2017. We think it will be undersupplied. And given the demand trends, we think we will have healthy demand supply balance in DRAM throughout 2018 timeframe as well. And in terms of NAND as it’s well-known that average capacities are increasing certainly in mobile devices, but even more importantly, SSDs are displacing HDDs at the rapid pace with the attach rates continuing to be projected to be going up over the course of next several quarters. And of course, there is a strong value proposition for SSDs in the cloud and hyperscale data center environment as well given all the trends of artificial intelligence, machine learning, all of this is driving big data analytics. So, all these trends are related to artificial intelligence, bit growth in data customers wanting to offer differentiated value to their end customers, all of this is driving need for memory and storage solution and overall, we remain pretty bullish about the demand trends. I mean, if they look at DRAM as well as NAND even in autonomous vehicle, the demand requirements for flash, I mean data is being generated. So much data is being generated by autonomous vehicles that it requires fast processing both within the vehicle as well as on the cloud. So, I think demand trends for the foreseeable future continued to be strong and that bodes well for our industry.”

Secular trend of SSDs replacing HDDs in notebooks only 35% penetrated right now

” I mean it’s not that this demand is perishable, I mean this demand in terms of the trend of SSDs replacing HDDs in client notebook computers where the attach rate continues to increase in 2017 attach rate of SSDs to PCs is around 35%. That attach rate over the course of next few years continues to grow to around 50% in 2018 and by 2020 timeframe expect it to go to around 75%. So, these demand trends are secular in nature. ”

SSDs also taking share in server

“It’s the same thing on the enterprise side, again on the cloud side that the attach rate of SSDs as well as the average capacity requirements on our per-server basis continued to go up as well.”