Micron Technology, Inc.

Transcription

1 Micron Technology, Inc Summer Analyst Day All rights reserved. Information, products, and/or specifications are subject to change without notice. All information is provided on an AS IS basis without warranties of any kind. Statements regarding products, including regarding their features, availability, functionality, or compatibility, are provided for informational purposes only and do not modify the warranty, if any, applicable to any 1 product Drawings Micron may Technology, not be to scale. Inc. Micron, the Micron logo, and all other Micron trademarks are the property of Micron Technology, Inc. All other trademarks are the property of their respective owners.

2 Safe Harbor During the course of this meeting, we may make projections or other forward-looking statements regarding future events or the future financial performance of the Company and the industry. We wish to caution you that such statements are predictions and that actual events or results may differ materially. We refer you to the documents we file on a consolidated basis from time to time with Securities and Exchange Commission, specifically our most recent Form 10-K and Form 10-Q. These documents contain and identify important factors that could cause our actual results on a consolidated basis to differ materially from those contained in our projections or forward-looking statements. These certain factors can be found at Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. We are under no duty to update any of the forward-looking statements after the date of the presentation to conform these statements to actual results. 2

3 Mark Durcan Chief Executive Officer 3

4 Agenda Industry Environment Strategic Focus Key Investments Market Positioning and Operational Focus Technology Roadmap Finance Strategy and Updates 4

5 Semiconductor Cycles 2Q08 to 4Q09 Memory 2Q08 to 4Q09 Semi ex-memory 120% YoY Quarterly Revenue Growth 90% 60% 30% 0% -30% -60% Peak to Trough Number of Quarters Trough to Peak Data in calendar quarters. Memory includes DRAM, SRAM, Flash, Mask PROM and EPROM. Values represent growth of total quarterly revenue over prior year same-quarter revenue. Cycle peaks reflect maximum YoY quarterly growth rates. Source: WSTS, Micron 5

6 Semiconductor Cycles 2Q08 to 4Q09 Memory 1Q10 to 2Q13 Memory 2Q08 to 4Q09 Semi ex-memory 1Q10 to 2Q13 Semi ex-memory 120% YoY Quarterly Revenue Growth 90% 60% 30% 0% -30% -60% Peak to Trough Number of Quarters Trough to Peak Data in calendar quarters. Memory includes DRAM, SRAM, Flash, Mask PROM and EPROM. Values represent growth of total quarterly revenue over prior year same-quarter revenue. Cycle peaks reflect maximum YoY quarterly growth rates. Source: WSTS, Micron 6

7 Semiconductor Cycles 120% 2Q08 to 4Q09 Memory 1Q10 to 2Q13 Memory 3Q13 to Today Memory 2Q08 to 4Q09 Semi ex-memory 1Q10 to 2Q13 Semi ex-memory 3Q13 to Today Semi ex-memory YoY Quarterly Revenue Growth 90% 60% 30% 0% -30% -60% 3Q-13 4Q-13 1Q-14 2Q-14 3Q-14 4Q-14 1Q-15 2Q-15 Data in calendar quarters. Memory includes DRAM, SRAM, Flash, Mask PROM and EPROM. Values represent growth of total quarterly revenue over prior year same-quarter revenue. Cycle peaks reflect maximum YoY quarterly growth rates. Source: WSTS, Micron 7

8 Long-Term Memory Market Conditions Consolidated Suppliers Low Supply Growth Diversifying Demand Suppliers with sufficient scale Return-focused investment and supply environment Limited new wafer capacity Slowing technology migrations Differentiated products System solutions Diversified customers Broadening applications 8

9 DRAM Supply Growth Slowing, Demand Differentiating DRAM Industry Y/Y Bit Shipment Growth DRAM Industry Bit Demand Profile 120% 100% 87% CAGR: 52% 100% 80% Embedded 80% 60% 40% 20% 54% 62% CAGR: 32% 44% 49% 32% 31% 23% 23% 25% 24% Stable growth expected 60% 40% 20% Enterprise Mobile Client 0% 0% Technological complexity increasing; wafer production stable or declining over time Aggregate demand increasing, with continued shift to mobile and enterprise Embedded: AIMM, Consumer, Connected Home Mobile: Handsets, Tablets Source: Micron and Industry Analysts Enterprise: Server (Enterprise and Cloud), Networking Client: PC, Graphics 9

10 NAND Supply Growth Slowing, Growing Demand in SSD and Mobile NAND Industry Y/Y Bit Shipment Growth NAND Industry Bit Demand Profile 250% 200% 209% 174% CAGR: 117% 100% 80% SSD 150% 100% 127% CAGR: 51% 60% 40% Mobile Consumer 50% 45% 73% 77% 62% 41% 41% 37% 34% New capacity ROIC dependent 20% Removable & Other 0% 0% D conversion does not result in increased industry supply growth absent wafer capacity additions Aggregate demand increasing, with significant growth in SSDs and mobile SSD: Client, Data Center, Enterprise SSDs Consumer: MP3, DSC/DVC, Other Consumer Source: Micron and Industry Analysts Mobile: Embedded NAND in Handsets and Tablets Removable & Other: Flash Cards, USB Drives, Other 10

11 Semiconductor Revenue ($B) Memory Revenue ($B) Micron s Markets Continue to Grow Inflation Adjusted Market TAMs (2014 Dollars) $400 $80 $300 $60 Real Semi Revenue $200 $40 Real DRAM Revenue $100 $20 Real NAND Revenue $ $0 Revenues adjusted for inflation, shown in 2014 dollar equivalents. Inflationary adjustments calculated using GDP Implicit Price Deflator. Source: Micron and Industry Analysts 11

12 % of Total Semiconductor Memory Growth Relative to Overall Semiconductors 40% 35% 30% 25% 20% 15% Memory Revenue Share Memory Silicon Share Linear (Memory Revenue Share) Linear (Memory Silicon Share) 10% Memory Has Grown in Terms of Both Revenue and Square Inches of Silicon Source: Micron and Industry Analysts 12

13 Strategic Focus to Drive Value Creation Investment for manufacturing and technology efficiency 20nm DRAM ramp 16nm planar TLC NAND deployment 3D NAND ramp and product enablement Next generation DRAM and NAND development Investment for value-added solutions and emerging technologies 3D XPoint Advanced products Controllers and firmware, SSD portfolio Advanced packaging solutions Investment in long-term customer and partner relationships Opening and growing new market segments Leveraging best-in-class expertise Moving from demand fulfillment to demand creation Optimizing resources and sharing risk Focused on Driving Long-Term Shareholder Returns 13

14 Mark Adams President 14

15 Current Memory Market Conditions PC demand and market conditions have been challenging Mobile, cloud, and specialty DRAM segments have performed better Mobile (emcp) and SSD driving demand growth in NAND Micron Continues to Leverage Demand Across Diversified End Markets 15

16 Growing and Diversifying Memory Demand DRAM Industry Bit Demand (B Gb EU) NAND Industry Bit Demand (B GB EU) Handset Tablet AIMM Consumer & Graphics Server/Storage/ Networking Other Removable Storage Consumer Handset Tablet PC Client SSD Datacenter SSD Enterprise SSD Source: Micron and Industry Analysts Tablets contain a mix of mobile DRAM, standard DRAM, and reduced-power solutions. Upgrade modules included with PC. 16

17 Micron s Value Proposition in Mobile Customer Requirements Energy efficient mobile computer Immersive multimedia experience Battery life and pleasing form factors Micron Portfolio Low Power DRAM LPDDR2-LPDDR4, from 4Gb to 32Gb Configurations to match any solution Enables emcp innovation Mobile Managed Memory emmc, emcp Next generation heterogeneous solutions Leading-edge packaging technology 17

18 Micron s Value Proposition in Automotive Customer Requirements Automotive quality and reliability Leading-edge technology 10+ year longevity Infotainment Micron Portfolio Adoption of Leading Edge Technology LPDDR4 in next generation Infotainment High density emmc and SSD (8GB 240GB) Enabling Innovation Increasing car OEM engagement Customer validation labs Advanced Driver Assistance Systems (ADAS) Instrument Cluster Full Auto-grade NVM and DRAM Legacy and mainstream DRAM Broad NOR product line SLC, MLC, emmc and SSD NAND 18

19 Micron s Value Proposition in Cloud and Enterprise Customer Requirements Real-time in-memory analytics driving memory content High-performance all-flash storage solutions Flash-enabled lights-out data centers Micron s Technology Enterprise-class technology (20nm DRAM, 3D NAND) Through-Silicon Via (TSV) for high performance Advanced memory systems Micron Portfolio Server Modules Up to 128GB densities DDR4 for higher performance Load reduction for higher capacity Enterprise SSD Enabled by high performance MLC NAND Expanding portfolio: SATA, SAS and PCIe Partnership enable go to market 3D XPoint 1 st new memory technology in 25+ years 1,000x faster than NAND 10x denser than conventional memory Hybrid Memory Cube Best-in-class bandwidth 70% less energy per bit 19

20 Micron s Business is Evolving Legacy Component Business Value Added Products Solutions for Emerging Markets OEMs OEMs Hyperscale Channel Strategic Partners ODM Verticals/Influencers Financial Oil & Gas Automotive Media Telecom Service Providers Medical Government Demand Fulfillment Relationship Demand Creation Relationship 20

21 Our Focus on High Value Products and Segments DRAM Portfolio ASP/Gb Premium CQ3-13 CQ4-13 CQ1-14 CQ2-14 CQ3-14 CQ4-14 CQ1-15 CQ2-15 FQ4-13 FQ1-14 FQ2-14 FQ3-14 FQ4-14 FQ1-15 FQ2-15 FQ3-15 Micron Fiscal ASP Industry ASP Average Premium NAND Portfolio ASP/GB Premium CQ3-13 CQ4-13 CQ1-14 CQ2-14 CQ3-14 CQ4-14 CQ1-15 CQ2-15 FQ4-13 FQ1-14 FQ2-14 FQ3-14 FQ4-14 FQ1-15 FQ2-15 FQ3-15 Trade NAND and DRAM. Intel s portion of IMFT is excluded. Source: Micron and Industry Analysts Micron fiscal data shifted to closest calendar quarter. 21

22 Investments Will Drive Growth Micron DRAM / NAND Normalized Bit Output NAND DRAM FY 2015 FY 2016 FY 2017 DRAM NAND Muted Growth in FY-15 / 1H-16 20nm transition-driven wafer loss Mix shift from DDR3 to DDR4 and LP 3D NAND ramp preparations Mix shift towards mobile/emcp from high density components Stronger Growth Beyond Volume ramp of 20nm (to >50% of bits) 3D NAND ramp + TLC impact 22

23 Investments Will Drive Growth Micron DRAM / NAND Normalized Bit Output NAND DRAM 3D XPoint FY 2015 FY 2016 FY 2017 DRAM NAND Muted Growth in FY-15 / 1H-16 20nm transition-driven wafer loss Mix shift from DDR3 to DDR4 and LP 3D NAND ramp preparations Mix shift towards mobile/emcp from high density components Stronger Growth Beyond Volume ramp of 20nm (to >50% of bits) 3D NAND ramp + TLC impact 23

24 Investments Will Drive Growth Two Year CAGR (FY-17 vs. FY-15) 1 Bit Shipments DRAM 20-30% NAND 30-40% Exiting FY 2017 (FQ4-17 vs. FQ4-15) Bits per Wafer DRAM 65-75% NAND % 1 Two-year CAGR comparing total annual FY 2017 vs FY

25 Key Takeaways Long-term market opportunities are favorable Micron is pursuing high-value markets with a strong value proposition We are making risk/reward trade-offs as we engage in new markets and new/ongoing customer and partner relationships Over the next few years we expect to outpace market bit growth Fuels top-line growth Expect premium products to increase as a percentage of total revenue We expect to drive relative operating profit expansion 25

26 Scott DeBoer Vice President, R&D 26

27 Responding to Market Needs Customer Requirements High Performance Memory Technology Solution DRAM scaling continues High Density Storage Innovation Creating New Opportunities 3D NAND scaling for the next decade 3D XPoint TM, 3D packaging, other new memory options 27

28 Yield % of Total Micron DRAM Bits Produced* DRAM Update 20nm DRAM Production 50% 20nm qualified and ramping in Hiroshima and Inotera 20nm yield progressing to plan (ahead of previous nodes) 1Xnm (first post-integration technology) deployed in Hiroshima fab ramp in second half 2016 Strong international team focused on best known practices for innovation and development 0% FQ1-16 FQ2-16 FQ3-16 FQ4-16 Micron Fiscal Quarter * Includes Inotera 2xnm DRAM Yield Trend 20nm Actual 25nm Actual Time from Early Ramp 28

29 Yield 3D NAND Update Status Rapid yield progress on 3D NAND (ahead of plan) Ramping TLC products for mobile and storage Continuing innovative path to maintain Gb/mm 2 leadership Early 3D NAND Yield Trend Next Major Milestones Continue yield improvement and volume ramp Enablement of 2 nd generation 3D NAND in Singapore manufacturing fab First wafers out of Singapore expansion in summer D Actual Planar Actual Singapore Fab Expansion Time From Introduction 29

30 Why Micron and Intel Chose Floating Gate for 3D NAND Floating Gate Flash Cell e - Isolated charge storage node for good cell to cell charge isolation Floating Gate is a Proven e Technology Charge Trap Flash Cell e e Continuous charge storage node prone to charge dispersion between cells Floating Gate is a Proven Technology Used in NVM since 70s and technology of choice for industry NAND today Physics and reliability surrounding floating gate are well understood Not susceptible to charge spreading Expect faster 3D NAND ramp in manufacturing Cell enables industry s highest Gb/mm 2 and world s first 384Gb die (TLC) 30

31 Micron s Portfolio of Innovative Firsts DRAM 6F 2 architecture Leading DRAM capacitor technology Copper metallization Package Hybrid memory cube using Through Silicon Via (TSV) 0.8mm four-layer LPDRAM package, thinnest LPDRAM memory device in the industry NAND Pitch multiplication patterning in manufacturing Award-winning, industry-leading planar NAND cell technology Air-gap technology implementation New Memory Productization of phase change memory technology Demonstration of 16Gb resistive RAM 31

32 Recent Technology Announcements Floating Gate 3D NAND March D XPoint Non-Volatile Memory July X higher capacity than existing NAND technologies due to smallest cell size Enables >10TB in a standard 2.5 SSD 1000X faster than NAND 1000X endurance of NAND 10X denser than conventional memory 32

33 Successful Development Path for 3D XPoint TM Memory Cross-point memory technology has been an industry aspiration for decades Unique enablers of 3D XPoint TM : Novel new materials with electrical, structural, and chemical compatibility Innovative integration concept Proprietary and unique to the industry Low latency, high endurance, non-volatile Selector capable of demanding on/off currents High endurance memory cell with large window High performance logic beneath the array Delivering 128Gb on a single die with a 2 deck stacked 20nm cross point It s a great time to be a materials engineer! 33

34 3D XPoint Enables High Performance Solutions ENTERPRISE STORAGE CLASS MEMORY Saturates the PCIe interface for reads and writes High IOPS for low queue workloads Unlimited life for 5-year 100% write workload CLIENT STORAGE Enables extreme 4K video editing Cost-sensitive performance with TLC NAND in the general SSD market MOBILE MEMORY Eliminates interface bottleneck of existing NVM storage solutions Provides lower power standby (no active refresh) Optimized for low-latency, small data transactions Small data sizes with 16GB density Non-volatile, high endurance 1,000X faster than NAND 34

35 Future Memory Technologies Resistive Memory Spin Torque Memory +V -V Cu/Ta Top lead Cu, Ag etc,. CoFeB MgO CoFeB Free layer Barrier Fixed layer MTJ PtMn Antiferromagnet W, TiN etc,. Exploring a broad range of materials with RRAM capability Investigation focused on unique material system advantages Cu/Ta MTJ Bottom lead Unique memory based on electron spin at the atomic level Potential long-term DRAM replacement Early application as a high-speed cache 35

36 Current Key Technology Priorities Continue to build positive momentum in the DRAM technology area Completion of 20nm DRAM ramp on plan Drive faster introduction cadence on DRAM technology with rapid 1Xnm and 1Ynm delivery 3D NAND and 3D XPoint TM technology ramps in D package technology enablement for multiple differentiated opportunities DRAM NAND 3D Package Xnm 3D Gen 2 HMC Gen 3 1Ynm 3D Gen 3 New Memory 3D X-Pt 3D X-Pt Gen 2 EM Gen 1 Position in time indicates volume enablement 36

37 Ernie Maddock Chief Financial Officer 37

38 Capital Allocation Strategy Investment for manufacturing and technology efficiency Investment for value-added solutions Return excess capital to shareholders 38

39 Investing in Business Growth and Shareholder Returns FQ1-11 through FQ3-15 $5.2B cumulative investment in R&D $11.6B cumulative investment in capital expenditures 1 Innovating with new memory technologies and system-level solutions Managing dilution through ~$3.8B of convertible note and share repurchases Maintaining balance sheet flexibility for operational/strategic initiatives Millions $25,000 $25 $20,000 $20 $15,000 $15 $10,000 $10 $5,000 $5 $0 $0 Capital Return R&D Capex 1 1 Includes payments on equipment purchase contracts 39

40 Significant Increase in Scale and Financial Flexibility $8.8B Revenue Cash from Operations (% of Sales) 16% CAGR, ~2X Growth 23% CAGR, $16.2B ~2X Growth 28% 32% FY2011 Capital Expenditures (% of Sales) 33% FY2015E* 23% FY2011 Free Cash Flow (% of Sales) FY2015E* FY-11 FY-15 1 FY-11 FY-15 1 ~$1.8B Increase 9% 1 Based on Bloomberg analyst consensus 2 Based on mid-point of FY 2015 guidance FY-11 FY2011 FY2015E* FY-15 2 FY-11 FY-151,2-4% 40

41 Return of Capital Framework Established Target Capital Structure Minimum cash target Leverage target Credit rating target Dilution Management Returned ~90% of FY-14 FCF and ~79% in FY-15 1 ~$3.8B in convertible note / share repurchases Capital Return Policy Annual review Disciplined approach based on operational and strategic initiatives 1 Through FQ

42 Millions of Shares Dilution Management Results 1,300 Start of FY 2014 GAAP Dilutive Shares 1 1,200 1,100 ~12% reduction in dilutive shares for stock price range of $20-$30 Through FQ ,000 $16 $18 $20 $22 $24 $26 $28 $30 $32 $34 $36 From FY 2014 through FQ3 2015, total share reduction of ~141M shares at $20 2 * Assume FQ3-15 basic shares and stock based compensation for analysis. All transactions assume full quarter of impact. 1 Does not include benefit of capped calls 2 Includes the benefit of capped calls 42

43 Financial Performance Expanded revenues to $16B+ in FY 2014 with strong operating cash flow Diversified market segments, customers and products Strengthened balance sheet to support operational/strategic initiatives Invested in R&D and capital expenditures to drive technology efficiency and innovation Enabled significant capital return and dilution management 43

44 Investments Will Drive Growth Two Year CAGR (FY-17 vs. FY-15) 1 Bit Shipments DRAM 20-30% NAND 30-40% Exiting FY 2017 (FQ4-17 vs. FQ4-15) Bits per Wafer DRAM 65-75% NAND % 1 Two-year CAGR comparing total annual FY 2017 vs FY

45 FY 2016 Capital Expenditure Guidance: $5.3B to $5.8B CapEx Breakdown 100% 20-30% Technology and Product Enablement Non-supply related investments with focus on driving nextgeneration memory technologies and packaging capabilities to enable high-margin, differentiated solutions Emerging memory Packaging and controller capabilities Other investments including R&D fab space in Boise 40-50% Non-Volatile Memory Investments related to 3D NAND development, TLC enablement and Fab 10X to drive cost reductions and margin improvements 3D NAND Fab 10X facility 3D XPoint 0% FY % DRAM Investments in leading edge technology to improve efficiencies and margins 20nm and 1xnm ramp Flexible, Return-Focused Capital Expenditure Plan 45

46 Normalized FY 2016 Capital Expenditures Total CapEx Partner Investments Shell Investments Normalized CapEx FY 2016 Capital Expenditure Guidance: $5.3 - $5.8B Strategic partner investments: ~$0.7 $0.9B Shell investment in Fab 10X: ~$0.6 $0.8B Normalized Capital Expenditures of ~$4.1B 46

47 Forward Guidance Responds to Our Changing Business Value proposition to customers and partners is evolving: Creating value beyond component sales Multi-chip packages, SSDs, sub-systems and solutions Differentiated next generation memory/storage technologies 3D XPoint, HMC, Enterprise SSD, etc. Strategic partnerships Current per-bit metrics are less indicative of market conditions and financial results 47

48 Changes to Forward Guidance Effective FQ1-16 Quarterly Guidance Metrics (on a Total Company, Non-GAAP basis) Revenue Gross Margin Operating Expense Operating Income Diluted EPS We expect quarterly call and financial reporting to be similar to current practice 48

49 Executing to a Capital Management Framework Return on Assets > Cost of Capital Weighted Average Cost of Capital Currently ~10% 1 Value Creation Strong Balance Sheet Target Minimum Cash Balance LTM SG&A + R&D + Current Debt 2 (Currently ~$3.4B) Cap Ex / Sales Target 20-25% of Sales Efficient Free Cash Flow Model Access to Low-Cost Capital Target Leverage Ratio GAAP Debt to EBITDA < 1.5x 1 Weighted average cost of capital as of June 4, 2015, based on Micron s internal model 2 LTM SG&A and R&D = $2.2B; Current Debt (based on GAAP value, not principal amount) = $1.2B. 49

50 Financial Takeaways Driving long-term returns with focused capital allocation Delivering scale, a strong balance sheet, and significant shareholder returns/dilution management in recent years Investing for future growth while remaining flexible and return-focused Aligning financial communications to our evolving strategy Executing efficient and effective capital management FQ4-15 QTD 1 : Repurchases of ~$0.5B of common shares and ~$0.1B of convertible notes 1 As of August 12,

51 Mark Durcan Chief Executive Officer 51

52 Analyst Day Summary Industry conditions remain favorable over the long term: Investing in technology, solutions, and strategic relationships to improve competitive position Delivering value-added solutions to our customers in diverse segments Focusing on operational execution Leveraging world-class technology to enable differentiated solutions Deploying efficient and effective capital management Focused on Driving Long-Term Shareholder Returns 52

53 Q & A 53

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55 Non-GAAP Asset Reconciliation Amounts in millions FQ3-15 FQ4-14 to FQ3-15 Beginning of period: Total assets $ 23,818 $ 20,495 Cash, current and noncurrent marketable investments (6,348) (4,809) Current and noncurrent restricted cash (67) (62) Non-controlling share (974) (949) Non-GAAP total assets $ 16,429 $ 14,675 End of period: Total assets $ 25,136 $ 25,136 Cash, current and noncurrent marketable investments (7,330) (7,330) Current and noncurrent restricted cash (70) (70) Non-controlling share (1,061) (1,061) Non-GAAP total assets $ 16,675 $ 16,675 Non-GAAP average total assets $ 16,552 $ 15,675 55

56 Adjusted EBITDA Reconciliation Amounts in millions FQ3-15 LTM FQ4-14 to FQ3-15 Net income $ 491 $ 3,579 Interest expense, net Income tax provision (benefit) Depreciation expense and amortization of intangible assets 673 2,510 EBITDA 1,356 6,555 (Income) loss from equity method investees (68) (519) Restructure and asset impairments 1 25 (Gain) loss from asset dispositions or other impairments (4) (15) (Gain) loss from changes in currency exchange rates (1) 29 Stock-based compensation Loss on restructure of debt (Gain) on Inotera issuance of shares -- (93) (Gain) from disposition of shares in Aptina -- (120) Legal settlements Adjusted EBITDA $ 1,345 $ 6,150 56

57 Non-GAAP Net Income Reconciliation Amounts in millions FQ3-15 LTM FQ4-14 to FQ3-15 GAAP net income attributable to Micron $ 491 $ 3,578 Non-GAAP adjustments: Tessera license Restructure and asset impairments 1 35 Amortization of debt discount and other costs Loss on restructure of debt (Gain) loss from changes in currency exchange rates (1) 29 (Gain) from Inotera issuance of shares -- (93) (Gain) from disposition of shares in Aptina -- (120) Estimated tax effects of above items -- (7) Non-cash taxes from MMJ and MMT 22 (25) Non-cash taxes from MMJ for changes in Japan tax laws and rates Non-cash taxes from Inotera 10 (55) Non-GAAP net income (loss) attributable to Micron $ 620 $ 3,660 x4 $ 2,480 $ 3,660 57

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