Micron Technology 2026 Q4 Earnings Call

Satya, please go ahead. Thank you, and welcome to Micron Technology's fiscal fourth quarter 2026 financial conference call.

On the call with me today are Sanjay Mehrotra, our Chairman and CEO, and Mark Murphy, our CFO. Today's call is being webcast from our investor relations site at investors.micron.com, including audio and slides. In addition, the press release detailing our quarterly results has been posted on the website, along with prepared remarks for this call. Today's discussion contains forward-looking statements that are subject to risks and uncertainties. These forward-looking statements include statements regarding our future financial and operating performance and our business model, as well as trends and expectations in our business, customers, market, industry, products, and regulatory and other matters. These statements are based on our current assumptions, and we assume no obligation to update these statements.

Please refer to our most recent financial reports on Form 10-K, Forms 10-Q, and our other filings with the SEC for more information on the risks and uncertainties that could cause actual results to differ materially from expectations. Today's discussion of financial results is presented on a non-GAAP financial basis, unless otherwise specified. A reconciliation of GAAP to non-GAAP financial measures can be found on our website. I'll now turn the call over to Sanjay.

Thank you, Satya. Micron delivered an exceptional fiscal Q4 with significant records in revenue, gross margin, and EPS, each exceeding the high end of our guidance. Fiscal 2026 was an outstanding year. Revenue was 3.5 times last year's record, with data center revenue up fourfold. Micron's DRAM revenue for the fiscal year 2026 surpassed $100 billion. I'm thankful for the above and beyond efforts of our employees around the world that made these extraordinary results possible. In recognition of these efforts and Micron's strong execution, we increased fiscal 2026 incentive compensation for every global team member, reinforcing our performance driven culture and aligning team member success with long term shareholder value creation. As strong as fiscal 2026 was, we expect fiscal 2027 to be even better.

Industry demand has strengthened since our last earnings call, and we expect memory and storage supply demand conditions to be much tighter in fiscal 2027 and 2028 than they were in 2026. AI is becoming super intelligent, and memory enhances this intelligence and the competitiveness of our customers' platforms. AI applications across end markets, whether using open source or closed source models, are run on a variety of competing customer platforms. These platforms all share one important characteristic. Their value proposition is enhanced by the performance and capacity of memory and storage. Running an AI application on a platform with greater memory capability enables more scalable growth and usage, improves the end user experience, and increases the value users get from AI applications. The strategic importance of memory to our customers also provides greater differentiation opportunities for Micron than at any time in our history.

As we address AI driven demand for an increasingly complex set of products across the memory hierarchy, we have opportunities to deliver differentiated performance and quality, time to market advantages, and geographically diversified supply, including DRAM made in the U.S. We also have opportunities for richer product mix relative to our competitors with our focus on higher value solutions. Micron's technology leadership, strong product portfolio, strategic customer agreements, and manufacturing excellence position us to capitalize on these opportunities. Micron is the industry's technology leader. Our 1-gamma DRAM node and G9 NAND nodes are our largest production nodes today and are on track to become the highest volume nodes in Micron's history. Development of our next generation DRAM and NAND technology nodes is also progressing well, and they are on track to begin volume production in the second half of calendar 2027.

We are leveraging these technology nodes and our advanced packaging capabilities to deliver leadership products across the memory hierarchy, such as industry leading HBM, high capacity SOCAMM, high capacity and high performance DDR modules, and data center SSD products. We are focused on our global manufacturing expansions to help address customer demand growth through the end of this decade and beyond. Micron is investing to provide long-term U.S.-based supply assurance for DDR, LPDRAM, and HBM products through our fabs in Virginia, Idaho, and New York to support our customers across a variety of markets, including data center, PC, mobile, automotive, aerospace and defense, medical, humanoid robotics, and other industrial and consumer markets. During the last quarter, we celebrated a concrete pour milestone for our first New York fab with initial wafer output expected in calendar 2030.

Our ID1 fab is on track to commence wafer output in mid calendar 2027. ID2 is on track to commence wafer output in late calendar 2028. In fiscal Q4, we held a groundbreaking ceremony for our DRAM fab expansion in Japan, with initial output expected in late calendar 2028 to support technology node transitions. In Taiwan, we are on track for meaningful product shipments from our Tongluo facility in mid calendar 2027. In Singapore, clean room preparation is ahead of plan at our HBM advanced packaging facility, with initial output expected in early calendar 2027. Also, construction is on track for our new NAND facility in Singapore to begin output in the second half of calendar 2028. Production from new DRAM and NAND fabrication facilities takes time to ramp and gradually becomes more meaningful, starting a few quarters after initial output.

Micron's strategic customer agreements accelerate the transformation of our business. These multi-year take or pay agreements sharpen our long-term supply planning and enhance the durability and predictability of our strong financial performance. Further, they provide our customers supply assurance and deepen technology roadmap collaboration. This, in turn, helps our customers invest more confidently in their business and enables their end consumers to benefit from their products and services. To date, we have signed 26 SCAs, which we currently estimate to be over 35% of our revenue through 2030. Three quarters of this estimated revenue has a defined pricing framework, a majority of which have pricing bands with floor and ceiling prices. The remaining quarter of this SCA revenue expectation has pricing negotiated periodically based on market prices.

Customers want SCA assured supply beyond 2030, and we have now signed SCAs that extend into 2031, as well as one-year extensions to 2031 for two agreements. Any new discussions on SCAs where pricing is involved are negotiated with higher pricing based on prevailing market conditions and outlook. For the 26 signed SCAs and extensions, financial commitments from customers have increased to $32 billion, the vast majority of which are cash deposits. These financial commitments reflect our customers' confidence in their long-term demand for memory and storage. Turning to our end markets, please see our earnings press release for highlights across our high capacity DDR and LP server DRAM, data center SSD, PC, smartphone, and physical AI product portfolios. We expect server unit growth in the high teens percentage range in both calendar 2026 and 2027.

This strong server unit growth is supported by a modestly lower rate of content growth than prior expectations, amid tight memory supply. Growing model parameter size, longer context lengths, and higher concurrency continue to increase the memory and storage content required to execute AI workloads efficiently. Micron is leveraging our technology leadership and manufacturing excellence to deliver innovative products across the memory hierarchy to data center customers. In HBM, our revenue for fiscal Q4 2026 grew faster than total company revenue in the quarter as we ramp HBM shipments across a growing number of customers. We have completed agreements for the vast majority of our calendar 2027 HBM bit supply with significant price increases year-over-year, narrowing the gross margin gap with conventional DRAM. We continue to execute well on our ramp of HBM4.

We have a strong roadmap for future HBM products and are proud to be working with NVIDIA on the industry's first custom HBM4E implementation, NV-HBM, to be adopted on next generation of GPUs and NVLink fusion platforms. In NAND, AI context memory storage used for KV cache offload and HDD displacement opportunities are expanding the addressable market for SSDs. Data center SSD revenue in fiscal Q4 was nearly $10 billion, more than 10 times the year ago quarter, and was over two-thirds of total company NAND revenue. We are on track to deliver the fifth consecutive year of record market share in data center SSD in calendar 2026. This performance is driven by the strength of our NAND technology leadership, end-to-end data center storage portfolio, and close collaboration with customers, which has resulted in design wins across the largest data center deployments.

PC and mobile industry revenue remain on track to grow this calendar year, driven by strength at the premium end of the market, despite potential double-digit overall unit declines in both markets. OEMs continue to introduce new AI capabilities in flagship PCs and smartphones, driving robust demand for higher performance devices with increased DRAM and NAND content. Micron is focused on these premium segments and is well positioned to support customers as they expand edge AI capabilities with our industry leading memory and storage portfolio. Nearly half of MCBU revenue in fiscal Q4 was generated by 1-gamma products as customers accelerate qualifications and adopt our latest technology, which delivers lower power consumption and higher performance. Autonomous vehicles are the first major deployment of physical AI, which we believe will expand over time to humanoid robots and other intelligent, autonomous systems.