Micron Technology (MU) 10-K risk factor changes: FY2018 vs FY2017

We have experienced significant volatility in our average selling prices, including dramatic declines, as noted in the table [removed: below] [added: below,] and may continue to experience such volatility in the future.

Our gross margins are dependent [added: in part] upon continuing decreases in per gigabit manufacturing costs achieved through improvements in our manufacturing processes and product designs, including, but not limited to, process line-width, additional 3D memory layers, additional bits per cell (i.e., cell levels), architecture, number of mask layers, number of fabrication steps, and yield.

We face intense competition in the semiconductor memory and storage markets from a number of companies, including Intel; Samsung Electronics Co., Ltd.; SK Hynix Inc.; Toshiba [added: Memory] Corporation; and Western Digital Corporation.

In addition, some [removed: governments, such as China,] [added: governments] have provided, and may continue to provide, significant [added: assistance,] financial [removed: assistance] [added: or otherwise,] to some of our competitors or to new [removed: entrants.][added: entrants and may intervene in support of national industries and/or competitors.]

[removed: We and some] of our competitors have plans to ramp, or are constructing or ramping, production at new fabrication facilities.

If competitors are more successful at developing or implementing new product or process [removed: technology] [added: technology,] their products could have [added: cost or performance advantages.]

In addition, [added: as of August 30, 2018,] the conversion value in excess of principal of our convertible [removed: notes, as of August 31, 2017] [added: notes] was [removed: $1.91] [added: $1.85] billion, based on the trading price of our common stock of [removed: $31.97 as of August 31, 2017.][added: $52.76 per share on such date.]

[removed: Events] [added: Additionally, events] and circumstances may occur which would cause us to not be able to satisfy applicable draw-down conditions and utilize [removed: this] [added: our] revolving credit facility.

We estimate that net cash expenditures in [removed: 2018] [added: 2019] for property, plant, and equipment will be approximately [removed: $7.5] [added: $10.5] billion plus or minus [removed: 5 percent,] [added: 5%,] which reflects the offset of amounts we expect to be funded by our partners.

Investments in capital expenditures, [removed: offset by] [added: net of] amounts funded by our partners, were [removed: $5.13] [added: $8.20] billion for [removed: 2017.][added: 2018.]

In addition, pursuant to an order of the [removed: Japan] [added: Tokyo District] Court, MMJ cannot make loans or advances, other than certain ordinary course advances, to us without the consent of the [removed: Japan] [added: Tokyo District] Court and may, under certain circumstances, be subject to approval of the legal trustee.

Furthermore, certain uses of the assets of MMJ, including certain capital expenditures of [removed: MMJ and MMT or further investments in MMT,] [added: MMJ,] may require consent of MMJ's trustees and/or the [removed: Japan] [added: Tokyo District] Court.

These barriers include potential limitations on stacking additional 3D memory layers, [removed: additional] [added: increasing] bits per cell (i.e., cell levels), [removed: the ability to shrink products in order to reduce costs, meet] [added: meeting] higher density requirements, and [removed: improve] [added: improving] power consumption and reliability.

Our competitors are working to develop new memory and storage technologies that may offer performance [removed: and] [added: and/or] cost advantages to existing technologies and render existing technologies obsolete.

We develop and produce [added: advanced memory technologies, including] 3D XPoint memory, [removed: which is] a new class of non-volatile technology.

There is no assurance that our efforts to develop and market [removed: this] new product [removed: technology] [added: technologies] will be successful.

[removed: Our unsuccessful] [added: Unsuccessful] efforts to develop new semiconductor memory and storage technologies could have a material adverse effect on our business, results of operations, or financial condition.

New product [added: and market] development may be unsuccessful.

We have made significant investments in product and process technology and anticipate expending significant resources for new semiconductor product [added: and system-level solution] development over the next several years.

[removed: -] [added: | • |] that our product development efforts will be successful; [added: |]

[removed: -] [added: | • |] that we will be able to cost-effectively manufacture new products; [added: |]

[removed: -] [added: | • |] that we will be able to successfully market these products; [added: |]

[removed: -] [added: | • |] that we will be able to [removed: qualify] [added: introduce] new products [added: into the market and qualify them] with our customers on a timely basis; or [added: |]

We have entered into strategic relationships, including our [added: joint development partnership and our] IMFT joint venture with Intel, to [removed: manufacture products and] develop new manufacturing process technologies and [added: products and to manufacture certain] products.

These joint ventures and strategic relationships are subject to various risks that could adversely affect the value of our investments and our results of [removed: operations.][added: operations, including the following:]

[removed: | • | we may experience] [added: -] difficulties in transferring technology to joint ventures; [removed: |]

[removed: | • | we may experience] [added: -] difficulties and delays in ramping production at joint ventures; [removed: |]

[removed: | • | our] [added: - limited] control over the operations of our joint [removed: ventures is limited; |][added: ventures;]

| • | [added: differences in participation on funding capital investments in our joint ventures] due to differing business models or long-term business [removed: goals, we and our partners may not participate to the same extent on funding capital investments in our joint ventures;] [added: goals;] |

[removed: | • |] [added: - inadequate] cash flows [removed: may be inadequate] to fund increased capital requirements of our joint ventures; [removed: |]

[removed: | • | we may experience] [added: -] difficulties or delays in collecting amounts due to us from our joint ventures and partners; [removed: |]

[removed: | • |] [added: -] changes in tax, legal, or regulatory requirements [removed: may] [added: that] necessitate changes in the agreements with our partners. [removed: |]

A significant concentration of our net sales [removed: are] [added: is] to a select number of customers.

[removed: In addition, any consolidation of our] customers could reduce the number of customers to whom our products could be sold.

Our development of system-level memory and storage products is dependent, in part, upon successfully identifying and meeting our customers' specifications [removed: of] [added: for] those products.

Our long-term ability to sell system-level memory and storage products is reliant upon our [removed: customer's] [added: customers'] ability to create, market, and sell their products containing our system-level solutions at sufficient volumes and prices in a timely manner.

Manufacturing system-level solutions to customer specifications requires a longer development cycle, as compared to [removed: discreet] [added: discrete] products, to design, test, and qualify, which may increase our costs.

Additionally, we may [added: need to] update our firmware or develop new firmware as a result of new product introductions or changes in customer specifications and/or industry standards, which increases our costs.

We maintain a system of controls over our intellectual property, including U.S. and foreign patents, trademarks, copyrights, trade [removed: secret laws,] [added: secrets,] licensing arrangements, confidentiality procedures, non-disclosure agreements with employees, consultants, and vendors, and a general system of internal controls.

Despite our system of controls over our intellectual property, it may be possible for our current or future competitors to obtain, copy, use, or disclose, illegally or otherwise, our product and process [removed: technology.][added: technology or other proprietary information.]

| 2018 from 2017 | | 37 | % | | (11 | )% |

In particular, we face the threat of increasing competition as a result of significant investment in the semiconductor industry by the Chinese government and various state-owned or affiliated entities that is intended to advance China's stated national policy objectives.

In addition, the Chinese government may restrict us from participating in the China market or may prevent us from competing effectively with Chinese companies.

We and some

We may face technological barriers to continue to shrink our products at our current or historical rate, which has generally reduced per-unit cost.

We have invested and expect to continue to invest in R&D for new and existing products, which involves significant risk and uncertainties.

We may be unable to recover our investment in R&D or otherwise realize the economic benefits of reducing die size or increasing memory and storage densities.

Additionally, we are increasingly differentiating our products and solutions to meet the specific demands of our customers, which increases our reliance on our customer's ability to accurately forecast the end-customer's needs and preferences.

As a result, our product demand forecasts may be impacted significantly by the strategic actions of our customers.

In order to continue our success, we must develop, manufacture, and qualify the products our customers need at the time they need those products.

In addition, some of our components have long lead-times, requiring us to place orders several months in advance of anticipated demand.

Such long lead-times increase the risk of excess inventory or loss of sales in the event our forecasts vary substantially from actual demand.

| • | that we will be able to establish or maintain key relationships with customers with specific chip set or design requirements; |

- diverging interests between us and our partners and disagreements on the following:

| ◦ | ongoing or future development, manufacturing, or operational activities; |

| ◦ | the amount, timing, or nature of further investments; and |

| ◦ | commercial terms in our joint ventures or strategic relationships; |

- competition from our partners;

- access by our partners to our proprietary product and process technology which they may use;

- inability of our partners to meet their commitments to us or our joint ventures;

- disputes with partners regarding the terms of arrangements or that terms of such arrangements are unfavorable; and

In addition, any consolidation of our

As of August 30, 2018, we had debt with a carrying value of $4.64 billion and may borrow up to an additional $2.00 billion under an undrawn revolving credit facility.

Any of these types of claims, regardless of the merits, could subject us to significant costs to defend or resolve such claims and may consume a substantial portion of management's time and attention.

As a result of these claims, we may be required to:

| • | pay significant monetary damages, fines, royalties, or penalties; |

| • | enter into license or settlement agreements covering such intellectual property rights; |

| • | make material changes to or redesign our products and/or manufacturing processes; and/or |

| • | cease manufacturing, having made, selling, offering for sale, importing, marketing, or using products and/or manufacturing processes in certain jurisdictions. |

We may not be able to take any of the actions described above on commercially reasonable terms and any of the foregoing results could have a material adverse effect on our business, results of operations, or financial condition.

We have been served with complaints in Chinese courts alleging patent infringement.

We have been served with complaints in Chinese courts alleging that we infringe certain Chinese patents by manufacturing and selling certain products in China.

The complaints seek orders requiring us to destroy inventory of the accused products and equipment for manufacturing the accused products in China, to stop manufacturing, using, selling, and offering for sale the accused products in China, and to pay damages plus court fees.

We are unable to predict the outcome of these assertions of infringement made against us and therefore cannot estimate the range of possible loss.

(See "Part II – Item 8.

Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Contingencies.")

From time to time we are subject to various legal proceedings and claims that arise out of the ordinary conduct of our business or otherwise, both domestically and internationally.

Any claim, with or without merit, could result in significant legal fees that could negatively impact our financial results, disrupt our operations, and require significant attention from our management.

We could be subject to litigation or arbitration disputes arising from our relationships with vendors or customers, supply agreements, or contractual obligations with our subcontractors or business partners.

We may also be associated with and subject to litigation arising from the actions of our subcontractors or business partners.

| 2013 from 2012 | | (11 | )% | | (18 | )% |

cost or performance advantages.

In recent periods, our debt levels have increased due to the capital intensive nature of our business, business acquisitions, and the restructuring of our capital structure.

As of August 31, 2017, we had debt with a carrying value of $11.13 billion.

In 2017, 2016, and 2015 we paid $1.63 billion, $94 million, and $1.43 billion, respectively, to repurchase and settle notes with principal amounts of $1.55 billion, $57 million, and $489 million, respectively.

As of August 31, 2017, we had a revolving credit facility that provided for additional borrowings of up to $750 million based on eligible receivables.

| • | result in all obligations owing under the 2021 MSTW Term Loan being accelerated to be immediately due and payable if MSTW fails to comply with certain covenants, including financial covenants; |

| • | increase the interest rate under the 2021 MSTW Term Loan if we or MSTW fails to maintain certain financial covenants; |

As of August 31, 2017, we had cash and marketable investments of $6.05 billion.

As of August 31,

2017, $1.29 billion of cash and marketable investments, including substantially all of the cash held by the MMJ Group, MSTW, and MTTW, was held by foreign subsidiaries whose earnings were considered to be indefinitely reinvested and repatriation of these funds to the United States would subject these funds to U.S. federal income taxes.

In addition, cash of $87 million held by IMFT was generally not available to finance our other operations.

The 2021 MSTW Term Loan contains covenants that limit or restrict MSTW's ability to create liens in or dispose of collateral securing obligations under the 2021 MSTW Term Loan, mergers involving MSTW and/or MTTW, loans or guarantees to third parties by MTTW and/or MSTW, and MSTW's and/or MTTW's distribution of cash dividends.

As a result, the assets of MSTW and/or MTTW are not available for use by us in our other operations.

To meet these requirements, we expect that new memory technologies will be developed by the semiconductor memory and storage industry.

These risks include the following:

| • | our interests could diverge from our partners' interests or we may not be able to agree with our partners on ongoing manufacturing and operational activities, or on the amount, timing, or nature of further investments in our joint ventures; |

| • | our joint venture partners' products may compete with our products; |

| • | due to financial constraints, our joint venture partners may be unable to meet their commitments to us or our joint ventures and may pose credit risks for our transactions with them; |

| • | the terms of our partnering arrangements may turn out to be unfavorable; and |

A determination that our products or manufacturing

In separate transactions in 2017, we sold our assembly and test facility located in Akita, Japan and our 40% ownership interest in Tera Probe; assets associated with our 200mm fabrication facility in Singapore; and assets related to our Lexar brand.

In 2016, we initiated a restructure plan in response to business conditions and the need to accelerate focus on our key priorities.

The plan included the elimination of certain projects and programs, the permanent closure of a number of open headcount requisitions, workforce reductions in certain areas of our business, and other non-headcount related spending reductions.

As a result of these and other actions, we incurred charges of $18 million, $67 million, and $3 million in 2017, 2016, and 2015, respectively.

We recorded net losses from changes in currency exchange rates of $74 million for 2017, $24 million for 2016, and $27 million for 2015.

Based on our foreign currency balances of monetary assets and liabilities, as of August 31, 2017, we estimate that a 10% adverse change in exchange rates versus the U.S. dollar would result in losses of approximately $391 million.

Our operations require raw materials, and in certain cases, third party services, that meet exacting standards.

In some cases, materials, components, or services are provided by a single supplier.

Our U.S. federal and state tax returns remain open to examination for 2013 through 2017.

In addition, tax returns that remain open to examination in Japan range from the years 2011 to 2017 and in Singapore and Taiwan from 2012 to 2017.

We may not utilize all of our net deferred tax assets.

We have substantial deferred tax assets, which include, among others, net operating loss and credit carryforwards.

As of August 31, 2017, our U.S. federal and state net operating loss carryforwards, including uncertain tax benefits, were $3.88 billion and $1.95 billion, respectively, which, if not utilized, will expire at various dates from 2028 through 2037 and 2018 through 2037, respectively.

As of August 31, 2017, our foreign net operating loss carryforwards were $6.30 billion, which will, if not utilized, substantially all expire at various dates from 2019 through 2026.

As of August 31, 2017, we had gross deferred tax assets of $3.78 billion and valuation allowances of $2.32 billion against our deferred tax assets.

If we repatriate earnings from our subsidiaries whose earnings are deemed to be indefinitely reinvested, a portion of our net operating losses would be utilized.

Utilization of all of our net operating loss and credit carryforwards would increase the amount of our annual cash taxes

A change in ownership may limit our ability to utilize our net operating loss carryforwards.

On January 18, 2017, our shareholders approved a Section 382 Rights Agreement (the "Rights Agreement"), under which our shareholders of record as of the close of business on August 1, 2016 received one right for each share of common stock outstanding, which entitles certain shareholders to purchase additional shares of our common stock at a significant discount in the event of certain transactions that may result in an ownership change, as defined by Section 382 of the Internal Revenue Code of 1986, as amended (the "Code").

[removed: Risk Factors."] This discussion should be read in conjunction with the consolidated financial statements and accompanying notes for the year ended August [removed: 31, 2017.][added: 30, 2018.]

Our fiscal [removed: 2017] [added: 2018, 2017,] and 2016 each contain 52 [removed: weeks and fiscal 2015 contained 53] weeks.

[removed: –] Business – Overview."

| For the year ended | | [removed: 2017] [added: 2018] | | | | | | | [removed: 2016] [added: 2017] | | | | | | | [removed: 2015] [added: 2016] | | | | | |

| Net sales | | $ | [removed: 20,322] [added: 30,391] | | | 100 | % | | $ | [removed: 12,399] [added: 20,322] | | | 100 | % | | $ | [removed: 16,192] [added: 12,399] | | | 100 | % |

| Cost of goods sold | | [removed: 11,886] [added: 12,500] | | | | [removed: 58] [added: 41] | % | | [removed: 9,894] [added: 11,886] | | | | [removed: 80] [added: 58] | % | | [removed: 10,977] [added: 9,894] | | | | [removed: 68] [added: 80] | % |

| Gross margin | | [removed: 8,436] [added: 17,891] | | | | [removed: 42] [added: 59] | % | | [removed: 2,505] [added: 8,436] | | | | [removed: 20] [added: 42] | % | | [removed: 5,215] [added: 2,505] | | | | [removed: 32] [added: 20] | % |

| Selling, general, and administrative | | [removed: 743] [added: 813] | | | | [removed: 4] [added: 3] | % | | [removed: 659] [added: 743] | | | | [removed: 5] [added: 4] | % | | [removed: 719] [added: 659] | | | | [removed: 4] [added: 5] | % |

| Research and development | | [removed: 1,824] [added: 2,141] | | | | [removed: 9] [added: 7] | % | | [removed: 1,617] [added: 1,824] | | | | [removed: 13] [added: 9] | % | | [removed: 1,540] [added: 1,617] | | | | [removed: 10] [added: 13] | % |

| Other operating (income) expense, net | | [removed: (17] [added: (57] | | ) | | — | % | | [removed: (6] [added: 1] | | [removed: )] | | — | % | | [removed: (45] [added: 61] | | [removed: )] | | — | % |

| Operating income | | [removed: 5,868] [added: 14,994] | | | | [removed: 29] [added: 49] | % | | [removed: 168] [added: 5,868] | | | | [removed: 1] [added: 29] | % | | [removed: 2,998] [added: 168] | | | | [removed: 19] [added: 1] | % |

| Interest income (expense), net | | [removed: (560] [added: (222] | | ) | | [removed: (3] [added: (1] | )% | | [removed: (395] [added: (560] | | ) | | (3 | )% | | [removed: (336] [added: (395] | | ) | | [removed: (2] [added: (3] | )% |

| Other non-operating income (expense), net | | [removed: (112] [added: (465] | | ) | | [removed: (1] [added: (2] | )% | | [removed: (54] [added: (112] | | ) | | [removed: —] [added: (1] | [removed: %] [added: )%] | | [removed: (53] [added: (54] | | ) | | — | % |

| Income tax [removed: (provision) benefit] [added: provision] | | [removed: (114] [added: (168] | | ) | | (1 | )% | | [removed: (19] [added: (114] | | ) | | [removed: —] [added: (1] | [removed: %] [added: )%] | | [removed: (157] [added: (19] | | ) | | [removed: (1] [added: —] | [removed: )%] [added: %] |

| Equity in net income (loss) of equity method investees | | [removed: 8] [added: (1] | | [added: )] | | — | % | | [removed: 25] [added: 8] | | | | — | % | | [removed: 447] [added: 25] | | | | [removed: 3] [added: —] | % |

| Net income attributable to noncontrolling interests | | [removed: (1] [added: (3] | | ) | | — | % | | (1 | | ) | | — | % | | [removed: —] [added: (1] | | [added: )] | | — | % |

| Net income (loss) attributable to Micron | | $ | [removed: 5,089] [added: 14,135] | | | [removed: 25] [added: 47] | % | | $ | [removed: (276] [added: 5,089] | [removed: )] | | [removed: (2] [added: 25] | [removed: )%] [added: %] | | $ | [removed: 2,899] [added: (276] | [added: )] | | [removed: 18] [added: (2] | [removed: %] [added: )%] |

[added: Total] Net Sales

| CNBU | | $ | [removed: 8,624] [added: 15,252] | | | [removed: 42] [added: 50] | % | | $ | [removed: 4,529] [added: 8,624] | | | [removed: 37] [added: 42] | % | | $ | [removed: 6,725] [added: 4,529] | | | [removed: 42] [added: 37] | % |

| SBU | | [removed: 4,514] [added: 5,022] | | | | [removed: 22] [added: 17] | % | | [removed: 3,262] [added: 4,514] | | | | [removed: 26] [added: 22] | % | | [removed: 3,687] [added: 3,262] | | | | [removed: 23] [added: 26] | % |

| MBU | | [removed: 4,424] [added: 6,579] | | | | 22 | % | | [removed: 2,569] [added: 4,424] | | | | [removed: 21] [added: 22] | % | | [removed: 3,692] [added: 2,569] | | | | [removed: 23] [added: 21] | % |

| EBU | | [removed: 2,695] [added: 3,479] | | | | [removed: 13] [added: 11] | % | | [removed: 1,939] [added: 2,695] | | | | [removed: 16] [added: 13] | % | | [removed: 1,999] [added: 1,939] | | | | [removed: 12] [added: 16] | % |

| All Other | | [removed: 65] [added: 59] | | | | — | % | | [removed: 100] [added: 65] | | | | [removed: 1] [added: —] | % | | [removed: 89] [added: 100] | | | | 1 | % |

| | | $ | [removed: 20,322] [added: 30,391] | | | | | | $ | [removed: 12,399] [added: 20,322] | | | | | | $ | [removed: 16,192] [added: 12,399] | | | | |

Percentages [added: are] of total net sales [removed: reflect rounding and] [added: but] may not total [removed: 100%.][added: 100% due to rounding.]

Increases in [added: DRAM and NAND] sales volumes for 2017 as compared 2016 were enabled by higher manufacturing output due to improvements in product and process technology and solid execution.

[added: Overall] Gross Margin

Our overall gross margin percentage increased to 42% for 2017 from 20% for 2016 [removed: reflecting increases in the gross margin percentages for all operating segments,] primarily due to strong markets that drove favorable pricing conditions and [removed: to] [added: solid execution in] manufacturing cost reductions from improvements in product and process [removed: technology and solid execution.][added: technology.]

The effect of the revision was not material for 2016 and reduced depreciation [removed: costs] [added: expense at the time] by approximately $100 million per [removed: quarter in 2017.][added: quarter.]

After December 2015 through December 6, 2016, the date we acquired the remaining interest in Inotera, the price for DRAM products [added: we] purchased [removed: by us] from Inotera was based on a formula that equally shared margin between Inotera and us.

Under these agreements, we purchased $504 [removed: million, $1.43 billion,] [added: million] and [removed: $2.37] [added: $1.43] billion of DRAM products from Inotera in [removed: 2017, 2016,] [added: 2017] and [removed: 2015,] [added: 2016,] respectively, which represented 9% of our aggregate DRAM gigabit production for [removed: 2017, 30% for 2016,] [added: 2017] and [removed: 35%] [added: 30%] for [removed: 2015.][added: 2016.]

| For the year ended | | [added: 2018 | | | | | | |] 2017 | | | | [removed: 2016] | | | [added: 2016] | [removed: 2015] | | | [added: | |]

[removed: |] Operating [removed: income (loss) | | 3,755 | | | | (25 | | ) | | 1,549 | | |][added: Income (Loss) by Business Unit]

CNBU sales for 2017 increased 90% as compared to 2016 due to increases in average selling prices [removed: for our products sold in the client market,] [added: due to strong demand across key markets,] growth in the cloud market driven by significant increases in DRAM content per server, and increases in sales of our GDDR5 and GDDR5X products into the graphics market driven by strong demand from the gaming industry.

SBU sales of SSD storage products increased by 137% for 2017 as compared to 2016 primarily as a result of the launch of new SSD products incorporating our [removed: 3D] TLC [added: 3D] NAND technology.

MBU sales for 2017 increased 72% as compared to 2016 primarily due to significant increases in sales [added: volumes, driven by customer qualifications for LPDRAM and managed NAND products, combined with higher memory content in smartphones and growth in sales of eMCP products.]

[removed: Sales] [added: MBU sales] growth in 2017 was partially offset by declines in average selling prices for [removed: Trade] [added: trade] NAND products.

EBU sales [removed: are] [added: were] comprised of [added: products incorporating] DRAM, NAND, and NOR Flash in decreasing order of revenue.

EBU [removed: sales] [added: operating income] for [removed: 2016 decreased 3%] [added: 2018 increased] as compared to [removed: 2015 primarily due to declines] [added: 2017 as a result of increases] in average selling [removed: prices for DRAM] [added: prices, manufacturing cost reductions,] and [removed: NAND products, which were] [added: increases in sales volumes,] partially offset by higher [removed: sales volumes as a result of increases in demand.][added: R&D costs.]

Net Sales by [removed: Product][added: Business Unit]

Total net sales for 2018 increased 50% as compared to 2017.

Higher sales in 2018 for both DRAM and NAND products as compared to 2017 were driven by strong execution in delivering high-value products featuring our 1Xnm DRAM and 64-layer 3D NAND technologies combined with strong demand for products across our primary markets.

Sales of DRAM products for 2018 increased 64% from 2017 primarily due to an increase in average selling prices of approximately 35% and an increase in sales volumes of approximately 20% as a result of strong market conditions, particularly for cloud, enterprise, mobile, and graphics markets, combined with increased sales into high-value markets.

Sales of trade NAND products for 2018 increased 26% from 2017 despite declines in average selling prices primarily due to an increase in sales volumes of approximately 40% driven by increases in sales of high-value SSD and mobile managed NAND products enabled by strong demand and our execution in delivering 3D NAND products.

Sales of DRAM products for 2017 increased 80% from 2016 due to an increase in sales volumes of approximately 50% and an increase in average selling prices of approximately 20% as a result of the strong market conditions.

Sales of trade NAND products for 2017 increased approximately 50% as compared to 2016 due to an increase in sales volumes of approximately 65% resulting from strong market demand for our 3D NAND products, which was partially offset by declines in average selling prices.

Increases in sales volumes for NAND products for 2017 were also enabled by key customer qualifications of new products.

Our overall gross margin percentage increased to 59% for 2018 from 42% for 2017 primarily due to favorable market conditions across key markets combined with strong execution in delivering products featuring advanced technologies, including 1Xnm DRAM and 64-layer 3D NAND, enabling manufacturing cost reductions.

For 2018 as compared to 2017, pricing for DRAM products increased while manufacturing costs declined and, for NAND products, manufacturing cost reductions outpaced declines in average selling prices.

For 2017 as compared to 2016, pricing for DRAM products increased while manufacturing costs declined

and, for NAND products, manufacturing cost reductions outpaced declines in selling prices.

Sales into cloud and graphics markets more than doubled in 2018 as compared to 2017.

MBU sales for 2018, which were comprised primarily of mobile LPDRAM and managed NAND products, increased 49% as compared to 2017 primarily due to customer qualifications for LPDRAM and managed NAND products, which combined with higher memory content in smartphones to drive improvements in DRAM pricing and increases in sales volumes.

SBU sales of trade NAND products for 2018 increased 13% as compared to 2017 driven by higher sales of SSD storage products, which increased by 72%, partially offset by declines in SBU NAND component sales from a strategic reallocation of supply from component sales to SSD and mobile managed NAND products.

Increases in SBU sales volumes for 2018 resulting from strong demand for cloud and enterprise SSD markets more than offset declines in selling prices.

EBU sales for 2018 increased 29% as compared to 2017 primarily due to strong demand across EBU's primary markets including consumer, industrial multimarkets, and automotive.

| CNBU | | $ | 9,773 | | | 64 | % | | $ | 3,755 | | | 44 | % | | $ | (25 | ) | | (1 | )% |

| MBU | | 3,033 | | | | 46 | % | | 927 | | | | 21 | % | | 97 | | | | 4 | % |

| SBU | | 964 | | | | 19 | % | | 552 | | | | 12 | % | | (123 | | ) | | (4 | )% |

| EBU | | 1,473 | | | | 42 | % | | 975 | | | | 36 | % | | 473 | | | | 24 | % |

| | | $ | 15,243 | | | | | | $ | 6,232 | | | | | | $ | 450 | | | | |

Percentages reflect operating income (loss) as a percentage of net sales for each business unit.

CNBU operating income for 2018 improved from 2017 primarily due to improved pricing and higher sales volumes resulting from strong demand for our products combined with manufacturing cost reductions.

MBU operating income for 2018 improved from 2017 primarily due to increases in pricing and sales volumes for LPDRAM products, higher sales of high-value managed NAND products, and manufacturing cost reductions.

SBU operating income for 2018 improved from 2017 primarily due to manufacturing cost reductions enabled by our execution in transitioning to 64-layer TLC 3D NAND products and improvements in product mix.

SBU operating income for 2018 was adversely impacted by higher costs associated with IMFT's production of 3D XPoint memory products at less than full capacity.

SG&A expenses for 2018 were 9% higher than 2017 primarily due to increases in legal costs, technical and consulting fees, and employee compensation.

R&D expenses vary primarily with the number of development wafers processed, the cost of advanced equipment dedicated to new product and process development, and personnel costs.

Because of the lead times necessary to manufacture our products, we typically begin to process wafers before completion of performance and reliability testing.

Development of a product is deemed complete when it is qualified through reviews and tests for performance and reliability.

R&D expenses can vary significantly depending on the timing of product qualification.

R&D expenses for 2018 were 17% higher than 2017 primarily due to increases in employee compensation, volumes of development and pre-qualification wafers, and depreciation expense as a result of increases in capital spending.

We share the cost of certain product and process development activities under development agreements with partners, including agreements to jointly develop NAND and 3D XPoint technologies with Intel.

We continue to jointly develop NAND technologies with Intel through the third generation of 3D NAND, which is expected to be completed in the second half of 2019.

In the second quarter of 2018, we and Intel agreed to independently develop subsequent generations of 3D NAND in order to better optimize the technology and products for our respective business needs.

We continue to jointly develop 3D XPoint technologies with Intel through the second generation of 3D XPoint technology, which is expected to be completed in the second half of 2019.

To better optimize 3D XPoint technology for our product roadmap and maximize the benefits for our customers and shareholders, in the fourth quarter of 2018, we announced that we will no longer jointly develop with Intel

subsequent generations of 3D XPoint technology.

As a result of the above actions, we expect reimbursements under our cost-sharing agreements to decrease in early fiscal 2019.

On December 22, 2017, the United States enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (the "Tax Act") which lowered the U.S. corporate income tax rate from 35% to 21% and significantly affects how income from foreign operations is taxed in the United States.

The following discussion contains trend information and other forward-looking statements that involve a number of risks and uncertainties.

Forward-looking statements include, but are not limited to, statements such as those made regarding future restructure charges; our expectation, from time to time, to engage in additional financing transactions; the sufficiency of our cash and investments, cash flows from operations, and available financing to meet our requirements for at least the next 12 months; capital spending in 2018; and the timing of payments for certain contractual obligations.

We are under no obligation to update these forward-looking statements.

Our actual results could differ materially from our historical results and those discussed in the forward-looking statements.

Factors that could cause actual results to differ materially include, but are not limited to, those identified in "Part I, Item 1A.

Our Management's Discussion and Analysis is provided in addition to the accompanying consolidated financial statements and notes to assist readers in understanding our results of operations, financial condition, and cash flows.

This discussion is organized as follows:

| | |

| --- | --- |

| • | Results of Operations: An analysis of our financial results consisting of the following: |

| ◦ | Consolidated results; |

| ◦ | Operating results by business segment; |

| ◦ | Operating results by product; and |

| ◦ | Operating expenses and other. |

| • | Liquidity and Capital Resources: An analysis of changes in our balance sheet and cash flows and discussion of our financial condition and liquidity. |

| • | Off-Balance Sheet Arrangements: Description of off-balance sheet arrangements. |

| • | Critical Accounting Estimates: Accounting estimates that we believe are most important to understanding the assumptions and judgments incorporated in our reported financial results and forecasts. |

| • | Recently Adopted and Issued Accounting Standards |

| Restructure and asset impairments | | 18 | | | | — | % | | 67 | | | | 1 | % | | 3 | | | | — | % |

The strong market conditions drove higher sales in 2017 for all

operating segments and significant increases in sales volumes for both DRAM and Trade NAND products as well as increases in average selling prices for DRAM products.

Total net sales for 2016 decreased 23% as compared to 2015 primarily due to lower CNBU, MBU, and SBU sales as declines in average selling prices outpaced increases in sales volumes.

The increases in sales volumes for 2016 were primarily attributable to higher manufacturing output due to improvements in product and process technology partially offset by reductions resulting from technology node transitions.

Our overall gross margin percentage declined to 20% for 2016 from 32% for 2015 primarily due to declines in the gross margin percentages for CNBU, MBU, and SBU, as decreases in average selling prices outpaced manufacturing cost reductions.

EBU's gross margin percentage for 2016 was relatively unchanged from 2015 as manufacturing cost reductions offset declines in average selling prices.

In accounting for the Inotera Acquisition, Inotera's work in process inventories were recorded at fair value, based on their estimated future selling prices, estimated costs to complete, and other factors, and was approximately $107 million higher than the cost of work in process inventory recorded by Inotera prior to the acquisition.

The acquired inventory was sold in 2017.

Operating Results by Business Segments

CNBU

| | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Net sales | | $ | 8,624 | | | $ | 4,529 | | | $ | 6,725 | |

Growth in CNBU markets drove increases for 2017 in average selling prices and sales volumes as compared to 2016.

See "Operating Results by Product – DRAM" for further detail.

CNBU sales for 2016 decreased 33% as compared to 2015 primarily due to declines in average selling prices as a result of weakness in the PC sector, partially offset by increases in sales volumes.

CNBU operating margin for 2016 declined from 2015 as decreases in average selling prices outpaced manufacturing cost reductions.

SBU

| Net sales | | $ | 4,514 | | | $ | 3,262 | | | $ | 3,687 | |

| Operating income (loss) | | 552 | | | | (123 | | ) | | (39 | | ) |

SBU sales included Non-Trade sales of $553 million, $501 million, and $463 million, for 2017, 2016, and 2015, respectively.

As of August [removed: 31, 2017] [added: 30, 2018] and [removed: September 1, 2016,] [added: August 31, 2017,] we had [added: fixed-rate] debt [removed: with fixed interest rates] of [removed: $5.7] [added: $3.1] billion and [removed: $7.5] [added: $5.7] billion, respectively, and as a result, the fair value of our debt fluctuates with changes in market interest rates.

We estimate that, as of August [removed: 31, 2017] [added: 30, 2018] and [removed: September 1, 2016,] [added: August 31, 2017,] a decrease in market interest rates of 1% would increase the fair value of our fixed-rate debt by approximately [removed: $273] [added: $79] million and [removed: $420] [added: $273] million, respectively.

As of August [removed: 31, 2017] [added: 30, 2018] and [removed: September 1, 2016,] [added: August 31, 2017,] we had [added: variable-rate] debt [removed: with variable interest rates] of [removed: $4.2 billion] [added: $725 million] and [removed: $1.0] [added: $4.2] billion, respectively.

As of August [removed: 31, 2017] [added: 30, 2018] and [removed: September 1, 2016,] [added: August 31, 2017,] a 1% increase in the interest rates of our variable-rate debt would result in an increase in [added: annual] interest expense of approximately [removed: $43] [added: $7] million and [removed: $10 million per year,] [added: $43 million,] respectively.

Based on monetary assets and liabilities denominated in foreign currencies, we estimate that a 10% adverse change in exchange rates versus the U.S. dollar would result in losses of approximately [removed: $391] [added: $78] million as of August [removed: 31, 2017] [added: 30, 2018] and [removed: $241] [added: $391] million as of [removed: September 1, 2016.][added: August 31, 2017.]

As of August 31, 2017 and September 1, 2016, we held fixed-rate debt investment securities of $1.48 billion and $1.11 billion, respectively, which were subject to interest rate risk.

We estimate that a 0.5% increase in market interest rates would decrease the fair value of these instruments by approximately $2 million as of August 31, 2017 and $1 million as of September 1, 2016.

In addition, we have entered into foreign currency forward contracts that mature in December 2017 and December 2018 to hedge our currency exchange rate risk on certain debt.

Through our global brands – Micron®, Crucial®, and Ballistix® – our broad portfolio of high-performance memory and storage technologies, including DRAM, NAND, NOR [removed: Flash,] [added: Flash] and 3D [removed: XPoint™] [added: XPoint] memory, is transforming how the world uses information to enrich life.

Backed by [removed: more than 35] [added: 40] years of technology leadership, our memory and storage solutions enable disruptive trends, including artificial intelligence, machine learning, and autonomous [removed: vehicles] [added: vehicles,] in key market segments like cloud, data center, networking, and mobile.

We make significant investments to develop [removed: the] proprietary product and process technology, which is implemented in our manufacturing facilities.

We generally develop firmware and expect to introduce proprietary controllers into our SSDs in [removed: 2018.][added: the first half of 2019.]

Development of advanced technologies enables us to diversify our product portfolio toward a richer mix of differentiated, high-value solutions and [added: to] target high-growth markets.

We market our products through our internal sales force, independent sales representatives, [added: distributors,] and [removed: distributors] [added: e-tailers,] primarily to original equipment manufacturers and retailers located around the world.

[removed: We] [added: From time to time, we sell and/or license our technology to other parties and] continue to pursue [removed: additional] opportunities to monetize our investment in [added: our] intellectual property through partnering and other arrangements.

[removed: Inotera acquisition, see] [added: See] "Part II – Item 8.

Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – [removed: Acquisition of Inotera."][added: Certain Concentrations."]

[removed: Compute and Networking Business Unit ("CNBU"): Includes] [added: CNBU includes] memory products [added: and solutions] sold into [removed: compute, networking,] [added: cloud server, enterprise, client,] graphics, and [removed: cloud server] [added: networking] markets.

[removed: Storage Business Unit ("SBU"): Includes memory] [added: SBU includes SSDs] and [removed: storage products] [added: component-level solutions] sold into [removed: enterprise, client,] [added: enterprise and] cloud, [added: client,] and [added: consumer storage markets as well as other discrete storage products sold in component and wafer forms to the] removable storage markets.

[removed: Mobile Business Unit ("MBU"): Includes] [added: MBU includes] memory products sold into [removed: smartphone, tablet,] [added: smartphone] and other mobile-device [removed: markets.][added: markets and includes discrete DRAM, discrete NAND, and managed NAND.]

[removed: Embedded Business Unit ("EBU"): Includes] [added: EBU includes] memory [added: and storage] products sold into automotive, industrial, [removed: connected home,] and consumer [removed: electronics markets.][added: markets and includes discrete DRAM, discrete NAND, managed NAND, and NOR.]

For [removed: more] [added: other] information regarding our [removed: segments,] [added: concentrations and customers,] see "Part II – Item 8.

Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – [removed: Segment] [added: Geographic] Information."

Our product portfolio of memory and storage [removed: solutions is] [added: solutions, advanced solutions, and storage platforms are] based on our high-performance semiconductor memory and storage technologies, [removed: which include] [added: including] DRAM, NAND, 3D XPoint memory, and other technologies.

We [removed: offer] [added: sell our] products [added: into various markets through our four business units (which are also our reportable segments)] in various forms, including wafers, components, [removed: and] modules, [removed: as well as] SSDs and [removed: multiple chip packages] [added: in MCPs] that combine [removed: our NAND] [added: DRAM, NAND, and/or NOR] with [removed: controllers] [added: a controller] and firmware.

[removed: Since 2006, we have owned 51% of IMFT, a joint venture between us and Intel to manufacture memory] [added: IMFT manufactures semiconductor] products exclusively for its [removed: members, who share the output of IMFT in proportion to their investment] [added: members] under a long-term supply agreement at prices approximating cost.

IMFT is governed by a Board of [removed: Managers] [added: Managers,] for which the number of managers appointed by each member varies based on the members' respective ownership interests.

[removed: Through] [added: At any time through] December 2018, Intel can put to us, and from January 2019 through December 2021, we can call from Intel, Intel's interest in IMFT, in either case, for [removed: an amount equal to the noncontrolling] [added: a price that approximates Intel's] interest [removed: balance attributable to Intel] [added: in the net book value of IMFT plus member debt] at [removed: such] [added: the] time [removed: either member exercises its right.][added: of the closing.]

If Intel exercises its put right, we can elect to set the closing date of the transaction [removed: to be] any time [removed: within] [added: between six months and] two years following such election by Intel and [added: we] can elect to receive financing of the purchase price from Intel for one to two years from the closing date.

Nearly all of our products are manufactured on 300mm wafers in facilities that generally operate 24 hours per day, [removed: 7] [added: seven] days per week.

Our DRAM, NAND, 3D XPoint memory, and NOR Flash products share a number of common manufacturing processes, enabling us to leverage [added: much of] our product and process technology and manufacturing infrastructure across these product lines.

Our process for manufacturing semiconductor products is [removed: complex, involving] [added: complex and involves] a number of precise steps, including wafer fabrication, assembly, and test.

Other factors that contribute to manufacturing costs are [added: the] cost and sophistication of manufacturing equipment, equipment utilization, process complexity, cost of raw materials, labor productivity, package type, [removed: and] cleanliness of our manufacturing [removed: environment.][added: environment, and utilization of subcontractors to perform certain manufacturing processes.]

In [removed: 2017,] [added: 2018,] we significantly increased our volume production of 1Xnm process node DRAM [removed: and, beginning in] [added: and expect to achieve bit crossover by] the [added: end of the] first quarter of [removed: 2017, manufactured a majority of our NAND production using our first generation 32-layer 3D NAND technology.][added: 2019.]

Our packaged products include memory modules, SSDs, [removed: MCPs,] [added: and] managed [removed: NAND,] [added: NAND including MCPs] and [removed: HMCs.][added: eMMCs.]

We assemble many products in-house and, in some cases, outsource assembly services [removed: where we can reduce costs] [added: for certain memory modules, SSDs,] and [removed: minimize our capital investment.][added: MCPs.]

In addition, we use our proprietary AMBYX™ line of intelligent test and burn-in systems to perform simultaneous circuit tests of semiconductor [removed: memory] die during the burn-in process, capturing quality and reliability data and reducing testing time and cost.

In recent years, we have produced an increasingly broad portfolio of products and system solutions, which enhances our ability to allocate resources to our most profitable products but also increases the complexity of our manufacturing [added: and supply chain] operations.

Although our product lines generally use similar manufacturing processes, our cost efficiency can be affected by frequent conversions to new products, the allocation of manufacturing capacity to more complex, smaller-volume [removed: parts,] [added: products,] and the reallocation of manufacturing capacity across various product lines.

[removed: Availability of Raw Materials] [added: Supply Chain, Materials,] and Use of [added: Third-Party] Service Providers

However, only a limited number of suppliers are capable of delivering certain raw materials and services that meet our [removed: standards.][added: standards and, in some cases, materials, components, or services are provided by a single supplier.]

Shortages [added: or increases in lead times] may [removed: occur,] [added: occur] from time to [removed: time,] [added: time] in the future.

We and/or our suppliers [added: and service providers] could be affected by [added: tariffs, embargoes or other trade restrictions, as well as] laws and regulations enacted in response to concerns regarding climate change, [added: conflict minerals, and responsible sourcing practices,] which could [removed: increase the cost and] limit the supply of our raw [removed: materials.][added: materials and/or increase the cost.]

The disruption of our supply of raw [removed: materials or services] [added: materials, components, services,] or the extension of our lead times could have a material adverse effect on our business, [removed: result] [added: results] of operations, or financial condition.

Our manufacturing processes are also dependent on our relationships with [added: third-party manufacturers of controllers used in a number of our products and with] outsourced semiconductor assembly and test providers, contract manufacturers, logistic carriers, and other service providers.

We [removed: have supply chain risk monitoring] [added: monitor] and [removed: management] [added: manage supply-chain activities] to mitigate [removed: our] risks associated with raw materials and service providers.

Our semiconductor memory and storage products are offered under our Micron, Crucial, and Ballistix brand names and [added: through] private labels.

We sell our Crucial-branded products through a web-based customer direct sales [removed: channel,] [added: channel] as well as through channel and distribution partners.

We are relentlessly focused on evolving our product portfolio to a richer mix of high-value solutions and cultivating deeper relationships with customers.

Our position as a developer and manufacturer of DRAM, NAND, NOR and other emerging memory technologies uniquely enables us to collaborate with our customers to ensure our technology and engineering roadmaps deliver critical features.

We continuously introduce new products on our advanced technologies, delivering performance, quality, and cost advantages to our customers.

Compute and Networking Business Unit

CNBU reported revenue of $15.25 billion in 2018, $8.62 billion in 2017, and $4.53 billion in 2016.

In 2018, we significantly increased our production of DRAM using 1Xnm technology and continued to focus on developing our 1Ynm technology.

In 2018, we achieved volume production of our 8Gb GDDR6 memory, which delivers significant performance improvements over our GDDR5 design, and enables bandwidth-intensive applications in our core CNBU markets in a variety of applications such as artificial intelligence and networking.

Cloud Server: The cloud server market was CNBU's fastest growing market in 2018, particularly in datacenters, with significant increases in DRAM content per server.

The cloud server market has been driven, in part, by intelligent edge devices capable of artificial intelligence and augmented reality that store and access data in the cloud.

Artificial intelligence servers require significantly increasing quantities of DRAM and as the number and capabilities of these intelligent edge devices increase, more data is stored, processed, and accessed in the cloud, creating a virtuous cycle between the cloud and edge devices.

We anticipate continued growth of our 1Xnm portfolio with the continued ramp of our second-generation 1Xnm 8Gb DDR4 products, which were validated with key partners and customers in 2018.

Enterprise: Similar to the cloud server market, the enterprise market is experiencing strong demand growth from intelligent edge devices that require rapid data analysis and storage in enterprise and cloud servers to enable machine learning, training, and inferencing.

Our enterprise RDIMM DRAM memory modules provide the high performance, reliability, and integrity requirements for such applications.

In 2018, we qualified our 32GB non-volatile module ("NVDIMM") at key OEMs and also began shipping in volume our 128GB through-silicon via-based ("TSV") RDIMMS.

Client: In 2018, we achieved significant production and sales to the client market from our 1Xnm technology.

Our products sold to the client market support both PC unit growth, driven primarily by corporate replacement cycles from upgraded operating systems, as well as increases in content per unit.

Additionally, our products sold to the client market are incorporated into gaming and ultra-thin notebooks.

Graphics: Our GDDR5/5x DRAM graphics products are incorporated into applications providing virtual reality, augmented reality, and crypto-mining technology.

In 2018, we benefitted from strong demand for graphics memory in gaming console applications, as well as a higher attach-rate of graphics DRAM products in performance and enthusiast graphics cards.

In 2018, we migrated and scaled production of our 8Gb GDDR5 to our 1Xnm DRAM technology, which augmented production of our GDDR5/5x DRAM memory on our 20nm line-width technology.

We remained focused on execution of technology transitions and achieved volume production of our 8Gb GDDR6 DRAM for the graphics and crypto-mining markets in 2018.

Networking: The networking memory market is characterized by long life-cycle DRAM products, and accordingly, a significant portion of our sales to the networking market consisted of products manufactured on our legacy 30nm and 25nm-series DRAM technology.

In 2018, we accelerated a shift from DDR3 to DDR4 DRAM and began sales of 4Gb DDR4 DRAM into emerging 5G applications.

Mobile Business Unit

MBU managed NAND includes eMMC and universal flash storage ("UFS") solutions, which each combine high-capacity NAND with a high-speed controller and firmware in a small ball-grid array, and eMCP products, which combine an eMMC/UFS solution with LPDRAM.

MBU reported revenue of $6.58 billion in 2018, $4.42 billion in 2017, and $2.57 billion in 2016.

In 2018, we announced new 64-layer, second-generation 3D NAND storage products, which support the high-speed UFS 2.1 standard and eMMC 5.1 standard.

These new mobile solutions are based on our industry-leading TLC 3D NAND technology, empowering smartphone makers to enhance the user experience with next-generation mobile features such as artificial intelligence, virtual reality, and facial recognition.

Our 1Xnm LPDRAM solutions provide power efficiency, particularly critical to our mobile customers, and our 1Ynm 12Gb LPDDR4 solutions, the highest capacity LPDRAM monolithic die available in the industry, provide both power efficiency and higher capacity to our mobile customers.

Smartphone: In 2018, we achieved product qualification of our 1Xnm LPDDR4 DRAM with major mobile phone OEMs.

Our LPDRAM offers low-power, high-performance solutions to perform in extreme environments demanded by high-end smartphones.

High-end smartphones incorporate higher levels of NAND and LPDRAM that enable features such as larger 4K displays, multiple high-resolution cameras, and 4K high-dynamic range video recording.

Additionally, our smartphone products are utilized by OEMs to enable artificial intelligence, augmented reality, and life-like virtual reality capabilities into high-end phones, including facial and voice recognition, real-time translation, fast image search, and scene detection.

In 2018, our managed NAND products achieved strong growth, including our new 128GB NAND plus 4GB DRAM MCP and our first high-performance UFS managed NAND products introduced in the fourth quarter of 2018.

Storage Business Unit

SBU sales also include "non-trade" products consisting of products manufactured and sold to Intel through IMFT under a long-term supply agreement at prices approximating cost, which included 3D XPoint memory and NAND products.

SBU reported revenue of $5.02 billion in 2018, $4.51 billion in 2017, and $3.26 billion in 2016.

In 2018, we continued to ramp our 64-layer 3D NAND technology and achieved bit output crossover relative to 32-layer in the second half of 2018.

In 2018, we also extended our leadership position in 3D NAND technology by delivering the industry's first commercially available QLC 3D NAND technology.

Leveraging our 64-layer structure, the new QLC NAND technology achieves 1 terabit ("Tb") density per die, which has a 33% higher array density as compared to TLC, enabling new operating points for density and cost in the enterprise, cloud, and client-storage markets.

The following discussion contains trend information and other forward-looking statements that involve a number of risks and uncertainties.

Forward-looking statements include, but are not limited to, statements such as those made regarding controller development; increasing sales of DDR4, 3D NAND, and client and cloud SSD products; growth in the market for NAND products; the need to obtain additional patent licenses or renew existing license agreements; the entry into additional sales or licenses of intellectual property and partnering agreements; debt incurred to finance our capital investments; and cash expenditures for property, plant, and equipment.

Our actual results could differ materially from our historical results and those discussed in the forward-looking statements.

Factors that could cause actual results to differ materially include, but are not limited to, those identified in "Item 1A.

Risk Factors." All period references are to our fiscal periods unless otherwise indicated.

To leverage our significant investments in R&D, we have formed, and may continue to form, strategic joint ventures that allow us to share the costs of developing memory and storage product and process technology with third parties.

In addition, from time to time, we also sell and/or license technology to other parties.

Acquisition of Inotera

Through December 6, 2016, we held a 33% ownership interest in Inotera (now known as MTTW), Nanya and certain of its affiliates held a 32% ownership interest, and the remaining ownership interest was publicly held.

On December 6, 2016, we acquired the remaining 67% interest in Inotera and began consolidating Inotera's operating results.

Inotera manufactures DRAM products at its 300mm wafer fabrication facility in Taoyuan City, Taiwan, and previously sold such products exclusively to us through supply agreements.

The Inotera acquisition enhances our flexibility to drive new technology, optimize the deployment of capital, and adapt our product offerings to changes in market conditions.

For more information regarding the

Business Segments

We have the following four business units, which are our reportable segments:

SBU also includes products sold to Intel through our IMFT joint venture.

DRAM

DRAM products are high-density, low-cost-per-bit, random access memory devices that provide high-speed data storage and retrieval with a variety of performance, pricing, and other characteristics.

Sales of DRAM products were 64%, 58%, and 64% of our total net sales in 2017, 2016, and 2015, respectively.

Wafer, Component, and Module DRAM: DDR3 and DDR4 DRAM products offer high speed and bandwidth, primarily for use in computers, servers, networking devices, communications equipment, consumer electronics, automotive, and industrial applications.

In 2017, we offered DDR4 and DDR3 products in 1Gb to 8Gb densities.

Sales of DDR4 products increased significantly in 2017 and we expect further increases in 2018 as DDR4 DRAM replaces DDR3 DRAM products in many applications.

Aggregate sales of DDR3 and DDR4 DRAM products were 40%, 31%, and 38% of our total net sales in 2017, 2016, and 2015, respectively.

LPDRAM products offer lower power consumption relative to other DRAM products and are used primarily in smartphones, tablets, automotive applications, laptop computers, and other mobile consumer devices that require low power consumption.

Aggregate sales of our LPDDR4, LPDDR3, and other versions of LPDRAM products were 18% of our total net sales in each of 2017, 2016, and 2015.

We offer other DRAM products targeted to specialty markets, including DDR2 DRAM, DDR DRAM, GDDR5 and GDDR5X DRAM, SDRAM, and RLDRAM.

These products are used in networking devices, servers, consumer electronics, communications equipment, computer peripherals, automotive and industrial applications, and computer memory upgrades.

Other: We offer HMC products, which are semiconductor memory devices where vertical stacks of DRAM die connected using through-silicon-via interconnects are placed above a small, high-speed logic layer.

NAND

NAND products are electrically re-writeable, non-volatile semiconductor memory and storage devices that retain content when power is turned off.

NAND sales were 32%, 37%, and 33% of our total net sales in 2017, 2016, and 2015, respectively.

NAND is ideal for mass-storage devices due to its fast erase and write times, high density, and low cost per bit relative to other solid-state memories.

NAND-based storage devices are utilized in smartphones, SSDs, tablets, computers, automotive and industrial applications, networking, and other consumer applications.

Removable storage devices, such as USB and Flash

memory cards, are used with applications such as PCs, digital still cameras, and smartphones.

The market for NAND products has grown rapidly and we expect it to continue to grow due to increased demand for these and other embedded and removable storage devices.

Wafer and Component NAND: Our NAND products feature a small cell structure that enables higher densities for demanding applications.

We began selling commercial volumes of new products featuring our 3D NAND technology in 2016 and it composed 43% of our total Trade NAND sales in 2017.

We expect 3D NAND sales to continue to increase in 2018.

3D NAND stacks layers of data storage cells vertically to create storage devices with higher capacity than competing planar NAND technologies.

See "Part II [added: –] Financial Information – Item 8.

Risk [removed: Factors."] [added: Factors"] for a discussion of other legal proceedings.

In 2013, we completed the acquisition of [removed: Elpida,] [added: Elpida Memory, Inc.,] now known as MMJ, a Japanese corporation, pursuant to the terms and conditions of an Agreement on Support for Reorganization Companies (as amended, the "Sponsor Agreement") that we entered into in 2012 with the trustees of the MMJ Companies' pending corporate reorganization proceedings under the Corporate Reorganization Act of Japan.

Under the Sponsor Agreement, we agreed to provide certain support for the reorganization of the MMJ Companies and the trustees agreed to prepare and seek approval from the [removed: Japan] [added: Tokyo District] Court and the MMJ Companies' creditors of plan of reorganization consistent with such support.

The actual recovery of unsecured creditors will be higher, however, [removed: based,] [added: based] in [removed: part,] [added: part] on events and circumstances occurring following the plan approval.

Because MMJ's plan of reorganization provides for ongoing payments to creditors following the closing of the MMJ acquisition, the reorganization proceedings in Japan are continuing and MMJ remains subject to the oversight of the [removed: Japan] [added: Tokyo District] Court and of the trustees (including a trustee designated by us, who we refer to as the business trustee, and a trustee designated by the [removed: Japan] [added: Tokyo District] Court, who we refer to as the legal trustee), pending completion of the reorganization proceedings.

MMJ's reorganization proceedings in Japan, and oversight of the [removed: Japan] [added: Tokyo District] Court, will continue until the final creditor payment is made under MMJ's plan of reorganization, which is scheduled to occur in December 2019, but may occur on a later date to the extent any claims of creditors remain unfixed on the final scheduled installment payment date.

MMJ may petition the [removed: Japan] [added: Tokyo District] Court for an early termination of the reorganization proceedings once two-thirds of all payments under the plan of reorganization are made.

Although such early terminations are customarily granted, there can be no assurance that the [removed: Japan] [added: Tokyo District] Court will grant any such petition in this particular case.

During the pendency of the reorganization proceedings in Japan, MMJ is obligated to provide periodic financial reports to the [removed: Japan] [added: Tokyo District] Court and may be required to obtain the consent of the [removed: Japan] [added: Tokyo District] Court prior to taking a number of significant actions relating to its businesses, including transferring or disposing of, or acquiring, certain material assets, incurring or guaranteeing material indebtedness, settling material disputes, or entering into certain material agreements.

Accordingly, during the pendency of the reorganization proceedings in Japan, our ability to effectively integrate MMJ as part of our global operations or to cause MMJ to take certain actions that we deem advisable for its businesses could be adversely affected if the [removed: Japan] [added: Tokyo District] Court or the legal trustee is unwilling to consent to various actions that we may wish to take with respect to MMJ.

For the fiscal year ended August [removed: 31, 2017][added: 30, 2018]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form [added: 10-K or any amendment to this Form 10-K.]

| Large Accelerated Filer x | Accelerated Filer o | Non-Accelerated Filer o [removed: (Do not check if a smaller reporting company)] | Smaller Reporting Company o | Emerging Growth Company o |

The aggregate market value of the voting stock held by non-affiliates of the registrant, based upon the closing price of such stock on March [removed: 2, 2017,] [added: 1, 2018,] as reported by the NASDAQ Global Select Market, was approximately [removed: $20.5] [added: $45.0] billion.

The number of outstanding shares of the registrant's common stock as of October [removed: 20, 2017] [added: 8, 2018] was [removed: 1,153,255,224.][added: 1,134,255,375.]

DOCUMENTS INCORPORATED BY REFERENCE: Portions of the Proxy Statement for the [removed: registrant’s] [added: registrant's] Fiscal [removed: 2017] [added: 2018] Annual Meeting of Shareholders to be held on January [removed: 17, 2018] [added: 16, 2019] are incorporated by reference into Part II and Part III of this Annual Report on Form 10-K.

| 2021 MSAC Term Loan | | Variable Rate MSAC Senior Secured Term Loan due 2021 | | [removed: LPDRAM] [added: Micron] | | [removed: Mobile Low-Power DRAM] [added: Micron Technology, Inc. (Parent Company)] |

| 2021 MSTW Term Loan | | Variable Rate MSTW Senior Secured Term Loan due 2021 | | [removed: MAI] [added: MLC] | | [removed: Micron Akita, Inc.] [added: Multi-Level Cell (two bits per cell)] |

| [removed: 2022 Notes] [added: MCP] | | [removed: 5.88% Senior Notes due 2022] [added: Multi-Chip Package] | | [removed: MCP] | | [removed: Multi-Chip Package] |

| 2022 Term Loan B | | Senior Secured Term Loan B due 2022 | | [removed: Micron] [added: MMJ Companies] | | [removed: Micron Technology, Inc. (Parent Company)] [added: MAI and MMJ] |

| [removed: 2023 Secured] [added: 2022] Notes | | [removed: 7.50%] [added: 5.88%] Senior [removed: Secured] Notes due [removed: 2023] [added: 2022] | | MMJ | | Micron Memory Japan, Inc. |

| [removed: 2024] [added: 2023] Notes | | 5.25% Senior Notes due [removed: 2024] [added: 2023] | | MMJ [removed: Companies] [added: Group] | | [removed: MAI and] MMJ [added: and its subsidiaries] |

| [removed: 2026] [added: 2023 Secured] Notes | | [removed: 5.63%] [added: 7.50%] Senior [added: Secured] Notes due [removed: 2026] [added: 2023] | | MMT | | Micron Memory Taiwan Co., Ltd. |

| [removed: 2032] [added: 2024] Notes | | [removed: 2032C and 2032D] [added: 5.25% Senior] Notes [added: due 2024] | | MSP | | Micron Semiconductor Products, Inc. |

| [removed: 2032C] [added: 2025] Notes | | [removed: 2.38% Convertible] [added: 5.50%] Senior Notes due [removed: 2032] [added: 2025] | | MSTW | | Micron Semiconductor Taiwan Co., Ltd. |

| [removed: 2032D] [added: 2026] Notes | | [removed: 3.13% Convertible] [added: 5.63%] Senior Notes due [removed: 2032] [added: 2026] | | MTTW | | Micron Technology Taiwan, Inc. |

| 2033 Notes | | 2033E and 2033F Notes | | [removed: Nanya] [added: Qimonda] | | [removed: Nanya Technology Corporation] [added: Qimonda AG] |

| 2033E Notes | | 1.63% Convertible Senior Notes due 2033 | | [removed: Qimonda] [added: QLC] | | [removed: Qimonda AG] [added: Quad-Level Cell (four bits per cell)] |

| [removed: Inotera] [added: Intel] | | [removed: Inotera Memories, Inc.] [added: Intel Corporation] | | Tera Probe | | Tera Probe, Inc. |

10-K 1 a2018q4.htm 10-K 2018

Forward-Looking Statements

This Form 10-K contains trend information and other forward-looking statements that involve a number of risks and uncertainties.

Forward-looking statements include, but are not limited to, statements such as those made regarding controller development; increasing sales of DDR4, 3D NAND, 3D XPointTM memory, and client and cloud SSDs; growth in our production of, and the market for, NAND products; our production of DRAM products; our joint research and development arrangements with Intel; the need to obtain additional patent licenses or renew existing license agreements; the entry into additional sales or licenses of intellectual property and partnering agreements; debt incurred to finance our capital investments; and cash expenditures for property, plant, and equipment.

Our actual results could differ materially from our historical results and those discussed in the forward-looking statements.

Factors that could cause actual results to differ materially include, but are not limited to, those identified in "Item 1A.

Risk Factors." All period references are to our fiscal periods unless otherwise indicated.

| 2032C Notes | | 2.38% Convertible Senior Notes due 2032 | | Nanya | | Nanya Technology Corporation |

| 2032D Notes | | 3.13% Convertible Senior Notes due 2032 | | OEM | | Original Equipment Manufacturer |

| IMFT | | IM Flash Technologies, LLC | | SLC | | Single-Level Cell (one bit per cell) |

| Inotera | | Inotera Memories, Inc. | | SSD | | Solid-State Drive |

| LPDRAM | | Mobile Low-Power DRAM | | TLC | | Triple-Level Cell (three bits per cell) |

| MAI | | Micron Akita, Inc. | | VIE | | Variable Interest Entity |

Micron, Crucial, Ballistix, any associated logos, and all other Micron trademarks are the property of Micron.

3D XPoint is a trademark of Intel or its subsidiaries in the United States and/or other countries.

Other product names or trademarks that are not owned by Micron are for identification purposes only and may be the registered or unregistered trademarks of their respective owners.

10-K 1 a2017q4.htm 10-K

10-K or any amendment to this Form 10-K.

| 2023 Notes | | 5.25% Senior Notes due 2023 | | MLC | | Multi-Level Cell (two bits per cell) |

| 2025 Notes | | 5.50% Senior Notes due 2025 | | MMJ Group | | MMJ and its subsidiaries |

| Elpida | | Elpida Memory, Inc. | | SLC | | Single-Level Cell |

| HMC | | Hybrid Memory Cube | | SSD | | Solid-State Drive |

| IMFT | | IM Flash Technologies, LLC | | TAIBOR | | Taipei Interbank Offered Rate |

| Intel | | Intel Corporation | | TLC | | Triple-Level Cell |

| Japan Court | | Tokyo District Court | | VIE | | Variable Interest Entity |

The following is a summary of our principal facilities as of August [removed: 31, 2017:][added: 30, 2018:]

| United States | | R&D, wafer [removed: fabrication facilities,] [added: fabrication,] reticle [removed: manufacturing, assembly, and test] [added: manufacturing] |

| Singapore | | [removed: Wafer] [added: R&D, wafer] fabrication, [removed: assembly, test,] [added: component assembly] and [added: test,] module assembly [added: and test] |

| China | | [removed: Assembly, test,] [added: Component assembly] and [added: test,] module assembly [added: and test] |

| Malaysia | | [removed: Assembly and test] [added: Component assembly] |

| [removed: Taiwan] [added: Japan] | | [removed: Wafer] [added: R&D and wafer] fabrication |

[removed: Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Debt.")] We [removed: also] own or lease a number of other facilities in locations throughout the world that are used for design, R&D, and sales and marketing activities.

Substantially all of [removed: the] [added: our manufacturing] capacity [removed: of the facilities listed above] is fully utilized.

Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – [removed: Equity – Noncontrolling Interests in Subsidiaries – IMFT.")][added: Debt.")]

| Taiwan | | Wafer fabrication, component assembly and test, module assembly and test |

| Japan | | Wafer fabrication and R&D |

(See "Part II – Item 8.

Our facility in Lehi, Utah is owned and operated by our IMFT joint venture with Intel.

Our common stock is listed on the NASDAQ Global Select Market and trades under the symbol "MU." The following table represents the high and low closing prices for our common stock as reported by NASDAQ for each quarter of [removed: 2017] [added: 2018] and [removed: 2016:][added: 2017:]

As of October [removed: 20, 2017,] [added: 8, 2018,] there were [removed: 2,170] [added: 2,062] shareholders of record of our common stock.

The information required by this item is incorporated by reference from the information to be included in our [removed: 2017] [added: 2018] Proxy Statement under the section entitled "Equity Compensation Plan Information," which will be filed with the Securities and Exchange Commission within 120 days after August [removed: 31, 2017.][added: 30, 2018.]

Issuer [removed: Purchases] [added: Purchase] of Equity Securities

Those withheld shares of common stock are not considered common stock repurchases under an authorized common stock repurchase [removed: plan.][added: plan and accordingly are excluded from the amounts in the table above.]

The following graph illustrates a five-year comparison of cumulative total returns for our common stock, the S&P 500 Composite Index, and the Philadelphia Semiconductor Index (SOX) from August 31, [removed: 2012,] [added: 2013,] through August 31, [removed: 2017.][added: 2018.]

[removed: ][added: ]

The performance graph above assumes $100 was invested on August 31, [removed: 2012] [added: 2013] in common stock of Micron Technology, Inc., the S&P 500 Composite Index, and the Philadelphia Semiconductor Index (SOX).

| | | [removed: 2012 | | | |] 2013 | | | | 2014 | | | | 2015 | | | | 2016 | | | | 2017 | | | [added: | 2018 | | |]

| 2018 | | | | | | | | | | | | | | | | |

| High | | $ | 61.39 | | | $ | 62.62 | | | $ | 48.81 | | | $ | 49.68 | |

| Low | | 47.10 | | | | 45.89 | | | | 39.40 | | | | 32.07 | | |

Common Stock Repurchase Authorization: In May 2018, we announced that our Board of Directors had authorized the discretionary repurchase of up to $10 billion of our outstanding common stock beginning in 2019.

We may purchase shares on a discretionary basis through open-market purchases, block trades, privately-negotiated transactions, derivative transactions, and/or pursuant to a Rule 10b5-1 trading plan, subject to market conditions and our ongoing determination of the best use of available cash.

The repurchase authorization does not obligate us to acquire any common stock.

| | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | |

| Period | | | | (a) Total number of shares purchased | | | (b) Average price paid per share | | | | (c) Total number of shares (or units) purchased as part of publicly announced plans or programs | | (d) Maximum number (or approximate dollar value) of shares (or units) that may yet be purchased under publicly announced plans or programs | | |

| June 1, 2018 | – | July 5, 2018 | | — | | | $ | — | | | | | | | |

| July 6, 2018 | – | August 2, 2018 | | — | | | — | | | | | | | | |

| August 3, 2018 | – | August 30, 2018 | | — | | | — | | | | | | | | |

| | | | | — | | | | | | | | | $ | 10,000,000,000 | |

For information on repurchases of our common stock subsequent to August 30, 2018, see "Item 8.

Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Equity – Micron Shareholders' Equity."

| Micron Technology, Inc. | | $ | 100 | | | $ | 240 | | | $ | 121 | | | $ | 122 | | | $ | 236 | | | $ | 387 | |

| S&P 500 Composite Index | | 100 | | | | 125 | | | | 126 | | | | 142 | | | | 165 | | | | 197 | | |

| Philadelphia Semiconductor Index (SOX) | | 100 | | | | 143 | | | | 139 | | | | 186 | | | | 263 | | | | 336 | | |

| 2016 | | | | | | | | | | | | | | | | |

| High | | $ | 16.91 | | | $ | 13.11 | | | $ | 15.50 | | | $ | 19.16 | |

| Low | | 11.73 | | | | 9.56 | | | | 9.69 | | | | 14.06 | | |

In addition, the 2021 MSTW Term Loan contains covenants that limit or restrict the ability of MSTW and/or MTTW to distribute cash dividends.

Our Board has authorized the discretionary repurchase of up to $1.25 billion of our outstanding common stock in open-market purchases, block trades, privately-negotiated transactions, or derivative transactions.

Through 2017, we had repurchased a total of 49 million shares for $956 million through open-market transactions pursuant to such authorization.

Repurchases are subject to market conditions and our ongoing determination of the best use of available cash.

In the fourth quarter of 2017, we did not repurchase any shares and, as of August 31, 2017, the maximum dollar value of shares that we may repurchase under the authorization of the Board was $294 million.

| Micron Technology, Inc. | | $ | 100 | | | $ | 219 | | | $ | 525 | | | $ | 264 | | | $ | 266 | | | $ | 515 | |

| S&P 500 Composite Index | | 100 | | | | 119 | | | | 149 | | | | 149 | | | | 168 | | | | 195 | | |

| Philadelphia Semiconductor Index (SOX) | | 100 | | | | 118 | | | | 169 | | | | 164 | | | | 219 | | | | 309 | | |

| | | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | | | [removed: 2013] [added: 2014] | | |

| Net sales | | $ | [removed: 20,322] [added: 30,391] | | | $ | [removed: 12,399] [added: 20,322] | | | $ | [removed: 16,192] [added: 12,399] | | | $ | [removed: 16,358] [added: 16,192] | | | $ | [removed: 9,073] [added: 16,358] | |

| Gross margin | | [removed: 8,436] [added: 17,891] | | | | [removed: 2,505] [added: 8,436] | | | | [removed: 5,215] [added: 2,505] | | | | [removed: 5,437] [added: 5,215] | | | | [removed: 1,847] [added: 5,437] | | |

| Operating income | | [removed: 5,868] [added: 14,994] | | | | [removed: 168] [added: 5,868] | | | | [removed: 2,998] [added: 168] | | | | [removed: 3,087] [added: 2,998] | | | | [removed: 236] [added: 3,087] | | |

| Net income (loss) | | [added: 14,138 | | | |] 5,090 | | | | (275 | | ) | | 2,899 | | | | 3,079 | | | [removed: | 1,194 | | |]

| Net income (loss) attributable to Micron | | [added: 14,135 | | | |] 5,089 | | | | (276 | | ) | | 2,899 | | | | 3,045 | | | [removed: | 1,190 | | |]

| Diluted earnings (loss) per share | | [added: 11.51 | | | |] 4.41 | | | | (0.27 | | ) | | 2.47 | | | | 2.54 | | | [removed: | 1.13 | | |]

| Cash and short-term investments | | [removed: 5,428] [added: 6,802] | | | | [removed: 4,398] [added: 5,428] | | | | [removed: 3,521] [added: 4,398] | | | | [removed: 4,534] [added: 3,521] | | | | [removed: 3,101] [added: 4,534] | | |

| Total current assets | | [removed: 12,457] [added: 16,039] | | | | [removed: 9,495] [added: 12,457] | | | | [removed: 8,596] [added: 9,495] | | | | [removed: 10,245] [added: 8,596] | | | | [removed: 8,911] [added: 10,245] | | |

| Property, plant, and [removed: equipment, net] [added: equipment] | | [removed: 19,431] [added: 23,672] | | | | [removed: 14,686] [added: 19,431] | | | | [removed: 10,554] [added: 14,686] | | | | [removed: 8,682] [added: 10,554] | | | | [removed: 7,626] [added: 8,682] | | |

| Total assets | | [removed: 35,336] [added: 43,376] | | | | [removed: 27,540] [added: 35,336] | | | | [removed: 24,143] [added: 27,540] | | | | [removed: 22,416] [added: 24,143] | | | | [removed: 19,068] [added: 22,416] | | |

| Total current liabilities | | [removed: 5,334] [added: 5,754] | | | | [removed: 4,835] [added: 5,334] | | | | [removed: 3,905] [added: 4,835] | | | | [removed: 4,791] [added: 3,905] | | | | [removed: 4,122] [added: 4,791] | | |

| Long-term debt | | [removed: 9,872] [added: 3,777] | | | | [removed: 9,154] [added: 9,872] | | | | [removed: 6,252] [added: 9,154] | | | | [removed: 4,893] [added: 6,252] | | | | [removed: 4,406] [added: 4,893] | | |

| Redeemable convertible notes | | [removed: 21] [added: 3] | | | | [removed: —] [added: 21] | | | | [removed: 49] [added: —] | | | | [removed: 68] [added: 49] | | | | [removed: —] [added: 68] | | |

| Total Micron shareholders’ equity | | [removed: 18,621] [added: 32,294] | | | | [removed: 12,080] [added: 18,621] | | | | [removed: 12,302] [added: 12,080] | | | | [removed: 10,760] [added: 12,302] | | | | [removed: 9,142] [added: 10,760] | | |

| Noncontrolling interests in subsidiaries | | [removed: 849] [added: 870] | | | | [removed: 848] [added: 849] | | | | [removed: 937] [added: 848] | | | | [removed: 802] [added: 937] | | | | [removed: 864] [added: 802] | | |

| Total equity | | [removed: 19,470] [added: 33,164] | | | | [removed: 12,928] [added: 19,470] | | | | [removed: 13,239] [added: 12,928] | | | | [removed: 11,562] [added: 13,239] | | | | [removed: 10,006] [added: 11,562] | | |

[removed: On] [added: In] December [removed: 6,] 2016, we acquired the 67% remaining interest in Inotera and began consolidating Inotera's operating results.

| Redeemable noncontrolling interest | | 97 | | | | — | | | | — | | | | — | | | | — | | |

In the periods presented above through December 2016, Inotera sold DRAM products exclusively to us through supply agreements.

(See Item 8.

Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Acquisition of Inotera."

Through December 6, 2016, we held a 33% ownership interest in Inotera (now known as MTTW), Nanya and certain of its affiliates held a 32% ownership interest, and the remaining ownership interest was publicly held.

Inotera manufactures DRAM products at its 300mm wafer fabrication facility in Taoyuan City, Taiwan, and previously sold such products exclusively to us through supply agreements.

On July 31, 2013, we completed the MMJ acquisition, in which we acquired Elpida, now known as MMJ, and a controlling interest in Rexchip Electronics Corporation, now known as MMT.

The MMJ Group's products include mobile DRAM targeted to mobile phones and tablets and computing DRAM targeted to desktop PCs, servers, notebooks, and workstations.

The MMJ acquisition included a 300mm DRAM wafer fabrication facility located in Hiroshima, Japan, a 300mm DRAM wafer fabrication facility in Taichung City, Taiwan, and an assembly and test facility located in Akita, Japan.

We recorded a gain on the transaction of $1.48 billion in 2013.

| Consolidated Financial Statements as of August [added: 30, 2018 and August] 31, 2017 and [removed: September 1, 2016 and] for the fiscal years ended August [added: 30, 2018, August] 31, 2017, [removed: September 1, 2016,] and September [removed: 3, 2015] [added: 1, 2016] | |

| Consolidated Statements of Operations | [removed: [41](#s43507253C3325CC0B75B27805288F082)] [added: [41](#sD4ABAC4D241395D1323BE1DD95A1D847)] |

| Consolidated Statements of Comprehensive Income (Loss) | [removed: [42](#s41149883F898545289850A05626D9308)] [added: [42](#s4D14C29DE95027DC6E64E1DD95B1F41C)] |

| Consolidated Balance Sheets | [removed: [43](#s078EE9B8973F587598461F537D1913DD)] [added: [43](#s7BDF086B6E36EC1E58F5E1DD95C1064A)] |

| Consolidated Statements of Changes in Equity | [removed: [44](#s3B3CA3BD94F75D1680F45C92A5C99A96)] [added: [44](#s9AEFEE8CA3EC0112AB2FE1DD95E0274A)] |

| Consolidated Statements of Cash Flows | [removed: [45](#sAC3B1FF99A9A591BA0612F53E31942ED)] [added: [45](#sF9DFCCB1C5A6422B2BBEE1DD962E9ECE)] |

| Notes to Consolidated Financial Statements | [removed: [46](#s6C772730FA4E5BE7A393E7A81C632CBC)] [added: [46](#s7161490565C6114DEF32E1DDB38AD1C6)] |

| Report of Independent Registered Public Accounting Firm | [removed: [80](#s3C39C7EC28635803BA34DAB56973F416)] [added: [80](#s65CE23CA4F374C262905E1DDB9A5FB8C)] |

| For the year ended | | August [removed: 31, 2017] [added: 30, 2018] | | | | [removed: September 1, 2016] [added: August 31, 2017] | | | | September [removed: 3, 2015] [added: 1, 2016] | | |

| Net sales | | $ | [removed: 20,322] [added: 30,391] | | | $ | [removed: 12,399] [added: 20,322] | | | $ | [removed: 16,192] [added: 12,399] | |

| Cost of goods sold | | [removed: 11,886] [added: 12,500] | | | | [removed: 9,894] [added: 11,886] | | | | [removed: 10,977] [added: 9,894] | | |

| Gross margin | | [removed: 8,436] [added: 17,891] | | | | [removed: 2,505] [added: 8,436] | | | | [removed: 5,215] [added: 2,505] | | |

| Selling, general, and administrative | | [removed: 743] [added: 813] | | | | [removed: 659] [added: 743] | | | | [removed: 719] [added: 659] | | |

| Research and development | | [removed: 1,824] [added: 2,141] | | | | [removed: 1,617] [added: 1,824] | | | | [removed: 1,540] [added: 1,617] | | |

| Restructure and asset impairments | | [removed: 18] [added: 28] | | | | [removed: 67] [added: 18] | | | | [removed: 3] [added: 67] | | |

| Other operating (income) expense, net | | [removed: (17] [added: (57] | | ) | | [removed: (6] [added: 1] | | [removed: )] | | [removed: (45] [added: 61] | | [removed: )] |

| Operating income | | [removed: 5,868] [added: 14,994] | | | | [removed: 168] [added: 5,868] | | | | [removed: 2,998] [added: 168] | | |

| Interest income | | [removed: 41] [added: 120] | | | | [removed: 42] [added: 41] | | | | [removed: 35] [added: 42] | | |

| Interest expense | | [removed: (601] [added: (342] | | ) | | [removed: (437] [added: (601] | | ) | | [removed: (371] [added: (437] | | ) |

| Other non-operating income (expense), net | | [removed: (112] [added: (465] | | ) | | [removed: (54] [added: (112] | | ) | | [removed: (53] [added: (54] | | ) |

| | | [removed: 5,196] [added: 14,307] | | | | [removed: (281] [added: 5,196] | | [removed: )] | | [removed: 2,609] [added: (281] | | [added: )] |

| Income tax (provision) benefit | | [removed: (114] [added: $] | [added: (168] | ) | | [removed: (19] [added: $] | [added: (114] | ) | | [removed: (157] [added: $] | [added: (19] | ) |

| Equity in net income (loss) of equity method investees | | [removed: 8] [added: (1] | | [added: )] | | [removed: 25] [added: 8] | | | | [removed: 447] [added: 25] | | |

| Net income (loss) | | [removed: 5,090] [added: 14,138] | | | | [removed: (275] [added: 5,090] | | [removed: )] | | [removed: 2,899] [added: (275] | | [added: )] |

| Net [removed: (income) loss] [added: income] attributable to noncontrolling interests | | [removed: (1] [added: (3] | | ) | | (1 | | ) | | [removed: —] [added: (1] | | [added: )] |

| Net income (loss) attributable to Micron | | $ | [removed: 5,089] [added: 14,135] | | | $ | [removed: (276] [added: 5,089] | [removed: )] | | $ | [removed: 2,899] [added: (276] | [added: )] |

| Basic | | $ | [removed: 4.67] [added: 12.27] | | | $ | [removed: (0.27] [added: 4.67] | [removed: )] | | $ | [removed: 2.71] [added: (0.27] | [added: )] |

| Diluted | | [removed: 4.41] [added: 11.51] | | | | [removed: (0.27] [added: 4.41] | | [removed: )] | | [removed: 2.47] [added: (0.27] | | [added: )] |

| Basic | | [removed: 1,089] [added: 1,152] | | | | [removed: 1,036] [added: 1,089] | | | | [removed: 1,070] [added: 1,036] | | |

| Diluted | | [removed: 1,154] [added: 1,229] | | | | [removed: 1,036] [added: 1,154] | | | | [removed: 1,170] [added: 1,036] | | |

| Net income (loss) | | $ | [removed: 5,090] [added: 14,138] | | | $ | [removed: (275] [added: 5,090] | [removed: )] | | $ | [removed: 2,899] [added: (275] | [added: )] |

| Foreign currency translation adjustments | | [removed: 48] [added: 1] | | | | [removed: (49] [added: 48] | | [removed: )] | | [removed: (42] [added: (49] | | ) |

| Gain (loss) on [removed: derivatives, net | | 15 | | | | 7 | |] [added: derivatives designated as hedging instruments] | | [removed: (18] [added: 25] | | [removed: )] |

| Pension liability adjustments | | [removed: 1] [added: (3] | | [added: )] | | [removed: (9] [added: 1] | | [removed: )] | | [removed: 20] [added: (9] | | [added: )] |

| Other comprehensive income (loss) | | [removed: 64] [added: (19] | | [added: )] | | [removed: (48] [added: 64] | | [removed: )] | | [removed: (44] [added: (48] | | ) |

| Total comprehensive income (loss) | | [removed: 5,154] [added: 14,119] | | | | [removed: (323] [added: 5,154] | | [removed: )] | | [removed: 2,855] [added: (323] | | [added: )] |

| Comprehensive (income) [removed: loss] attributable to noncontrolling interests | | [removed: (1] [added: (3] | | ) | | (1 | | ) | | [removed: 1] [added: (1] | | [added: )] |

| Comprehensive income (loss) attributable to Micron | | $ | [removed: 5,153] [added: 14,116] | | | $ | [removed: (324] [added: 5,153] | [removed: )] | | $ | [removed: 2,856] [added: (324] | [added: )] |

| As of [removed: | |] August 31, 2017 | | [added: $] | [added: (1] | [removed: September 1, 2016] [added: )] | | [added: $] | [added: 17 | | | $ | 13 | | | $ | — | | | $ | 29 | |]

| Cash and equivalents | | $ | [removed: 5,109] [added: 6,506] | | | $ | [removed: 4,140] [added: 5,109] | |

| For the year ended | | August 30, 2018 | | | | August 31, 2017 | | | | September 1, 2016 | | |

| Gains (losses) on derivative instruments | | (15 | | ) | | 15 | | | | 7 | | |

| Unrealized gains (losses) on investments | | (2 | | ) | | — | | | | 3 | | |

| Stock issued in public offering | | 34 | | | 3 | | | | 1,363 | | | | | | | | | | | | | | | | 1,366 | | | | | | | | 1,366 | | |

| Balance at August 30, 2018 | | 1,170 | | | $ | 117 | | | $ | 8,201 | | | $ | 24,395 | | | $ | (429 | ) | | $ | 10 | | | $ | 32,294 | | | $ | 870 | | | $ | 33,164 | |

| For the year ended | | August 30, 2018 | | | | August 31, 2017 | | | | September 1, 2016 | | |

| Net income (loss) | | $ | 14,138 | | | $ | 5,090 | | | $ | (275 | ) |

| Other | | (259 | | ) | | 254 | | | | (31 | | ) |

| Proceeds from government incentives | | 355 | | | | 21 | | | | 16 | | |

| Proceeds from maturities of available-for-sale securities | | 320 | | | | 194 | | | | 1,376 | | |

As a result of adopting Accounting Standards Update ("ASU") 2017-12, beginning in the second quarter of 2018, such amounts are included in the same line item in which the underlying transactions affect earnings.

For derivative forward contracts designated as fair value hedges, hedge effectiveness is determined by the change in the fair value of the undiscounted spot rate of the forward contract.

The changes in fair values of hedge instruments attributed to changes in undiscounted spot rates are recognized in other non-operating income (expense).

The time value associated with hedge instruments is excluded from the assessment of the effectiveness of hedges and is recognized on a straight-line basis over the life of hedges to other non-operating income (expense).

Government Incentives: We receive incentives from governmental entities related to expenses, assets, and other activities.

Our government incentives may require that we meet or maintain specified spending levels and other operational metrics and may be subject to reimbursement if such conditions are not met or maintained.

Government incentives are recorded in the financial statements in accordance with their purpose: as a reduction of expenses, a reduction of asset costs, or other income.

Incentives related to specific operating activities are offset against the related expense in the period the expense is incurred.

Incentives related to the acquisition or construction of fixed assets are recognized as a reduction in the carrying amounts of the related assets and reduce depreciation expense over the useful lives of the assets.

Other incentives are recognized as other operating income.

Government incentives received prior to being earned are recognized in current or noncurrent deferred income, whereas government incentives earned prior to being received are recognized in current or noncurrent receivables.

Cash received from government incentives related to operating expenses are included as an operating activity in the statement of cash flows, whereas cash received from incentives related to the acquisition of property, plant, and equipment are included as an investing activity.

of shipment to our customers.

We account for forfeitures as they occur.

This ASU will be effective for us in the first quarter of 2019 and requires modified retrospective adoption, with prospective adoption for amendments related to equity securities without readily determinable fair values.

Our assets and liabilities subject to this standard are not material.

As of August 30, 2018, deferred income related to our distributor sales was $232 million.

Upon adoption of this ASU, amounts deferred related to our sales to distributors, net of estimated price adjustments, will be recognized as an increase to retained earnings, net of taxes.

We will also reclassify certain allowances from accounts receivable to accounts payable and accrued expenses in connection with new presentation requirements of this ASU.

The tax effects of the adoption of this ASU will be recorded primarily as a reduction of net deferred tax assets.

Nanya's option for the 1X Process Node expired unexercised.

| | | 6,506 | | | | $ | 296 | | | $ | 473 | | | $ | 7,275 | | | 5,109 | | | | $ | 319 | | | $ | 617 | | | $ | 6,045 | |

| As of | | 2018 | | | | 2017 | | |

| Other | | 261 | | | | 169 | | |

| | | $ | 5,478 | | | $ | 3,759 | |

| As of | | 2018 | | | | 2017 | | |

| | | $ | 3,595 | | | $ | 3,123 | |

| As of | | 2018 | | | | 2017 | | |

| | | 49,091 | | | | 41,533 | | |

| | | $ | 23,672 | | | $ | 19,431 | |

| | |

| --- | --- |

| | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Gain (loss) on investments, net | | — | | | | 3 | | | | (4 | | ) |

| | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Equity method investments | | 16 | | | | 1,364 | | |

| Balance at August 28, 2014 | | 1,073 | | | $ | 107 | | | $ | 7,868 | | | $ | 2,729 | | | $ | — | | | $ | 56 | | | $ | 10,760 | | | $ | 802 | | | $ | 11,562 | |

| Distributions to noncontrolling interests | | | | | | | | | | | | | | | | | | | | | | | | | — | | | | (6 | | ) | | (6 | | ) |

| Repurchase of treasury stock | | | | | | | | | | | | | | | | | (831 | | ) | | | | | | (831 | | ) | | | | | | (831 | | ) |

| Equity in net (income) loss of equity method investees | | (8 | | ) | | (25 | | ) | | (447 | | ) |

| Cash paid to acquire treasury stock | | (35 | | ) | | (148 | | ) | | (884 | | ) |

| Other | | 8 | | | | (203 | | ) | | 13 | | |

For derivative forward contracts designated as cash-flow hedges, we exclude changes in the time value from the effectiveness assessment.

Effectiveness is measured by comparing the cumulative change in the fair value of the hedge contract with the cumulative change in the forecasted cash flows of the hedged item.

As a result, we revised the estimated useful lives of equipment in our DRAM wafer fabrication facilities from five to seven years in the fourth quarter of 2016.

Inotera: Prior to our acquisition of the remaining interest in Inotera on December 6, 2016, Inotera was a VIE because of the terms of its supply agreement with us.

We had previously determined that we did not have the power to direct the activities of Inotera that most significantly impacted its economic performance, primarily due to limitations on our governance rights that required the consent of other parties for key operating decisions and due to Inotera's dependence on Nanya for financing and the ability of Inotera to operate in Taiwan.

Therefore, we did not consolidate Inotera and we accounted for our interest under the equity method.

(See "Acquisition of Inotera" and "Equity Method Investments – Inotera" notes.)

In addition, IMFT manufactures certain products exclusively for us using our product designs.

Recently Adopted Accounting Standards

In January 2017, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2017-04 – Simplifying the Test for Goodwill Impairment, which modified the goodwill impairment test and required an entity to write down the carrying value of goodwill up to the amount by which the carrying amount of a reporting unit exceeded its fair value.

We adopted this ASU as of the beginning of the fourth quarter of 2017 in connection with our annual impairment test.

In November 2016, the FASB issued ASU 2016-18 – Restricted Cash, which required amounts generally described as restricted cash and restricted cash equivalents to be included with cash and cash equivalents when reconciling the total beginning and ending amounts for the periods shown on the statement of cash flows.

We adopted this ASU in the fourth quarter of 2017 on a retrospective basis.

As of September 1, 2016, September 3, 2015, and August 28, 2014, restricted cash was $123 million, $88 million, and $84 million, respectively.

The adoption of this ASU did not have a material impact on our cash flows.

In March 2016, the FASB issued ASU 2016-09 – Improvements to Employee Share-Based Payment Accounting, which simplified several aspects of the accounting for share-based payment transactions, including income tax consequences, classification of awards as either equity or liabilities, forfeitures, and classification within the statement of cash flows.

We adopted this ASU as of the beginning of the first quarter of 2017 and elected to account for forfeitures when they occur, on a

modified retrospective basis.

At the time of adoption in the first quarter of 2017, we recognized deferred tax assets of $325 million for the excess tax benefits that arose directly from tax deductions related to equity compensation greater than amounts recognized for financial reporting and also recognized an increase of an equal amount in the valuation allowance against those deferred tax assets.

The adoption did not have any other material impacts on our financial statements.

In April 2015, the FASB issued ASU 2015-05 – Customer's Accounting for Fees Paid in a Cloud Computing Arrangement, which provided additional guidance to customers about whether a cloud computing arrangement includes a software license.

Under ASU 2015-05, cloud computing arrangements that contain a software license should be accounted for in a manner consistent with the acquisition of other software licenses, otherwise customers should account for the arrangement as a service contract.

ASU 2015-05 also removed the requirement to analogize to ASC 840-10 – Leases, to determine the asset acquired in a software licensing arrangement.

We adopted this ASU as of the beginning of the first quarter of 2017 on a prospective basis.

The adoption of this ASU did not have a material impact on our financial statements.

In February 2015, the FASB issued ASU 2015-02 – Amendments to the Consolidation Analysis, which amended the consolidation requirements in Accounting Standards Codification 810 – Consolidation.

During the fourth quarter of [removed: 2017,] [added: 2018,] there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Based on this evaluation, management concluded that our internal control over financial reporting was effective as of August [removed: 31, 2017.][added: 30, 2018.]

The effectiveness of our internal control over financial reporting as of August [removed: 31, 2017] [added: 30, 2018] has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report, which is included in Part II, Item 8, of this Form 10-K.

On December 6, 2016, we acquired the remaining 67% interest in Inotera and began consolidating Inotera.

As a result, we are currently integrating Inotera's operations into our overall internal control over financial reporting.

Under the guidelines established by the Securities and Exchange Commission, companies are permitted to exclude acquisitions from their assessment of internal control over financial reporting during the first year of an acquisition while integrating the acquired company, and accordingly, we expect to exclude Inotera from the assessment of internal control over financial reporting during that time.

Management's evaluation of the effectiveness of its internal control over financial reporting as of August 31, 2017 has excluded Inotera from its assessment of internal control over financial reporting as of August 31, 2017 because it was acquired by us in a business combination on December 6, 2016.

Inotera is a wholly-owned subsidiary whose total assets and total revenues represent 11% and 0%, respectively, of the related consolidated financial statement amounts as of and for the year ended August 31, 2017.

Other information required by Items 10, 11, 12, 13, and 14 will be contained in our Proxy Statement which will be filed with the Securities and Exchange Commission within 120 days after August [removed: 31, 2017] [added: 30, 2018] and is incorporated herein by reference.

| 1. | [removed: |] Financial Statements: See Index to Consolidated Financial Statements under Item 8. |

| 2. | [removed: |] Financial Statement [removed: Schedules: Schedule I – Condensed Financial Information of the Registrant] [added: Schedule:] Schedule II – Valuation and Qualifying Accounts Certain Financial Statement Schedules have been omitted since they are either not required, not applicable, or the information is otherwise included. |

| 3. | [removed: |] Exhibits. |

| Year ended August 31, 2017 | [removed: $ |] 2,107 | | | [removed: $] | — | | | [removed: $] | (64 | [removed: )] | [added: )] | [removed: $] | 278 | | | [removed: $] | 2,321 | | [added: |]

Amounts charged to other accounts for the year ended August 31, 2017 includes $325 million as a result of the adoption of ASU [removed: 2016-09.][added: 2016-09 – Improvements to Employee Share-Based Payment Accounting.]

| 2.2* | [English Translation of Agreement Amending Agreement on Support for Reorganization Companies, dated October 29, 2012, by and among Micron Technology, Inc. and Nobuaki Kobayashi and Yukio Sakamoto, the trustees of Elpida Memory, Inc. and Akita Elpida Memory, Inc.](http://www.sec.gov/Archives/edgar/data/723125/000072312512000159/exh2-3amendment.htm) | | 8-K | | 2.3 | [removed: 10/29/12] [added: 10/31/12] |

| 4.3 | [Form of 2032C Note (included in Exhibit 4.1)](http://www.sec.gov/Archives/edgar/data/723125/000110465912026222/a12-9302_3ex4d1.htm) | | 8-K | | [removed: 4.3] [added: 4.1] | 4/18/12 |

| 4.5 | [removed: [Indenture] [added: [Indenture,] dated [removed: July 26, 2011,] [added: as of February 12, 2013,] by and between Micron Technology, Inc. and U.S. Bank National Association, as [removed: Trustee for 1.875% Convertible Senior Notes due 2031](http://www.sec.gov/Archives/edgar/data/723125/000110465911040844/a11-21841_1ex4d3.htm)] [added: trustee](http://www.sec.gov/Archives/edgar/data/723125/000110465913009753/a13-4300_4ex4d1.htm)] | | 8-K | | [removed: 4.3] [added: 4.1] | [removed: 7/26/11] [added: 2/12/13] |

| 4.6 | [Indenture, dated as of February 12, 2013, by and between Micron Technology, Inc. and U.S. Bank National Association, as [removed: trustee](http://www.sec.gov/Archives/edgar/data/723125/000110465913009753/a13-4300_4ex4d1.htm)] [added: trustee](http://www.sec.gov/Archives/edgar/data/723125/000110465913009753/a13-4300_4ex4d3.htm)] | | 8-K | | [removed: 4.1] [added: 4.3] | 2/12/13 |

| [removed: 4.7] [added: 4.9] | [Indenture, dated as of [removed: February] [added: November] 12, 2013, by and between Micron Technology, Inc. [removed: and] [added: &] U.S. Bank National [removed: Association, as trustee](http://www.sec.gov/Archives/edgar/data/723125/000110465913009753/a13-4300_4ex4d3.htm)] [added: Association](http://www.sec.gov/Archives/edgar/data/723125/000110465913085422/a13-24304_1ex4d1.htm)] | | 8-K | | [removed: 4.3] [added: 4.1] | [removed: 2/12/13] [added: 11/18/13] |

| [removed: 4.8] [added: 4.7] | [Form of 2033E Note (included in Exhibit [removed: 4.6)](http://www.sec.gov/Archives/edgar/data/723125/000110465913009753/a13-4300_4ex4d1.htm)] [added: 4.5)](http://www.sec.gov/Archives/edgar/data/723125/000110465913009753/a13-4300_4ex4d1.htm)] | | 8-K | | 4.1 | 2/12/13 |

| [removed: 4.9] [added: 4.8] | [Form of 2033F Note (included in Exhibit [removed: 4.7)](http://www.sec.gov/Archives/edgar/data/723125/000110465913009753/a13-4300_4ex4d3.htm)] [added: 4.6)](http://www.sec.gov/Archives/edgar/data/723125/000110465913009753/a13-4300_4ex4d3.htm)] | | 8-K | | 4.3 | 2/12/13 |

| [removed: 4.10] [added: 4.12] | [Indenture, dated as of [removed: November 12, 2013,] [added: July 28, 2014,] by and between Micron Technology, Inc. [removed: &] [added: and] U.S. Bank National [removed: Association](http://www.sec.gov/Archives/edgar/data/723125/000110465913085422/a13-24304_1ex4d1.htm)] [added: Association, as Trustee](http://www.sec.gov/Archives/edgar/data/723125/000110465914054469/a14-17184_4ex4d1.htm)] | | 8-K | | 4.1 | [removed: 11/18/13] [added: 7/29/14] |