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    Earnings call· May 2025(Q3 FY25)

    MICRON TECHNOLOGY Q3 FY25 earnings call MU

    Jun 25, 2025 Source

    Executive summary

    Micron Q3 FY25 — Record Revenue Driven by HBM and Data Center Growth

    Micron delivered record Q3 FY25 revenue, gross margin, and EPS, driven by robust data center demand and a strong HBM ramp-up. The company is strategically reorganizing for AI growth, making disciplined investments in manufacturing, and progressing on advanced technology nodes like 1-gamma DRAM and G9 NAND. Management anticipates continued constructive demand and improved profitability, focusing on high-value products amidst tight inventories.

    Highlights

    5

    • Achieved record Q3 revenue of $9.3 billion, up 37% year-over-year.

    • Data center revenue more than doubled year-over-year and reached a record level.

    • HBM revenue grew nearly 50% sequentially, with Micron expecting to reach overall DRAM share in HBM in 2H CY25.

    • Generated over $1.9 billion in free cash flow, the highest quarterly amount in over 6 years.

    • Non-GAAP diluted EPS of $1.91, exceeding the high end of guidance.

    Concerns

    3

    • NAND prices decreased in the high single-digit percentage range sequentially.

    • D4 products are on allocation and facing increasing shortages, with LP4 shortages also anticipated due to end-of-life notices.

    • Some tariff-related pull-ins by certain customers, though the impact is considered relatively modest.

    Guidance & targets

    13
    CategoryTargetConfidence
    Revenue
    $10.7 billion
    high materiality
    High
    Gross Margin
    42%
    high materiality
    High
    Operating Expenses
    $1.2 billion
    medium materiality
    High
    Tax Rate
    around 13%
    low materiality
    High
    Non-GAAP Diluted EPS
    $2.50 per share
    high materiality
    High
    Capital Spending
    approximately $14 billion
    high materiality
    High
    Tax Rate
    high teens percentage range
    low materiality
    Medium
    Industry DRAM bit demand growth
    high teens percentage range
    medium materiality
    Medium
    Industry NAND bit demand growth
    low double-digit percentage range
    medium materiality
    Medium
    Micron's bit supply growth (non-HBM DRAM and NAND)
    below industry bit demand growth
    medium materiality
    Medium
    Medium-term industry bit demand growth (DRAM)
    mid-teens CAGR
    medium materiality
    Medium
    Medium-term industry bit demand growth (NAND)
    mid-teens CAGR
    medium materiality
    Medium
    NAND wafer capacity
    10% structurally lower
    medium materiality
    High

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    Compute and Networking Business Unit
    Achieved a quarterly record, driven by strong HBM growth and high-capacity DRAM and low-power server DRAM.
    HBM sequential increase: nearly 50%
    		$5.1 billion—11%—
    Storage Business Unit
    Growth primarily driven by an increase in consumer-oriented revenue.
    		$1.5 billion—4%—
    Mobile Business Unit
    Sequential growth due to reduced customer inventories and strong demand from DRAM content growth.
    		$1.6 billion—45%—
    Embedded Business Unit
    Supported by growth in industrial and consumer embedded markets.
    		$1.2 billion—20%—

    Operational metrics

    36
    Non-GAAP Gross Margin
    39%up 110 bps sequentially, up 250 bps vs midpoint of guidance
    Q3 FY25

    Exceeded the high end of guidance due to better prices for DRAM and NAND, partially offset by higher consumer-oriented mix.

    Operating Expenses
    $1.1 billionup $87 million QoQ
    Q3 FY25

    In line with guidance, primarily driven by higher R&D investments and labor-related costs.

    Operating Income
    $2.5 billion
    Q3 FY25

    Resulted in an operating margin of 26.8%.

    Operating Margin
    26.8%up ~190 bps sequentially, up 13 percentage points YoY
    Q3 FY25

    Strong improvement driven by revenue and gross margin performance.

    Effective Tax Rate
    12.3%
    Q3 FY25

    Lower than guidance due to effects of one-time discrete items.

    Non-GAAP Diluted EPS
    $1.91up 22% sequential growth, up >200% YoY
    Q3 FY25

    Exceeded the high end of the guidance range.

    Capital Expenditures
    $2.7 billion
    Q3 FY25

    Investments made in the quarter.

    Ending Inventory
    $8.7 billiondown $280 million sequentially
    Q3 FY25

    Inventory reduction driven by strong sequential bit shipment growth.

    Inventory Days
    139 daysdown 19 days sequentially
    Q3 FY25

    Improved inventory efficiency.

    Cash and Investments Balance
    $12.2 billionrecord
    Q3 FY25

    Record cash and investments at quarter end.

    Liquidity
    $15.7 billion
    Q3 FY25

    Includes untapped credit facility.

    Total Debt
    $15.5 billion
    Q3 FY25

    Maintained low net leverage.

    Net Debt
    $3 billion
    Q3 FY25

    Further improved balance sheet.

    Weighted Average Debt Maturity
    2032
    Q3 FY25

    Extended debt maturity profile.

    DRAM Revenue
    $7.1 billionup 51% YoY
    Q3 FY25

    Strong growth in DRAM segment.

    DRAM Bit Shipments
    >20%sequential increase
    Q3 FY25

    Strong sequential volume growth.

    DRAM Prices
    low single-digit percentage rangesequential decrease
    Q3 FY25

    Primarily due to a higher consumer-oriented revenue mix.

    NAND Revenue
    $2.2 billionup 4% YoY
    Q3 FY25

    Growth in NAND segment.

    NAND Bit Shipments
    mid-20s percentage rangesequential increase
    Q3 FY25

    Strong sequential volume growth.

    NAND Prices
    high single-digit percentage rangesequential decrease
    Q3 FY25

    Sequential price decrease.

    HBM Revenue Run Rate
    >$6 billion
    FQ3 based

    Current run rate for HBM revenue.

    HBM Revenue
    multiple billions of dollars5x growth YoY
    FY25

    Significant growth in HBM revenue for the fiscal year.

    HBM Customers
    4
    Q3 FY25

    Shipping HBM in high volume to multiple customers.

    HBM4 Bandwidth
    >2 terabytes per second per memory stack>60% higher performance than previous generation
    Future

    Delivered by HBM4, leveraging 1-beta DRAM technology.

    HBM4 Power Consumption
    20% lowervs HBM3E 12-high
    Future

    Setting new benchmarks in power efficiency for HBM.

    LPDRAM for Servers Revenue
    multiple billions of dollars5x growth YoY
    FY25

    Combined revenue from high-capacity DIMMs and LP server products.

    PC Market Units Growth
    low single-digit percentage range
    CY25

    Expected growth for calendar year 2025, driven by AI PCs and Windows 11 upgrade cycle.

    Smartphone Units Growth
    low single-digits
    CY25

    Expected growth for calendar year 2025, with AI adoption driving DRAM content growth.

    Smartphone DRAM Content
    12 gigabytes or morevs 8 gigabytes average today
    Future

    Expected increase in DRAM content for AI-enabled smartphones.

    1-gamma DRAM Bit Density Improvement
    30%vs 1-beta DRAM
    Current

    Benefit of 1-gamma DRAM technology node.

    1-gamma DRAM Power Reduction
    >20%vs 1-beta DRAM
    Current

    Benefit of 1-gamma DRAM technology node.

    1-gamma DRAM Performance Improvement
    up to 15%vs 1-beta DRAM
    Current

    Benefit of 1-gamma DRAM technology node.

    1-gamma LP5X DRAM Performance
    >25% faster
    Future

    For AI applications in high-end devices across several use cases.

    1-gamma LP5X DRAM Power Reduction
    20%
    Future

    For AI applications in high-end devices.

    D4 Revenues
    low single-digit percentage
    2H FY25

    Share of total revenues for D4 products.

    Diluted Share Count
    1.15 billion
    Q4 FY25

    Used for Q4 FY25 EPS guidance.

    Industry KPIs

    6
    MetricValueDetails
    Ai data center revenueData center revenue more than doubled YoY; HBM revenue nearly 50% sequential growth; HBM revenue (FY25) multiple billions of dollars; LPDRAM for servers revenue (FY25) multiple billions of dollars
    Fab capacity utilizationNAND capacity 10% structurally lower%
    Design wins socket pipelineMultiplewins
    Inventory channel inventory$8.7 billionUSD
    Node platform ramp schedule1-gamma DRAM technology node; G9 2-terabit QLC NAND; HBM4; 1-beta dual-channel LP5 DRAM
    End market segment revenue mixData center revenue more than doubled YoY; Compute and Networking Business Unit revenue $5.1B; Storage Business Unit revenue $1.5B; Mobile Business Unit revenue $1.6B; Embedded Business Unit revenue $1.2B

    Product announcements

    5
    ProductTypeDetails
    1-gamma based LP5 DRAMmilestone
    New G9 QLC 2-terabit based SSDlaunch
    LP5X memory built on 1-gamma nodemilestone
    G9-based UFS 4 productsmilestone
    1-beta dual-channel LP5 DRAMmilestone

    Capital programs

    4
    US Investment Plan (Manufacturing & R&D)announced$200 billion

    Benefit: $150 billion in manufacturing and $50 billion in R&D, including a second leading-edge memory fab in Boise, expanding Manassas fab, and advanced packaging capabilities in the U.S.

    Includes an additional $30 billion beyond previously announced plans, with support from the Trump administration.

    ID1 Fab Constructionunderway

    Benefit: First DRAM wafer output, followed by customer qualifications.

    Achieved another key construction milestone in June.

    ID2 Fab Constructionplanned

    Benefit: Benefits from manufacturing economies of scale with ID1, adds to R&D co-location benefits, greater efficiencies, and faster time to market.

    Will begin production before the first New York fab.

    New York Fab Ground Preparationplanned
    Start: later this year

    Following the completion of state and federal environmental reviews.

    Risks & headwinds

    3
    Tariff-related pull-insQ3 FY25

    relatively modest impact

    Mitigation: Remaining agile to adjust to unforeseen demand changes.

    D4/LP4 Shortagesnear term (D4), 2-3 quarters from now (final shipments)

    D4 products on allocation; LP4 shortages anticipated

    Mitigation: Working with customers to support high-priority near-term demand for D4; managing node conversions at a measured pace consistent with demand.

    Macro conditions or evolving tariff situation

    unforeseen demand changes

    Mitigation: Remaining agile to adjust to any unforeseen demand changes.

    What to watch in Q4 FY25

    5

    HBM Market Share

    2H CY25
    CurrentMicron is at >$6B HBM run rate (FQ3 based), expecting to reach overall DRAM share in HBM.
    TargetAchievement of HBM share similar to overall DRAM share.

    Why it matters

    Indicates Micron's ability to capture the high-growth, high-value HBM market and its competitive positioning.

    We expect to reach HBM shares similar to our overall DRAM share sometime in the second half of calendar 2025.

    Q&A highlights

    6

    How does HBM TAM scale with the accelerator TAM, and are there limits to HBM attachment to GPUs/ASICs?

    HBM demand is growing significantly, from $18 billion in CY24 to approximately $35 billion in CY25. CY26 HBM bit demand will exceed overall DRAM industry growth. Transitions to 12-high and HBM4 (higher value) are positive drivers. Micron has sampled HBM4 and aims to maintain leadership specifications and capacity ramp.

    “HBM is growing from last year about $18 billion in revenue to approximately $35 billion in calendar year '25. We see in calendar year '26, if you look at HBM bit demand growth, it will significantly exceed the overall DRAM industry demand growth.”

    asked by Timothy Arcuri · answered by Sanjay Mehrotra

    2 min read5 chapters

    Detailed Narrative

    01

    Strategic Reorganization for AI Growth

    Micron completed a strategic reorganization of its business units in June, aligning them around key market segments. This new structure aims to capitalize on the significant AI growth opportunity by enhancing customer engagement and shifting more resources towards AI-focused initiatives across the product portfolio. This move is intended to deepen Micron's focus on high-performance memory and storage solutions critical for AI-driven innovation.

    02

    Advanced Technology Progress and Roadmap

    The company is making excellent progress on its 1-gamma DRAM technology node, with yields ramping ahead of the record pace achieved on the 1-beta node. 1-gamma DRAM leverages EUV, offering a 30% improvement in bit density, over 20% lower power, and up to 15% higher performance compared to 1-beta. Micron has also started qualifications for new high-performance SSD products based on its G9 2-terabit QLC NAND and continues to ramp the G9 node consistent with demand, achieving a record-high mix of QLC bits in the quarter.

    03

    Significant US Investment Plans

    Micron announced plans to invest approximately $200 billion in the U.S. over the next 20+ years, comprising $150 billion in manufacturing and $50 billion in R&D. This includes an additional $30 billion beyond previous plans, earmarked for building a second leading-edge memory fab in Boise, Idaho (ID2), expanding and modernizing the existing Manassas, Virginia fab, and establishing advanced packaging capabilities in the U.S. to support long-term HBM growth.

    04

    Fab Construction and Production Timelines

    The first Idaho fab, ID1, achieved a key construction milestone in June, with first DRAM wafer output expected in the second half of calendar 2027, followed by customer qualifications. The second Idaho fab, ID2, is planned to begin production before the first New York fab, benefiting from economies of scale and R&D co-location. Ground preparation in New York is expected to commence later this year, pending environmental reviews.

    05

    End-of-Life Product Transitions and Shortages

    Micron has issued end-of-life (EOL) notices for D4 and LP4 products, primarily produced on the 1-alpha DRAM node, to high-volume customers in segments like mobile, client, data center, and consumer. Final shipments are expected within 2 to 3 quarters. The company notes increasing shortages of D4 products, which are now on allocation, and anticipates similar shortages for LP4. D4 revenues represent a low single-digit percentage of total revenues in the second half of fiscal 2025.

    AI-generated summary of the company’s earnings call. Not investment advice.