Micron Technologies FY 4Q14 Earnings Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. Full transcripts can be found at Seeking Alpha

Continue to expect strong growth in DRAM demand

“Our long-term outlook for the memory industry remains favorable. For DRAM, we are forecasting 2014 industry supply growth of around 30%. In 2015, we expect DRAM industry bit growth in the low to mid 20% range, and beyond 2015 we expect industry supply growth to slow somewhat ranging from the high teens to mid-20s.”

Strong demand from PC customer base

“On the client side, we continued to receive strong demand signals from our PC customer base.”

Server customers adding more DRAM per systemr

“Server DRAM growth is being driven by customers adding more memory per system..This growth in server based memory is based on increasing server workloads, continuing to require DRAM performance and density and is a great example of a high-growth segment with a demand profile that is not sensitive to price.”

More DRAM in more smartphones

“The low to mid range price smartphone market is driven additional memory content as well, meeting the entry-level segment is evolving from phones with virtually no DRAM to new products such as the Android 1, which is 1 gigabyte of low-power DRAM. This is $100 smartphone targeting 5 billion users in emerging markets.”

Automotive market as well

“The automotive segment continues to benefit from memory content growth fueled by both infotainment and advanced driver assistance systems. Our commitment to the unique needs of this market in areas such as quality, reliability, longevity and service has enabled us to strengthen our market leadership in Q4”

Breakdown of DRAM business by market

“When you look at our DRAM business, today, the best way to think about it is mobile is roughly about 25% of overall DRAM. And, compute is roughly around 30% of DRAM. And then if you look at the specialty business, you asked about servers. Server is roughly just below 20%.”

Stronger dollar does effect them but effect will lag

“Yes, John. In terms of the yen, which is moving a lot just very recently as we all know, and the comment was on operating spending or general spending — yen-based spending. Today, our calculus is that our operating spend is impacted about – which is not just OpEx, but all of our yen-based cost of sales activities, too. Our impact is about $3 million to $4 million per one yen per quarter. Most of the yen-based spending is in COGS, actually, so the impact is delayed about a quarter based on their inventory flow through. So, you need to keep that in mind.”

Memory growth in server driven by more memory per server, not huge unit growth right now

“I think we think it’s not – the argument that you just posed is that there’s more server units being sold and our proposition is that there is more density, more memory bits going into every server. So if in fact, you are right, you will see even faster memory growth in the server segment. But, we’re talking about people wanting to put more capacity in a relatively modest single digit growth server business today.’

PC market is strong right now

“Given the strength of the PC market, we’ve optimized around the PC market on a relative basis, remember we want to be in all three businesses for the long-term…But PC strength clearly today is helping lift mobile pricing and server pricing and which led to pretty favorable results in the quarter.”