Micron (Minutes): HBM4 has been sampled, and HBM3E 12Hi has been successfully mass-produced.

Micron (MU.O) released its fiscal Q3 2025 earnings report (ending May 2025) after the U.S. stock market closed on June 26, 2025, Beijing time. Key points are as follows:

Below are the minutes of Micron's fiscal Q3 2025 earnings call. For earnings interpretation, please refer to "HBM Expansion Imminent, Can Micron Capitalize on the Momentum?"

I.$Micron Tech(MU.US) Review of Core Financial Information

1. Q4 Guidance (non-GAAP):

a. Revenue: $10.7 billion (±$300 million), expected to grow 15% quarter-over-quarter.

b. Gross Margin: 42% (±100 basis points), benefiting from DRAM pricing, product mix, and cost improvements.

c. Operating Expenses: Approximately $1.2 billion (±$20 million), increased quarter-over-quarter due to HBM and future technology R&D investments.

d. Earnings Per Share: $2.50 (±$0.15), based on 1.15 billion shares outstanding.

e. Tax Rate: Approximately 13% (expected to rise to high teens% in fiscal 2026 due to Singapore's global minimum tax policy).

2. Capital Expenditure: Fiscal 2025 capital expenditure remains at $14 billion, primarily for HBM, factory construction, and R&D. DRAM inventory expected to be tight by year-end, NAND inventory significantly reduced, overall inventory turnover days approaching target.

3. Business Adjustment: Initiated restructuring of business units centered around market sectors, starting Q4, revenue, gross margin, and other metrics will be disclosed by new departments.

II. Detailed Content of Micron's Earnings Call

2.1 Executive Statements Core Information

1. Q3 Performance Core

a. DRAM saw nearly 50% quarter-over-quarter growth due to HBM, reaching a new high, as the exclusive supplier of LPDRAM for data centers;

b. NAND achieved record market share in data center and client SSD markets, ranking second in the data center SSD market for the first time.

2. Technological Progress:

a. 1-gamma DRAM: Yield improvement rate surpasses 1-beta node, first batch of qualified LP5 DRAM samples shipped based on this node; compared to 1-beta, bit density increased by 30%, power consumption reduced by over 20%, performance improved by 15%, will be applied across the entire DRAM product line.

b. NAND: QLC proportion reached a historical high; high-performance SSD based on G9 2Tb QLC NAND entered certification stage, G9 node capacity steadily increased according to demand.

3. Global Investment Plan: U.S. investment of $200 billion (over the next 20+ years), including $150 billion in manufacturing, $50 billion in R&D, additional $30 billion investment: building a second wafer fab in Idaho, expanding Virginia plant, developing advanced packaging capabilities in the U.S., New York plant site preparation expected to start later in 2025.

4. End Market Performance:

a. Data Center: Server market unit shipments expected to grow in mid-single digits (around 5%) in 2025, mainly driven by AI servers.

- HBM: HBM3E 12-layer stack yield/capacity improvement progressing smoothly, FQ4 shipment breakthrough; market share in the second half of 2025 expected to approach overall DRAM share (20-25%); large-scale supply to 4 customers (including GPU/ASIC platforms), HBM4 samples delivered to multiple customers, mass production in 2026 (bandwidth over 2TB/stack, performance increased by 60%+, power consumption reduced by 20%).

- DRAM: High-capacity DIMM and low-power server DRAM revenue reached a new high, fiscal 2025 generated billions in revenue (5 times year-over-year growth).

- SSD: 9550 SSD included in NVIDIA's recommended list, 6550 ION 60TB SSD accelerated certification.

b. PC Market: Expected low single-digit growth in 2025, relying on AI PC proliferation and Windows 11 upgrade. Client SSD Q1 share reached a new high; soon to release SSD based on G9 QLC 2TB (write speed increased 4 times, performance close to TLC).

c. Mobile Market: Smartphone growth expected in low single digits in 2025, AI driving DRAM capacity increase (more models will feature 12GB+ memory).

- DRAM: LP5X DRAM samples based on 1-gamma node have been shipped (for 2026 flagship phones, AI application recommended speed increased by 25%+, power consumption reduced by 20%);

- NAND: G9 process UFS4.1 products received key customer orders and mass production, received quality awards from 7 mobile phone manufacturers.

d. Automotive, Industrial, and Consumer Embedded Markets

- Automotive: L2/L3 ADAS and AI in-vehicle systems driving storage demand, 1-beta dual-channel LP5 DRAM (supporting 9.6Gbps) ready for mass production.

- Industrial: AI investment recovery growth (e.g., factory automation), D4/LP4 supply constrained + low channel inventory, driving price improvement.

5. Market Outlook:

a. Supply and Demand: DRAM bit demand expected to grow in high teens% (around 18%) in 2025, NAND bit demand growth in low double-digit% (around 12%); Micron's non-HBM DRAM and NAND bit supply growth will be below industry demand. Mid-term (DRAM and NAND) bit demand expected to grow in mid-teens%; NAND wafer capacity at fiscal 2025 year-end down 10% compared to fiscal 2024 (due to node conversion efficiency improvement).

b. D4/LP4: EOL notifications (end-of-life notifications) sent to major customers, final shipments to be completed in the next 2-3 quarters (main production line is 1-alpha node, unrelated to 1-beta/1-gamma). Short-term D4 supply shortage intensifies, quota system implemented; LP4 shortage may follow; long-term will continue to supply low-capacity demand customers in automotive, industrial, and other fields.

2.2 Q&A Session

Q: How do you view the growth of HBM's TAM with the growth of accelerator TAM? Is there any limitation on the HBM equipped with these GPUs and custom ASICs?

A: Growth: HBM demand will continue to rise, market size expected to increase from $18 billion to $35 billion in 2025; 2026 bit demand growth far exceeds the overall DRAM industry, and technological iteration (8-layer to 12-layer, HBM4 and subsequent versions) enhances value, matching accelerator platform demand, is a key driver of business growth and value, company is prepared to maintain leadership.

Limitation: No specific limitations mentioned.

Q: What are the driving factors for the quarter-over-quarter growth in gross margin? Will this become a new benchmark for gross margin? What are the driving or inhibiting factors for the future quarters after the fourth quarter?

A: Driving Factors: Pricing better than expected is a key factor; good cost control; product mix optimization (DRAM growth exceeds NAND, data center product proportion increases, consumer proportion decreases).

New Benchmark: Not mentioned.

Outlook: Favorable market environment, focus on pricing. Despite significant supply constraints in the first quarter, will shift to higher-value DRAM and NAND products.

Q: Is the 23%-24% HBM market share related to the $35 billion annual scale, and is it affected by seasonality? How should the contribution of bit growth and higher ASP from next-generation products be considered for HBM's annual growth? With the market share achieved in the second half and the 23%-24% proportion, what is the approximate revenue scale of HBM?

A: Scale and Seasonality: Not directly mentioned in relation to the $35 billion scale and seasonality. Only stated expected to achieve HBM market share equal to its DRAM share (20-25%) ahead of schedule.

Contribution: Not directly responded to the contribution proportion, emphasized 12-layer stacked HBM yield improvement faster than 8-layer, significant capacity increase, is a strong support for HBM business performance.

Revenue Scale: Annualized HBM revenue in the third fiscal quarter has exceeded $6 billion (indicating third fiscal quarter was $1.5 billion), and production continues to increase, revenue scale will further expand with capacity and share growth.

Q: After achieving the share target next year, what is the normalized share for next year? If competitor qualification issues persist into next year, does the company have expansion plans? What might the share be after expansion?

A: Share: No specific figures mentioned, only stated HBM will become part of the overall product mix, share will adjust with end market changes, focus on ROI and profitability.

Expansion: Company has invested in expanding HBM backend packaging capacity in Singapore (production in 2027), and HBM capacity can be substituted with other products, providing flexibility; no direct mention of competitor issues affecting share.

Q: What is the current utilization rate for NAND? What is the utilization rate plan for next year? Does it depend on the market, or is it necessary to increase utilization due to gross margin pressure?

A: Current Utilization Rate: Total capacity structurally decreased by 10% compared to fiscal 2024 year-end, utilization rate issues alleviated, but some capacity still not fully utilized, leading-edge process fully saturated.

Plan: No specific plan mentioned, capacity adjustment related to structural transition such as G9 node transition, not mentioned as directly driven by market or gross margin pressure.

Q: How is the progress of HBM supply and pricing negotiations for 2026? Is next year's supply fully determined? Considering the potentially long certification cycle for HBM3E and HBM4 12-layer stack, does the customer's HBM demand forecast for 2026 exceed the company's supply capacity?

A: Negotiation Progress: Collaborating with customers to advance (due to rapid iteration of customer accelerator platforms, need to plan HBM3E 12-layer stack and HBM4 supply chain and product mix), supply not fully determined; HBM4 samples sent, focus on customer certification, HBM3E 12-layer stack mass-produced with good yield improvement.

Demand Forecast: Not directly mentioned whether demand exceeds supply, only emphasized strong bit demand growth for HBM in 2026

Q: In the long-term capital expenditure plan, does the level of 35% of revenue still apply to fiscal 2026? Is there a need to invest beyond this proportion due to opportunities?

A: Applicability: Not directly mentioned whether this proportion applies, only clarified current maintenance of approximately $14 billion annual capital expenditure, future will continue to expand new capacity (including new node equipment installation), expenditure timing may fluctuate due to construction, subsidies, and other factors.

Advance Investment: Advancing new capacity construction to meet HBM and other demands, emphasized flexible balance sheet to ensure investment (maintaining technological leadership), not explicitly mentioned need to exceed 35% proportion.

Q: What is the expected trade ratio for HBM4 due to silicon through-hole doubling I/O capacity? Is there a difference in bit and profit margin between HBM sold to GPU customers and ASIC customers?

[Core meaning of trade ratio: Assuming production of 1 traditional DRAM wafer can produce 100GB of effective storage capacity; when producing HBM, due to yield loss in stacking and packaging steps, the same wafer may only produce 30GB (trade ratio of 3)]

A: HBM4 Expected Trade Ratio: Greater than 3, higher than HBM3E (around 3); trade ratio will gradually rise from 3 to around 4 from HBM3E to HBM4 and then to HBM4E.

HBM Difference: Both are high-value, and future HBM capacity (e.g., from 200-288GB to higher levels) and value positioning will grow.

Q: How is the situation of customers stocking up in advance due to tariffs? Are customer inventory levels reasonable? What impact does this have on bit demand in the second half?

A: Advance Stocking: Some customers have a certain degree of tariff-related stocking, but the impact is relatively limited.

Inventory Levels: Overall healthy, reasonable.

Impact on Bit Demand in the Second Half: Favorable demand environment, driven by AI-driven growth in data center, automotive, industrial, and other fields, expected to maintain growth trend.

Q: How is the certification progress of HBM4? Can the power performance leading advantage of HBM3E be continued on HBM4?

A: HBM4 Certification Progress: Samples provided to multiple customers, customer certification work not yet completed, plan to meet customer demand in 2026 (as a ramp-up product for 2026 mass production, aligning with customer next-generation platform timeline).

Power Performance Leading Advantage: Plan to continue power consumption advantage, and confident in HBM4 mass production ramp-up (based on HBM3E 12-layer stack yield, production exceeding expectations, and adoption of mature 1-beta technology and self-developed advanced CMOS logic chips).

Q: Does focusing on AI servers also drive demand for SSDs?

A: Not directly mentioned AI server driving SSD demand, but noted data center SSD occupies a favorable position in recently released accelerator platforms, contributing to future growth; also data center SSD performance in the second half of 2025 expected to be better than the first half (first half affected by inventory digestion), and company is focusing on shifting product structure to high-value parts of the NAND market.

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