Micron Technology, Inc. (NASDAQ:MU) Q2 2023 Earnings Call Transcript

Mark Murphy: That’s right, Joe. You did a decent job of sort of answering the question. But if you — I would refer you to our public filings, but as a reminder, we evaluate the recoverability of inventory as a single pool. This method we’ve applied consistently and as disclosed, we analyzed the recoverability of our inventory based on quantities and values on hand at the end of each quarter. We project the period over which that inventory will be sold based on our most recent forecast and consider the expected selling prices during that forecast horizon. Since the pre-write-down inventory, days of inventory were about 235 days. That projection covers nearly 3 quarters. The amount by which our inventory carrying cost exceeds expected sales values adjusted for selling expenses determines the charge. And in this case, that yielded a $1.4 billion write-down in the second quarter, and we expect that same process to result in a $500 million charge in the third quarter.

Operator: Our next question and final question for this session comes from the line of Krish Sankar from Cowen.

Hadi Orabi: This is Eddy for Krish from TD Cowen. It seems you adjusted the language regarding your DDR4 and DDR5 crossover date from mid-2024 to mid-to-early 2024, so slightly better than prior outlook. It’s a bit surprising given that data center inventory for DDR4 is pretty high. Is that improved outlook driven by better-than-expected demand for new CPUs from Intel and AMD? Or is it a function of you seeing higher share than expected in DDR5? Or is it more of data center customers buying ahead and taking advantage of low price environment? Any color regarding the improved outlook would be helpful.

Sanjay Mehrotra: Regarding the mix of D4 to D5 transition, the comments that I made were for the industry trends, and those have not really changed versus our prior expectations. Of course, there are functions — they are a function of deployment of the new CPUs, such as AMD Genoa and Intel Sapphire Rapids into the servers, into the data center infrastructure. And those — and you are seeing that those CPUs are now starting to get broadly deployed and will continue to increase through the course of ’23 and ’24. So our expectations in terms of transition timing for D4 to D5 for the industry have not changed, and yes, we remain well positioned with our D5 product in the market.

Operator: Thank you. This does conclude the question-and-answer session as well as today’s program. Thank you, ladies and gentlemen, for your participation. You may now disconnect. Good day.