While inventories in cloud remain at elevated levels, inventories in data center remain at elevated levels. We do expect them to improve through the course of the year towards — and get to normalized levels by the end of the year as well. And in cloud, the new CPUs do drive new D5 deployment, and Micron is well positioned with DDR5 with our strong position with the product. So we think that DDR5 is also tailwinds for the cloud demand with increased memory per server content that it will be driving as well. So these are all positive trends. And while we are navigating the business through an extremely challenging environment, I hope you see that Micron is responsibly managing its supply and continuing to focus on improving the demand supply environment for us.
Of course, as we have said, the recovery in the industry could be accelerated if the demand — if the supply for DRAM and NAND in terms of year-over-year growth was negative. We, of course, have taken our actions to bring our DRAM and our NAND supply growth for the year to be negative.
Operator: And our next question comes from the line of Timothy Arcuri from UBS.
Timothy Arcuri: I had a 2-part question. First, Sanjay, I was curious — just following on the last question, what are the lasting changes that you think that the industry is going to implement coming out of the cycle? I mean it’s been so much worse than I think any of us thought it would be. Do you think that the industry and you — I mean, certainly, you, it sounds like, but do you think the industry is going to be more draconian about adding bit supply? Do you think you can engage customers in more LTAs, given that the writing clearly is on the wall about where pricing is going to go after all this? And then I guess also then for Mark, a question on the write-down for May. Why keep on producing if you’re going to immediately write down $500 million worth of inventory? Is it that you’ve hit some sort of floor in terms of utilization where you can’t go below that? I’m just curious why you’d produce and you’d immediately write that down.
Sanjay Mehrotra: So I think with respect to the industry environment, you have to look at that over the course of last 3 years, the world faced once-in-100-years kind of pandemic, once-in-multiple-decades kind of Russia-Ukraine war and its impact on the economy, 40-year-high inflation and its impact on the macro. And all of these really resulted in an environment that created a material dislocation in terms of the demand, the surge in demand, and then the inventory adjustments that took place and resulted in a material dislocation in the customer behavior as well. And now you are seeing the process of recovery that is starting, the process of recovery with respect to the supply growth reductions actions that are being implemented.
We talked about ours today. And so this will ultimately lead to the industry to recover to healthier levels. The profitability levels in the industry today are simply not sustainable. So the demand and supply environment has to improve in the industry. And keep in mind that before this period of last 2 to 3 years with all these events that I just mentioned, the industry for 10 years plus has been disciplined particularly in DRAM. So I do believe that the investments in the future that require healthy levels of profitability and, of course, supply discipline will be back and the industry will grow. And particularly, keeping it in mind the strong demand trends. I talked about 2025 being — we think will be a record revenue year for the industry because last 2 years have been slow demand growth in terms of shipments.
