Thank you, and welcome to Micron Technology's Fiscal Third Quarter 2025 Financial Conference Call. On the call with me today are Sanjay Mehrotra, our Chairman, President and CEO; and Mark Murphy, our CFO. Today's call is being webcast from our Investor Relations site at investors.micron.com, including audio and slides. In addition, the press release detailing our quarterly results has been posted on the website, along with the prepared remarks for this call. Before we begin, let me remind everyone that today's discussion contains forward-looking statements that are subject to risks and uncertainties. These forward-looking statements include statements regarding our future financial and operating performance, including our guidance as well as trends and expectations in our business, market, industry and regulatory and other matters. These statements are based on our current assumptions, and we assume no obligation to update these statements. Please refer to our most recent financial report on Form 10-K and our other filings with the SEC for more information on these risks and uncertainties that could cause actual results to differ materially from expectations. Today's discussion of financial results is presented on a non-GAAP financial basis unless otherwise specified. A reconciliation of GAAP to non-GAAP financial measures can be found on our website. We encourage you to visit our website at micron.com throughout the quarter for the most current information on the company, including information on financial conferences that we may be attending. You can also follow us on LinkedIn, X, and YouTube. I'll now turn the call over to Sanjay.

Thank you, Satya. Good afternoon, everyone. Micron's strong competitive position and solid execution delivered record revenue in fiscal Q3 with revenue, gross margin, and EPS all exceeding the high end of our guidance ranges. Data center revenue more than doubled year-over-year and reached a record level, and consumer-oriented markets had strong sequential growth. We generated substantial free cash flow in the quarter, even as we continue to make strategic investments critical to sustain long-term growth. I'm thankful to all our Micron team members for their focus and execution, which made these results possible. In fiscal Q3, DRAM revenue reached a new record driven by nearly 50% sequential growth in HBM revenue. We remain the sole supplier in volume production of LPDRAM in the data center. In NAND, we achieved a new quarterly record for market share across data center SSDs as well as client SSDs in calendar Q1. For the first time ever, during calendar Q1, Micron has become the number two brand by share in data center SSDs according to third-party data. Looking ahead to fiscal Q4, we see a robust demand environment and expect to grow revenue by 15% sequentially to a record $10.7 billion at the guidance midpoint. In June, we completed a strategic reorganization of our business units around key market segments to capitalize on the tremendous AI growth opportunity ahead. As high-performance memory and storage becomes increasingly critical to enabling AI-driven innovation, this new structure enhances Micron's ability to engage more deeply with customers by shifting more resources to AI-focused opportunities across our portfolio. We are making excellent progress on our 1-gamma DRAM technology node with yields ramping ahead of the record pace we achieved on our 1-beta node. We completed several key product milestones during the quarter, including the first qualification sample shipments of 1-gamma based LP5 DRAM. Micron 1-gamma DRAM leverages EUV, and the node provides a 30% improvement in bit density, more than 20% lower power, and up to 15% higher performance compared to 1-beta DRAM. We will leverage 1-gamma across our entire DRAM product portfolio to benefit from this leadership technology. In NAND, we reached a record-high mix of QLC bits in the quarter. We started qualifications for new high-performance SSD products based on our G9 2-terabit QLC NAND, and we continue to ramp our G9 node at a pace consistent with demand. We are making disciplined investments in our global operations network to add to supply in line with demand over time. Two weeks ago, with support from the Trump administration, Micron announced plans to invest approximately $200 billion in the U.S., which includes $150 billion in manufacturing and $50 billion in R&D over the next 20-plus years. As part of this $200 billion investment plan, Micron plans to invest an additional $30 billion beyond previously announced plans, which includes building a second leading-edge memory fab in Boise, Idaho; expanding and modernizing our existing fab in Manassas, Virginia, serving the automotive, aerospace, defense, and industrial markets; and bringing advanced packaging capabilities to the U.S. to support our long-term HBM growth plans after we have established sufficient DRAM wafer scale in our U.S. operations. We are pleased with the strong endorsement we received for our technology, products, and investment plans from our customers and ecosystem partners as part of this announcement. Our first Idaho fab, ID1, achieved another key construction milestone in June. We expect first DRAM wafer output at ID1 to begin in the second half of calendar 2027 with customer qualifications to follow. The second Idaho fab, ID2, will benefit from manufacturing economies of scale with ID1 and adds to R&D co-location benefits with greater efficiencies and faster time to market. To meet anticipated demand, ID2 will begin production before the first New York fab. We expect to begin ground preparation in New York later this year following the completion of state and federal environmental reviews. Turning to our end markets. In the data center, we expect the CY25 server market to grow mid-single digits percentage in units, largely driven by significant growth in AI servers. In fiscal Q3, data center DRAM revenue reached a new record for the fourth consecutive quarter, driven by strong growth and share gains in HBM and robust performance by our industry-leading portfolio of high-capacity DIMMs and low-power server DRAM products. We are executing well on our HBM ramp and product development roadmap. Our yield and volume ramp on HBM3E 12-high is progressing extremely well, and we expect shipment crossover in FQ4. We expect to reach HBM shares similar to our overall DRAM share sometime in the second half of calendar 2025. At AMD's Advancing AI event earlier this month, we announced that Micron's HBM3E 36-gigabyte 12-high has been designed into AMD's Instinct MI355X GPU platform. We are now shipping HBM in high volume to four customers, spanning both GPU and ASIC platforms. As generative AI workloads grow in size and complexity, the performance demands on HBM continue to rise. Micron's HBM4 leverages our well-established 1-beta DRAM technology along with an internally developed and manufactured advanced CMOS logic base die to deliver bandwidth exceeding 2 terabytes per second per memory stack, over 60% higher performance than the previous generation. Additionally, Micron's HBM4 offers a 20% lower power consumption compared to the already industry-leading power performance on our HBM3E 12-high product, setting new benchmarks in power efficiency for this product category. The expanded interface for HBM4 facilitates rapid communication and a high throughput design that accelerates the inference performance of large language models and chain-of-thought reasoning systems. Micron has delivered samples of HBM4 to multiple customers and expects to ramp volume production in calendar 2026, aligned with our customers' plans. We are exceptionally well positioned for the ramp of HBM4. Building on the success of our HBM3E ramp, we have high-quality, field-proven technology and have executed a robust and significant ramp in our HBM manufacturing capacity. We have deep relationships with practically every major customer of HBM and have earned their trust with our execution, delivering the world's lowest power, highest performance HBM. Our portfolio of high-capacity DIMMs and low-power server DRAM solutions delivered another record revenue quarter. Micron has pioneered the adoption of LPDRAM for servers, and we continue to maintain our sole-source position for LP in server. Together, our high-capacity DIMM and LP server products have already generated multiple billions of dollars in revenue in fiscal 2025, reflecting a remarkable fivefold growth compared to the same period in the previous year. During calendar Q1, for the third consecutive quarter, Micron achieved a record for data center SSD market share driven by our portfolio of differentiated products enabled through vertical integration. In fiscal Q3, our data center 9550 performance SSD, which is on the NVIDIA GB200 NVL72 recommended vendor list, completed additional customer qualifications at multiple OEMs. Micron's 9550 SSDs provide an industry-leading performance and energy-efficient Gen5 data center storage solution for AI server systems. We continue to qualify additional customers and ramp revenue for our 6550 ION 60-terabyte capacity SSDs. Turning to PC. We expect PC market units to grow in the low single-digit percentage range in calendar 2025. In the quarters ahead, key catalysts for growth include the increasing adoption of AI-enabled PCs and the Windows 11 upgrade cycle. Micron is focused on bringing differentiated high-performance products to the PC market. Our strong SSD portfolio resulted in Micron achieving a record-high client SSD market share in calendar Q1. Tomorrow, we will be announcing our new G9 QLC 2-terabyte based SSD featuring our proprietary Adaptive Write Technology, which enables four times faster write performance. This technology expands the addressable market for QLC SSDs by delivering performance equivalent to TLC NAND for most consumer use cases. Turning to mobile. We expect smartphone units to grow low single digits in calendar 2025. AI adoption remains a key driver of DRAM content growth for smartphones, and we expect more smartphone launches featuring 12 gigabytes or more compared to 8 gigabytes of capacity in the average smartphone today. Micron is focused on providing solutions to the high-end smartphone segments, leveraging our leading 1-beta and 1-gamma technology nodes for LP5X DRAM and G8 and G9 technology nodes for our UFS 4 NAND products. During the quarter, we began shipping qualification samples of the industry's first LP5X memory built on the 1-gamma node, offering a wide range of capacities and industry-leading speed grades for 2026 flagship smartphones. Micron's 1-gamma LP5X DRAM is engineered to accelerate AI applications in high-end devices, delivering over 25% faster recommendations across several use cases while reducing power consumption by 20%, all in an ultra-thin form factor ideal for mobile. In NAND, we secured a key customer design win and ramped high-volume production of our G9-based UFS 4 products. The strength of our mobile portfolio was further recognized through top quality awards from seven smartphone OEMs during the quarter. Turning to automotive, industrial, and consumer embedded markets. We expect increasing adoption of L2 and L3 ADAS features, and AI-enabled in-vehicle infotainment systems to drive memory and storage content growth as well as higher bandwidth requirements. Micron is positioned for long-term success in the automotive market with new product introductions such as the industry's first 1-beta dual-channel LP5 DRAM with high-speed 9.6 gigabits per second support, which achieved production readiness during the quarter. In industrial, we are seeing a resumption in our growth as customers increase their investments for the adoption of AI, including in key areas like factory automation. Micron is driving price improvements with a market backdrop of constrained D4 and LP4 supply and low distributor channel inventory. Now turning to our market outlook. Customer inventory levels have been healthy overall across end markets, and there may have been some tariff-related pull-ins by certain customers. Our customers continue to signal a constructive demand environment for the remainder of this calendar year, and we remain agile to adjust to any unforeseen demand changes that may occur due to macro conditions or the evolving tariff-related situation. We expect CY '25 industry DRAM bit demand growth to be in the high teens percentage range and industry NAND bit demand growth to be in the low double-digit percentage range. We expect Micron's bit supply growth to be below industry bit demand growth for non-HBM DRAM and NAND. Over the medium term, we anticipate industry bit demand growth of mid-teens CAGR for both DRAM and NAND. As previously communicated, our efficient node conversions will result in 10% structurally lower NAND wafer capacity ending fiscal 2025 versus the end of fiscal 2024 levels. Additionally, given NAND technology transitions provide a significant increase in overall bit output, Micron plans to manage our node conversions at a measured pace, consistent with our demand. Recent press reports have discussed the end of life of D4 and LP4 products. Micron's leading-edge DRAM nodes such as 1-beta and 1-gamma are focused on the latest-generation products such as D5, LP5, and HBM and are not utilized to produce D4 and LP4. D4 and LP4 products are largely produced in our 1-alpha DRAM node. Micron has sent EOL notices for these products to customers in high-volume segments like mobile, client, data center, and consumer several months ago with final shipments occurring in 2 to 3 quarters from now. This EOL process is similar to prior transitions from one generation of memory to another, and consistent with history, Micron intends to support its longevity customers with long-term and relatively lower-volume requirements in segments like automotive, industrial, defense, and networking with supply of these 1-alpha DRAM products for several years. In the near term, customers in the high-volume segments are starting to see increasing shortages of D4 products. We are now on allocation for these products and are working with customers to try and support their high-priority near-term demand. D4 revenues are low single-digit percentage of our revenues in the second half of fiscal 2025. We anticipate LP4 shortages may also increase as a result of EOL. In closing, Micron's record Q3 revenue performance and strong Q4 outlook are the results of our strategic focus and consistent execution. As AI drives unprecedented demand for high-performance memory and storage, Micron is exceptionally well positioned to capitalize on this transformative era. Our leadership in technology, highlighted by progress in HBM, 1-gamma DRAM, and G9 NAND, alongside disciplined global manufacturing investments, supports our path to sustained growth. We are confident that our strategic direction, innovation capabilities, and the execution by our exceptional team will continue to create meaningful value for our shareholders, customers, and employees. We are on track to deliver record revenue with solid profitability and free cash flow in fiscal year 2025, while we invest to build on our leadership to address growing AI-driven memory demand. I will now turn it over to Mark for our financial results and outlook.

Thank you, Sanjay, and good afternoon, everyone. Micron delivered strong results in fiscal Q3 with revenue, gross margin, and EPS all above the high end of the guidance ranges provided in our last earnings call. Total fiscal Q3 revenue was $9.3 billion, up 15% sequentially and up 37% year-over-year and a quarterly revenue record for Micron. Higher sequential revenue was driven by growth across our end markets, including record data center revenues and strong sequential growth in consumer-oriented markets. Fiscal Q3 DRAM revenue was $7.1 billion, up 51% year-over-year and represented 76% of total revenue. Sequentially, DRAM revenue increased 15% with bit shipments increasing over 20% and prices decreasing in the low single-digit percentage range, primarily due to a higher consumer-oriented revenue mix. Fiscal Q3 NAND revenue was $2.2 billion, up 4% year-over-year and represented 23% of Micron's total revenue. Sequentially, NAND revenue increased 16% with bit shipments increasing in the mid-20s percentage range and prices decreasing in the high single-digit percentage range. Now turning to revenue by business unit. Compute and Networking Business Unit revenue was $5.1 billion, up 11% sequentially and a quarterly record. This performance was driven by a nearly 50% sequential increase in HBM along with growth in our high-capacity DRAM and low-power server DRAM. Revenue for the Storage Business Unit was $1.5 billion, up 4% sequentially. This growth was primarily driven by an increase in consumer-oriented revenue. Mobile Business Unit revenue was $1.6 billion, up 45% sequentially. Sequential revenue growth was due to reduced customer inventories and strong demand from DRAM content growth. Embedded Business Unit revenue was $1.2 billion, up 20% sequentially, supported by growth in industrial and consumer embedded markets. The consolidated gross margin for fiscal Q3 was 39%, up 110 basis points sequentially and up 250 basis points versus the midpoint of our guidance. Gross margins were above the high end of our guidance range, primarily due to better prices for both DRAM and NAND, partially offset by a higher consumer-oriented mix. Operating expenses in fiscal Q3 were $1.1 billion, up $87 million quarter-over-quarter and in line with our guidance range. The increase was primarily driven by higher R&D investments and labor-related costs. We generated operating income of $2.5 billion in fiscal Q3, resulting in an operating margin of 26.8%, up approximately 190 basis points sequentially and up 13 percentage points year-over-year. Fiscal Q3 taxes were $306 million on an effective tax rate of 12.3%, lower than our guidance due to the effects of one-time discrete items in the quarter. Non-GAAP diluted earnings per share in fiscal Q3 was $1.91, above the high end of the guidance range with 22% sequential growth and up over 200% versus the year-ago quarter. Turning to cash flows and capital spending. In fiscal Q3, our operating cash flows were over $4.6 billion, and our capital expenditures were $2.7 billion. Free cash flows in the quarter were over $1.9 billion, the highest quarterly amount in over 6 years. Ending inventory for fiscal Q3 was $8.7 billion or 139 days. Inventory was down $280 million sequentially, and inventory days were down 19 days sequentially, driven by strong sequential bit shipment growth in both DRAM and NAND. On the balance sheet, we held a record $12.2 billion of cash and investments at quarter-end and maintained $15.7 billion of liquidity when including our untapped credit facility. During fiscal Q3, we refinanced our $900 million 2027 notes with $1.7 billion in new notes maturing in fiscal years 2033 and 2036. We closed the quarter with $15.5 billion of debt, maintaining low net leverage and a weighted average debt maturity of 2032. Now turning to our outlook for the fourth fiscal quarter. We expect our revenue growth to be weighted towards DRAM, supported by robust pricing execution, favorable product mix, and continued cost improvements, all of which benefit gross margins. Operating expenses for fiscal Q4 are projected to be approximately $1.2 billion with the sequential increase primarily driven by planned R&D investments in future technology nodes and HBM product development. Our fiscal 2025 capital spending plans remain unchanged at approximately $14 billion. The overwhelming majority of the fiscal 2025 CapEx is to support HBM as well as facility, construction, back-end manufacturing, and R&D investments. We expect a fiscal Q4 tax rate of around 13%. As previously disclosed, our fiscal 2026 tax rate is expected to be in the high teens percentage range following Singapore's adoption of the global minimum tax. Any impacts that occur due to potential new tariffs are not included in our guidance. With all these factors in mind, our non-GAAP guidance for fiscal Q4 is as follows. We expect revenue to be $10.7 billion, plus or minus $300 million; gross margin to be in the range of 42%, plus or minus 100 basis points; and operating expenses to be approximately $1.2 billion, plus or minus $20 million. We expect our fiscal Q4 tax rate to be around 13%. Based on a share count of approximately 1.15 billion shares, we expect EPS to be $2.50 per share, plus or minus $0.15. With another quarter of shipment growth forecasted in fiscal Q4, we expect to exit fiscal 2025 with tight DRAM inventories, significantly reduced NAND inventories, and overall company DIO near our target levels. With low inventories on hand and a constructive demand environment, we will continue to focus on improving pricing and further strengthening our product mix. In fiscal Q3, Micron delivered earnings above the guidance range, achieved record revenue, and continued ramping our industry-leading HBM. We also began transitioning to a new market segment-focused business unit structure. Starting in fiscal Q4, we will report revenue, gross margin, and operating margin metrics across these new business units. With strong execution and a differentiated product portfolio, Micron is well positioned to maintain our leadership and to deliver record revenue and significantly improved profitability once again in fiscal Q4. Thank you for joining us today. We will now open it up for questions.

And our first question comes from Timothy Arcuri from UBS.

Sanjay, I wanted to ask how you view the HBM total addressable market scaling alongside the accelerator total addressable market. Over the past three months, it has become clear that the accelerator market is expanding significantly. Based on their projections and your HBM projections, it appears that the HBM market will constitute around 15% to 20% of the overall accelerator market. How do you perceive the HBM total addressable market developing in relation to that? Additionally, is there a certain limit or threshold we might reach concerning HBM's attachment to these GPUs and custom ASICs?

Regarding HBM growth, we anticipate continuing demand in the future. For calendar year 2025, HBM revenue is projected to rise from approximately $18 billion last year to around $35 billion. By 2026, HBM bit demand growth is expected to significantly outpace overall DRAM industry growth. The switch from 8-high to 12-high HBM and the introduction of HBM4 in 2026, which is a higher-value product, underscores the increasing importance of HBM for rapidly evolving accelerator platforms. Our customers are actively collaborating with us to assess the integration of 12-high and HBM4 in their systems. Looking ahead to 2027, we will see HBM4E come into play, followed by customization in HBM in 2028. The growth trajectory for HBM, regarding its value proposition in accelerators, remains robust. We have started sampling our HBM4 products and are committed to leading in specifications while successfully ramping up our capacity. We remain enthusiastic about HBM as it is clearly a significant growth and value driver for our business.

And our next question comes from the line of Vivek Arya from Bank of America Securities.

I wanted to talk about gross margins. So first, what is driving the upside sequentially? And then is this the new baseline for gross margins? And then what would be kind of the puts and takes as we look at the next few quarters beyond Q4?

Yes, in the third quarter, we experienced strong sequential volume growth. However, compared to our guidance, the key factor was that prices were lower than expected, but we did have better-than-expected pricing that improved our margins. Additionally, our cost performance was solid. Looking ahead to the fourth quarter, we had a revised outlook based on improving inventory conditions. While there were challenges with the Liberation Day tariffs, the market has strengthened since then. Our execution has been effective, contributing to our improved performance. As we compare the third and fourth quarters, we anticipate a favorable mix with more DRAM growth than NAND, and a shift toward a stronger data center focus rather than consumer-oriented mix, which affected margins in the third quarter. Overall, we remain optimistic about the market, continue to prioritize pricing, and expect favorable mix effects to help drive margins up to the current guide of 42%.

And anything beyond this mark? Any puts and takes as we look at the next several quarters? Is this kind of the new baseline? Or is it going to be entirely dependent on the direction of pricing?

Yes. We're not going to provide Q1 guidance. We are positive on the trajectory of the business. The market environment does remain constructive, particularly in DRAM versus NAND. Again, we're focused on pricing and making sure to put our bets in the right places. As we said in the prepared remarks, our inventories are very tight, particularly on leading edge and then now even pockets of some of the legacy and DRAM. So we're going to have some bit constraints going into the first quarter, but we're going to mix to DRAM, higher-value DRAM and higher-value NAND products. And so we think gross margins can be up.

And our next question comes from the line of CJ Muse from Cantor Fitzgerald.

I was hoping to revisit your comments on HBM. So you're talking 23%, 24% market share. And it sounds like you're now calling not exiting the year but sometime in the second half. So that's coming in better. And so I guess first question is, should we be thinking that, that number is kind of a 22%, 23% depending, I guess, on seasonality of the $35 billion number? And then perhaps more importantly, as you think about HBM growth in calendar '26, how should we be thinking about the contributions to that growth, both from bits as well as higher ASPs as you go to next-generation products?

C.J., I didn't quite understand the question around 22%, 23%. What exactly did you say there?

Just trying to understand how you talked about getting to your DRAM market share, which I think you said 23%, 24% for the HBM market. And your previous comments were exiting the year. Now you're saying sometime in the second half. So trying to get an idea of kind of what that revenue number looks like.

We are already seeing a run rate of more than $6 billion based on our FQ3 performance with our HBM, and we are continuing to increase our HBM output, including shifting production to 12-high HBM. It may be possible that we achieve our HBM share aligned with our DRAM share sooner than previously anticipated, potentially by the end of the calendar year. This is really dependent on our strong execution and improved output and yield. Our 12-high yield ramp is progressing faster than our 8-high yield ramp, which is a result of all the insights we've gained. The team has excelled in ramping up capacity as well, contributing to our strong performance in HBM. We are very satisfied with our current position and execution, our ability to successfully increase yield and capacity, and the trust we are building with our customers. We are also excited about the future roadmap for HBM. These factors will be crucial as we collaborate with customers to understand their overall mix requirements for 2026.

And our next question comes from the line of Thomas O'Malley from Barclays.

Two here. So my first on the HBM side, you're obviously reaching your share target a little bit earlier. Going into next year, are you guys ready to talk about what you think that your normalized share will be? Obviously, there's difficulties with some of your competitors getting qualified. If that continues into next year, do you guys have a view of if you're able to increase capacity, and if you are, what that share may look like? And then two, on the NAND side, where does utilization stand today? And obviously, you're going through some of the transitions right now internally, which has allowed you to kind of keep some things offline. But as you move into next year, what is your plan for utilization? Is that going to be market dependent? Or at some point, do you need to start bringing on utilization just from the fact that there's a gross margin headwind?

So as I said, we are very pleased that we are executing well and with what we told you several quarters ago in terms of our share objectives with HBM that we are going to be able to achieve that goal for this year in the second half of '26. Now our HBM is really at scale. It has a healthy share and we are successfully delivering. So going forward, of course, this becomes like part of our overall product portfolio and just like we manage the rest of the portfolio with respect to total ROI and profitability objectives. And of course, HBM really positions us very well with respect to our profitability objectives. We will, of course, continue to manage the mix of our products in the portfolio, including that of HBM, including the share that sometimes can move around in different parts of the end market segments that we address. So I think that's how you have to look at it. Overall, really very pleased with our HBM products, 12-high as well as HBM4 built with our well-proven 1-beta technology, which also gives us cost-effective benefits. And of course, the packaging technology, well established. And company, of course, has been investing in expanding our HBM back-end capacity as well. We have talked about investments in Singapore, bringing assembly and packaging capacity there in line, starting production, targeting that for 2027 timeframe. And I'll tell you that HBM, given that it uses our well-proven 1-beta technology, is really fungible capacity with the rest of the portfolio as well. So this gives us plenty of flexibility in terms of managing our business and extremely focused on really meeting customers' requirements and continuing to deliver and enhance our product capabilities to meet their growing requirements. And your second question around NAND in terms of utilizations, so we have said before that toward the end of fiscal '25, our NAND overall capacity would be down versus end of fiscal '24 by about 10%. And that's a structural reduction in capacity. And of course, as we have discussed before, that structural reduction was implemented to achieve capital-efficient next node transition for us like G9 node transition. So as that capacity has come down, of course, our underutilization has come down as well, although part of NAND continues to remain underutilized. I must note here that, of course, the leading edge of NAND is fully utilized.

And our next question comes from the line of Harlan Sur from JPMorgan.

If I rewind back 1 year ago during your June earnings call, you guys did say back then that you were sold out on your HBM supply through calendar '25 and that majority of that committed supply was locked in from a pricing perspective. One year later, where are you on your negotiations for your calendar '26 HBM supply and pricing discussions? Is the team's supply outlook for next year fully committed, too? Or maybe a better way to frame it, right, because I know that the HBM3E and HBM4 12-high qualification cycles might be taken a bit longer, but maybe the other way to frame it is, if you look at your customers' calendar '26 forecasted demand for HBM, is it exceeding your forecasted supply capability?

With respect to HBM in 2025, yes, very pleased that what we told you back a year ago, we are continuing to deliver on that, as I said earlier. And yes, our HBM is sold out for 2025. And as I mentioned earlier, we are working closely with our customers as their platforms, AI accelerated platforms, both with GPUs as well as with ASICs, are continuing to evolve and move fast. And they themselves are working on overall their supply chain requirements and product mix with respect to HBM3E 12-high as well as HBM4. So we continue to work with the customers in those, and we are still in the middle of '25 and for 2026. As I said earlier, we see, with respect to bit demand growth, strong trend in 2026, bit demand growth for HBM significantly exceeding DRAM demand growth. And of course, we have a strong product roadmap. And we are working on continuing. As we said, we sampled HBM4, focused on getting these products qualified with the customers. And HBM3E 12-high is already in volume production and doing very well with our yield ramp there as well. So very much focused on addressing the '26 needs for the customers and executing well and remaining extremely focused on our execution for 2026.

And our next question comes from the line of Joseph Moore from Morgan Stanley.

I wonder if you could talk in terms of your long-term CapEx plans and the sort of 35% of revenue levels. Is that kind of a reasonable guideline to think about for fiscal '26? Or are you thinking because of the opportunity here you need to invest ahead of that?

Yes, we have a significant tech transition opportunity ahead of us that Micron is exceptionally well positioned to take advantage of. We've discussed our inventory levels for a while now, working towards leaner figures, especially at the leading edge. With the silicon requirements of HBM and the trade ratio, we need to establish new capacity, which is already in progress. Our CapEx forecast for the quarter came in at $2.7 billion, slightly lower than expected, but we anticipate an increase in CapEx in the fourth quarter, sticking with our approximately $14 billion estimate. As we move forward, we will continue to expand our greenfield capacity, install equipment on new nodes, and engage in grants and construction. The timing of this spending may vary, but we expect to generate free cash flow in the fourth quarter and will keep building our capacity. Additionally, we are making progress in further improving our balance sheet; our net debt has decreased to $3 billion. We have reduced short-term maturities by retiring the $900 million '27 notes and issuing $1.75 billion further out. This puts us in a strong position with a flexible balance sheet to invest in our business, maintain technology leadership, and return capital to shareholders through dividends and opportunistic buybacks.

And our next question comes from the line of Krish Sankar from TD Cowen.

I have a two-part question for Sanjay. First, regarding HBM4, with the increased I/O count through silicon via, what trade ratio should we expect for HBM4? Second, is there a difference in HBM bits and margin profile when selling to GPU customers compared to ASIC customers?

Regarding HBM4, its trade ratio exceeds 3. For HBM3E, we previously stated that the trade ratio is around 3, and HBM4 has an even higher trade ratio. It features a larger die size and offers enhanced performance, as we mentioned, with a performance increase of 60% thanks to its high-bandwidth interface. HBM4E is expected to have an even greater ratio. As we've discussed previously, transitioning from HBM3E to HBM4 to HBM4E shows the trade ratio increasing from about 3 to nearly 4 during that timeframe. This rise in the HBM trade ratio and the overall growth of HBM is putting pressure on the non-HBM supply in the industry. Regarding your question about the margin differences between GPU and ASIC, HBM indeed commands a high value in both GPU accelerators and ASIC-based accelerators, and that value is on the rise. Looking ahead, the content in future generation GPUs and ASIC platforms that utilize HBM is expected to keep increasing. We've mentioned before the jump from about 200 to 288 gigabytes in current GPU accelerators and ASIC-based accelerators, which is projected to rise as we move from 8-high to 12-high capacity. Therefore, the value proposition remains strong for both GPU and ASIC accelerators, and we typically refrain from getting into the specifics that differentiate the two.

And our next question comes from the line of Chris Caso from Wolfe Research.

I would like to clarify something from your prepared remarks. You mentioned that some customers might have pulled in orders due to tariffs. My interpretation is that you believe customer inventory levels are being somewhat reduced. Can you elaborate on this and explain what it means for customer inventory levels and how it impacts your outlook on bit demand for the second half?

Yes. As we said, customer inventory levels have been healthy overall across our end markets. Some customers may have some level of tariff-related pull-ins. We think the impact of that is relatively modest here, and customers definitely continue to signal a constructive demand environment for the remainder of the calendar year. And of course, the demand trends are driven by strength in AI-driven data center demand, demand coming back in the automotive, industrial, resumption of growth there as well as distribution channels. And as we have discussed, smartphones and PCs, really, as AI penetration increases, the content increase story is there intact for AI smartphones as well as PC. We provided some details in our script there. So we see a constructive demand environment as our customers discuss with us. And again, the effect of the pull-in is relatively modest here. Our growth in Q3 as well as our exceptional record for FQ4 guidance is really driven by Micron's strong execution in the growing market for AI.

And our final question for today comes from the line of Vijay Rakesh from Mizuho.

Just a quick question on the HBM4. Just wondering how the qualification is progressing and if you continue to see that similar power performance leadership that you guys have had on HBM3E. Do you see that continuing on the HBM4 side as well?

We have provided early units to our customers and sampled the HBM4 products to multiple clients. We are very pleased with the execution and all the specifications that our HBM is delivering. In addition to performance, we will continue to focus on maintaining a strong power position, which is critical for AI applications, as established with our HBM portfolio. Customer qualifications are ahead of us, and we will be ready to meet demand in 2026. HBM will ramp in volume as a 2026 product, aligning with the timeline requirements for customers' next-generation platforms that will implement HBM4 products. It's important to note that HBM4 utilizes our proven, cost-effective 1-beta technology node, along with internally developed and manufactured advanced CMOS logic die, which positions us effectively. With our experience from the HBM3E ramp-up, we are transitioning from HBM3E 8-high to HBM3E 12-high, and that ramp is progressing very well, with yields and output exceeding our plans, and ramping faster than what we experienced with the 8-high. All this gives us confidence and positions us well for the HBM4 ramp. We are very optimistic about our capabilities to address the HBM4 markets in 2026.

Got it. And on the SSD side, just quickly, with your focus on AI servers, are you seeing an accelerated pull-through on the AI server side for SSDs as well?

We previously noted that in the data center sector, there was some inventory digestion for SSDs in late Q4 of 2024 and early 2025, following a period of strong demand growth for SSDs. Looking ahead, we anticipate that the second half of 2025 will perform better than the first half of 2025, which was affected by this inventory digestion. Our data center SSDs are well-positioned with the recently announced accelerator platforms, contributing to future growth in this area. We are pleased with our record market share in data center SSDs as reported by third-party sources, and we have secured the number two position in market share at the end of Q1. Our strategy will focus on optimizing our SSD portfolio and shifting the product mix toward more valuable segments of the NAND market.

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.