Micron Tech Executive Earnings Call Insights: NAND, Notebooks

On Wednesday, Micron Technology, Inc. (NASDAQ:MU) reported its third quarter earnings and discussed the following topics in its earnings conference call. Here’s what executives shared.

NAND

James Schneider – Goldman Sachs: I was wondering on the NAND side, if you could talk about the impact of the higher MLC and 3-level-per-cell sales recorder. How did that swing your bit shipments and your ASPs if you could provide some quantification on that and specifically with respect to TLC, going forward, do you expect to increase a portion of that?

Mark W. Adams – President: Well, I think that – the first part of your question is that some of the application markets that we’re building products for are able to adapt the MLC and lower end products at TLC shipments. We’ve said all along that our technology lead in NAND has allowed us to ship MLC competitively in the marketplace even competing with some of our competitors older technology TLC platforms. As we said going forward we’ve enabled both MLC and TLC in these products and you can see that there is an increase in our shipments in the past quarter, that being – we’ve been able to enable some of this technology in some of the broader portfolios.

A Closer Look: Micron Technology Earnings Cheat Sheet>>

James Schneider – Goldman Sachs: Then maybe on the SSD side, can you talk about the inventory levels you’re seeing out there in the channel for your customers right now? We’ve heard some data points you’re guessing, maybe it may have been elevated. Do you still see those elevated inventory levels and do you expect them to be kind of flushed out over the next quarter or so?

Mark W. Adams – President: We actually commented on the last two calls that we saw that pretty early in the cycle driven primarily of that. I guess some of the OEM and channels took in a lot of inventory pre-Christmas and they were sitting on a bunch of inventory. We think it’s actually working its way out fairly well and we’ve seen pretty strong demand over the last month in the channel and especially on the (fine) SSD side. So we agree that that’s been a trend. We think it’s working itself out at the end of Q3 and certainly during Q4.

James Schneider – Goldman Sachs: Just a clarification, can you provide a number for how much of the TLC was as a mix of your NAND sales in the quarter?

Mark W. Adams – President: TLC was about 9%.

Notebooks

Alex Gauna – JMP Securities: I was wondering if you could give some insights into how you see the end-market dynamic, specifically on the server side, the notebook side, and maybe the mobile wireless side? And I think there’s a lot of investor concern that maybe particularly in the area of notebook we might be seeing an artificial strengthening in DRAM because of the hard-disk drive recovery and maybe also some safety stocking against Elpida. I was wondering if you could give some insights on how you see demand holding up going forward here with those considerations?

Mark W. Adams – President: Let me break that up. You asked about notebooks, you asked about wireless and the serve business. I’ll tackle the notebook market, the desktop notebook market. In general we do think there has been some support for hard drives, that inventory situation improving and I think there’s a bit of catch-up as mostly corporate PC buying picked up after being away for about six-months. I don’t think they adopted the SSD platform as aggressively as everyone might like which contributed to the inventory discussion I just had. So, I think the notebook market did get some support from improving hard driven environment. I also think as we talked about the Ultrathin product launches as well as Windows 8 will provide for some support beyond just the hard drive availability and we think it will be better back half of the year. In a stable environment, we continue to see a lot of new opportunities, not just the traditional data center main application, but when you think about some of the new customers, the Facebooks and Googles of the world, we’re dropping in data centers more in the shrink wrapped environment with large server content. We’re seeing large volume orders for servers and on top of that as I mentioned in my comments, the density per server continues to increase of performance reason, so we’re pretty bullish on servers and we’ve had three consecutive of quarters of record bid shipment in the server segment. On the wireless market, as I mentioned earlier, we see growth there as well especially for us to recapture some share with our low priority DRAM 30 nanometer product as we get into increased ramps for that product in Q4 and beyond. So, good customer access and the calls are in place to drive some additional volume there.

Alex Gauna – JMP Securities: Real quickly as a follow-up, with regard to the SSD opportunity in notebooks rolling forward here. There have been a lot of models being released with hybrid drives and then obviously the netbooks came out off of some very high density complete solid stated drives, what are your expectations in terms of hybrid versus solid state and what are the OEMs telling you with regard to the price point to accelerate the full SSD versus the hybrid solution?

Mark W. Adams – President: Well I think that we’re seeing about a 50-50 split in terms of a hybrid configuration with a pure SSD play configuration. I would say that one of the comments I made upfront was that given some of the pricing we’re seeing as well as the in improvement technology from the technology node perspective and lower cost in the markets today, the economics are getting their where we’ve been asking the question what will it take to accelerate SSDs and we think we’re pretty close to faster acceleration of SSDs in the notebook given cost per gigabyte equation. I think it continues to be fair but we see about 50-50 ratio on hybrid versus pure SSDs.