Micron Technology, Inc. (NASDAQ:MU) Q4 2023 Earnings Call Transcript

In the past, we would have done this with more CapEx. But we are being extremely mindful of CapEx spend, extremely disciplined about supply. So as a result, when we move the equipment from older nodes to support the ramp-up of leading-edge nodes, it results in a net reduction in overall – in a net reduction and the structural reduction in the wafer capacity as well. And that overall bodes well for the industry demand-supply fundamentals. So keep in mind that as we go through the year, we – and you know, as we shift more of the equipment toward ramp up of leading edge nodes, this will result in overall wafer capacity reduction and lowering underutilization as well. Of course, the legacy nodes will continue to have underutilization through the course of the year.

And these are all helpful factors in terms of the demand-supply balance in the industry. And you know, some of the phenomena that we have described regarding structural wafer capacity reduction, this is not unique to Micron. We believe this is happening with other suppliers as well as they grapple with the same supply profitability and CapEx considerations as we are adjusting. So the reduction in wafer capacity is actually the headwind and supply growth. And this you know that increasing wafer capacity has a high bar for auto – for CapEx investments, it has a high bar in terms of ROI, and of course, it would require longer lead-time as well given the new equipment that would be required. So reduction – structural reduction in wafer capacity is overall good coupled where the underutilization in the legacy nodes.

And as we pointed out, the new products in the leading-edge nodes also do require more wafer capacity for the same gigabits of production given the nature of like HBM that – where the die-size is twice as big. So, these new products also actually have a favorable impact on the industry supply growth capability. And these trends of supply growth with respect to structural wafer capacity-reduction and the new products that end up requiring more new wafer capacity are extremely important factors in terms of really understanding the improving, strengthening demand-supply fundamentals as we look at our fiscal year ’24 and calendar year 2024.

Mehdi Hosseini: Thank you.

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.