We think ’24 and ’25 will be strong years that will drive strong growth. You are seeing actions on the supply side. The health of the industry will be restored in the future quarters. And no doubt that AI — and we talk about generative AI, right? I mean this is very, very early stages of generative AI, and these are the trends that ultimately really drive greater demand for a long time to come for memory and storage. I mean when you look at really the future, it equals AI and AI equals memory, and Micron is well positioned with our technology and product roadmaps to address the growing opportunities there.
Mark Murphy: Yes. Tim, on your second question, we have been actively taking supply out of the market. We took utilization levels down late summer. We increased that more in the fall. And as you heard on the call today, we’ve taking utilization down even further. And it’s — we’re at levels now that none of us have seen before on underutilization at Micron and maybe in the company’s history. So it’s a significant reduction. I’ll add that we do, as you know, build principally to WIP. So we’re able to then finish those products later and minimize the amount of build. We’ve also very thoughtfully, when we’ve reduced utilization, done it in the way that we can maximize the cash benefits reductions that we get when we reduce. And then it’s important to note that in the time horizon that we’re looking at, we are seeing bit volumes increase sequentially from here on out.
Now in the third quarter, I will note just some housekeeping that DRAM volumes were up modestly in the third quarter, and NAND is up sharply — as strongly, I should say. And while both are price-challenged, NAND is more challenged. But again, we are seeing growth in bits, and we expect that too is the beginning of supply/demand getting into better balance.
Operator: Our next question comes from the line of Chris Danely from Citi.
Christopher Danely: Just a couple of specific questions on the expected recovery. Is your base case — I guess in terms of the PC and cell phone demand for the second half of this year, is your base case expecting those end markets to get back to normal seasonality? And how should we expect utilization rates to trend as you continue to increase DRAM and NAND shipments? Should we expect you to get back to full utilization rates in a couple of quarters? Or is there some sort of revenue or bit level that you could give us that would indicate that you’re back to full utilization?
Sanjay Mehrotra: So with respect to the utilization rates, of course, we will continue to monitor the industry demand, and it’s important for us to continue to work on bringing our days of inventory down, and utilization could continue into fiscal year ’24 as well. We’ll make decisions regarding utilization as a function of, again, our latest status in the future around our inventory position and assessment of demand. Regarding your question on the smartphone market, as we have said that in calendar year ’24, we expect that smartphone unit volume will decline on a year-over-year basis, and Q2 growth for us was above seasonal. And as customers’ inventory levels normalize over the course of the year, then normal demand trends will also be restored in the smartphone market.
And regarding the smartphone market, even though the unit volume may be down on a year-over-year basis, important thing is that the smartphone market is shifting its mix more towards flagship phones, and flagship phones require more memory as well. So these are some of the trends that will play out as the demand grows over the course of the year for — in the smartphone market.
Operator: And our next question comes from the line of Harlan Sur from JPMorgan.
