Micron Technology (MU) 10-K risk factor changes: FY2019 vs FY2018

Any of [removed: the] [added: these] factors [removed: below] could have a material adverse effect on our business, results of operations, financial condition, or stock price.

[removed: We have experienced volatility] [added: Volatility] in average selling prices for our semiconductor memory and storage products [removed: which] may adversely affect our business.

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

[removed: Decreases in average] [added: Average] selling prices for our products that decline faster than our costs could have a material adverse effect on our business, results of operations, or financial condition.

| | | DRAM | | | [removed: Trade] NAND | |

| 2018 from 2017 | | 37 | % | | [removed: (11] [added: (8] | )% |

| 2017 from 2016 | | 19 | % | | [removed: (9] [added: (7] | )% |

| 2016 from 2015 | | (35 | )% | | [removed: (20] [added: (19] | )% |

| 2015 from 2014 | | (11 | )% | | [removed: (17] [added: (15] | )% |

Factors that may limit our ability to [added: maintain or] reduce costs include, but are not limited to, strategic product diversification decisions affecting product mix, the increasing complexity of manufacturing processes, difficulties in transitioning to smaller line-width process technologies, 3D memory layers, NAND cell levels, [added: transitioning to replacement gate technology for NAND,] process complexity including number of mask layers and fabrication steps, manufacturing yield, technological barriers, changes in process technologies, and new products that may require relatively larger die sizes.

[removed: Per] [added: In addition, per] gigabit manufacturing costs may also be affected by a broader product portfolio, which may have smaller production quantities and shorter product lifecycles.

[removed: Consolidation of industry] competitors could put us at a competitive disadvantage.

Our competitors generally seek to increase [removed: silicon] [added: wafer] capacity, improve yields, and reduce die size in their product designs which may result in significant increases in worldwide supply and downward pressure on prices.

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

Increases in worldwide supply of semiconductor memory and storage, if not accompanied by commensurate increases in demand, [removed: would] [added: could] lead to further declines in average selling prices for our products and [removed: would] [added: could] materially adversely affect our business, results of operations, or financial condition.

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 [removed: end-customer's needs and preferences.]

| • | that we will be able to establish or maintain key relationships with [removed: customers] [added: customers, or that we will not be prohibited from working] with [added: certain customers, for] specific chip set or design requirements; |

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

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

[removed: -] [added: | • |] disputes with partners regarding the terms of [removed: arrangements] [added: arrangements, including the termination] or [added: discontinuance of our joint ventures, or] that terms of such arrangements are unfavorable; and [added: |]

A significant [removed: concentration] [added: portion] of our [removed: net sales] [added: revenue] is [removed: to] [added: concentrated with] a select number of customers.

In each of the last three years, approximately one-half of our total [removed: net sales were to] [added: revenue was from] our top ten customers.

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

Our inability to meet our customers' requirements or to qualify our products with them could adversely impact our [removed: sales.][added: revenue.]

If we fail to identify or develop products on a timely basis, or at all, that comply with our customers' specifications or achieve design wins with our customers, we may experience a significant adverse impact on our [removed: sales] [added: revenues] and margins.

Our failure to cost-effectively manufacture system-level solutions and/or firmware in a timely [removed: manner,] [added: manner] may result in reduced demand for our system-level [removed: products,] [added: products] and could have a material adverse effect on our business, results of operations, or financial condition.

[removed: As a result, we] [added: We] could be adversely affected in several ways, including the following:

[removed: In addition, as] [added: As] of August [removed: 30, 2018,] [added: 29, 2019,] the conversion value in excess of principal of our convertible notes was [removed: $1.85 billion,] [added: $654 million,] based on the trading price of our common stock of [removed: $52.76] [added: $44.67] per share on such date.

(See "Part [removed: II – Item 8.][added: II.]

[removed: We are] unable to predict whether these license agreements can be obtained or renewed on terms acceptable to us.

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

If our manufacturing process is [removed: disrupted,] [added: disrupted by operational issues, natural disasters, or other events,] our business, results of operations, or financial condition could be materially adversely affected.

Additionally, [added: until we complete] our [added: acquisition of Intel's noncontrolling interest in IMFT, our] control over operations at IMFT is limited by our agreements with Intel.

From time to time, there have been disruptions in the manufacturing process as a result of power outages, improperly functioning equipment, disruptions in supply of raw materials or components, [removed: equipment failures, earthquakes,] or [removed: other environmental events.][added: equipment failures.]

If production is disrupted for any reason, manufacturing yields may be adversely [removed: affected] [added: affected,] or we may be unable to meet our customers' requirements and they may purchase products from other suppliers.

Increases in tariffs or other trade restrictions or taxes on our [added: or our customers'] products or equipment and supplies could have an adverse impact on our operations.

Additionally, a significant portion of our facilities are located outside the United States, including [added: in] Taiwan, Singapore, Japan, and China.

General trade tensions between the U.S. and China have been escalating [removed: in] [added: since] 2018, with [removed: three rounds of] U.S. tariffs on Chinese goods [removed: taking effect in July, August,] and [removed: September 2018, each followed by a round of] retaliatory Chinese tariffs on U.S. goods.

Some of our products are included in these [removed: announced] tariffs.

If the U.S. were to impose [added: current or] additional tariffs on components that we or our suppliers [removed: source from China,] [added: source,] our cost for such components would increase.

| 2019 from 2018 | | (30 | )% | | (44 | )% |

Many factors may result in a reduction of our output or a delay in ramping production, which could lead to underutilization of our production assets.

These factors may include, among others, a weak demand environment, industry oversupply, inventory surpluses, declining selling prices, and changes in supply agreements.

A significant portion of our manufacturing costs are fixed and do not vary proportionally with changes in production output.

As a result, lower utilization and increases in our per gigabit manufacturing costs may adversely affect our gross margins, business, results of operations, or financial condition.

Our business and the markets we serve are subject to rapid technological changes and material fluctuations in demand based on end-user preferences.

As a result, we may have work in process or finished goods inventories that could become obsolete or in amounts that are in excess of our customers' demand.

As a result, we may incur charges in connection with obsolete or excess inventories, which could have a material adverse effect on our business, results of operations, or financial condition.

Consolidation of industry

Some of our competitors may use aggressive pricing to obtain market share or take business of our key customers.

We estimate that capital expenditures in 2020 for property, plant, and equipment, net of partner contributions, will be approximately $7 billion to $8 billion, focused on technology transitions and product enablement.

Investments in capital expenditures may not generate expected returns or cash flows.

Delays in completion and ramping of new production facilities could significantly impact our ability to realize expected returns on our capital expenditures, which could have a material adverse effect on our business, results of operations, or financial condition.

We have experienced volatility in our cash flows and operating results and may continue to experience such volatility in the future, which may negatively affect our credit rating.

Our credit rating may also be affected by our liquidity, financial results, economic risk, or other factors, which may increase the cost of future borrowings and make it difficult for us to obtain financing on terms acceptable to us.

In 2019, we suspended the security interest in the collateral under our credit facility upon achieving specified credit ratings and the prepayment of our 2022 Term Loan B; however, the security interest would be automatically reinstated upon a decline in our corporate credit rating below a certain level.

In 2019, 89% of our revenue was from products shipped to customer locations outside the United States.

Additionally, the U.S. has threatened to impose tariffs on goods imported from other countries, which could also impact certain of our customers' or our operations.

Additionally, tariffs on our customers' products could impact their sales of such end products, resulting in lower demand for our products.

We cannot predict what further actions may ultimately be taken with respect to tariffs or trade relations between the U.S. and other countries, what products may be subject to such actions, or what actions may be taken by other countries in retaliation.

U.S. trade regulations have restricted our ability to sell our products to a significant customer and could restrict our ability to sell our products to other customers.

On May 16, 2019, the Bureau of Industry and Security ("BIS") of the U.S. Department of Commerce added Huawei to the BIS's Entity List, which imposes limitations on the supply of certain U.S. items and product support to Huawei.

In 2019, our sales to Huawei accounted for 12% of our total revenue.

To ensure compliance with the Entity List restrictions, we suspended shipments of all products to Huawei, effective May 16, 2019.

We are reviewing our product portfolio to determine whether our products and related support are subject to the Export Administration Regulations, and therefore within the scope of the Entity List restrictions.

We have determined that certain products Huawei purchases from us are not subject to the Export Administration Regulations and consequently can be lawfully sold and shipped to Huawei.

Accordingly, we resumed shipping certain products to Huawei in the fourth quarter of 2019.

While Huawei remains on the Entity List, and in the absence of a license from the BIS, we may be unable to work with Huawei on future product development, which may have a negative effect on our ability to sell products to Huawei in the future.

Entity List restrictions may also encourage Huawei to seek to obtain a greater supply of similar or substitute products from our competitors that are not subject to these restrictions, thereby decreasing our long-term competitiveness as a supplier to Huawei.

Moreover, although Huawei is not prohibited from paying (and we are not restricted from collecting) accounts receivable for products we sell to Huawei, the credit risks associated with these accounts may have increased as a result of the BIS's actions.

We cannot predict what additional actions the U.S. government may take with respect to Huawei, including modifications to, or interpretations of, Entity List restrictions, export restrictions, tariffs, or other trade limitations or barriers.

Due to the customized nature of certain of the products we manufacture, we may be unable to sell certain finished goods inventory to an alternative customer or manufacture in-process inventory to different specifications, which may result in excess and obsolescence charges in future periods.

The Entity List trade restrictions enacted during our third quarter of 2019 had an adverse effect on our business.

We are unable to predict the duration of the export restrictions imposed with respect to Huawei, whether any licenses will be issued, or the long-term effects on our business.

Other companies may be added to the Entity List and/or subject to trade restrictions.

For example, in October 2019, the U.S. government added several additional Chinese organizations to the Entity List, effective October 9, 2019.

In addition, there may be indirect impacts to our business which we cannot reasonably quantify, including that some of our other customer's products which incorporate our solutions may also be impacted by these and other trade restrictions that may be imposed by the U.S., China, or other countries.

Restrictions on our ability to sell and ship our products to Huawei have had, and may continue to have, an adverse effect on our business, results of operations, or financial condition.

In addition, restrictions on our ability to sell and ship our products to other organizations added to the Entity List may have a further adverse effect on our business, results of operations, or financial condition.

In 2019, 53% of our revenue was to customers who have headquarters located in the United States.

| 2014 from 2013 | | 6 | % | | (23 | )% |

We and some

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

Investments in capital expenditures, net of amounts funded by our partners, were $8.20 billion for 2018.

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, 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.

In 2018, 88% of our sales were to customers located outside the United States.

We have filed a notice of appeal, and the parties have submitted briefs to the appeals court.

Our results of operations could be affected by natural disasters and other events in the locations in which we or our customers or suppliers operate.

A substantial majority of our consolidated net sales are to customers outside the United States.

The implementation of these regulations may limit the sourcing and availability of some of these materials.

In addition, many of our customers have or are planning to adopt responsible sourcing programs with requirements that our broader in terms of minerals and geographies than DRC conflict minerals programs.

MMJ's reorganization proceedings in Japan, and oversight of the 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 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 Tokyo District Court will grant any such petition in this particular case.

advisable for its business could be adversely affected if the Tokyo District Court or the legal trustee is unwilling to consent to various actions that we may wish to take with respect to MMJ.

This discussion should be read in conjunction with the consolidated financial statements and accompanying notes for the year ended August [removed: 30, 2018.][added: 29, 2019.]

Our fiscal [added: 2019,] 2018, [removed: 2017,] and [removed: 2016] [added: 2017] each contain 52 weeks.

| For the year ended | | [removed: 2018] [added: 2019] | | | | | | | [removed: 2017] [added: 2018] | | | | | | | [removed: 2016] [added: 2017] | | | | | |

| Cost of goods sold | | [removed: 12,500] [added: 12,704] | | | | [removed: 41] [added: 54] | % | | [removed: 11,886] [added: 12,500] | | | | [removed: 58] [added: 41] | % | | [removed: 9,894] [added: 11,886] | | | | [removed: 80] [added: 58] | % |

| Gross margin | | [removed: 17,891] [added: 10,702] | | | | [removed: 59] [added: 46] | % | | [removed: 8,436] [added: 17,891] | | | | [removed: 42] [added: 59] | % | | [removed: 2,505] [added: 8,436] | | | | [removed: 20] [added: 42] | % |

| Selling, general, and administrative | | [removed: 813] [added: 836] | | | | [removed: 3] [added: 4] | % | | [removed: 743] [added: 813] | | | | [removed: 4] [added: 3] | % | | [removed: 659] [added: 743] | | | | [removed: 5] [added: 4] | % |

| Research and development | | [removed: 2,141] [added: 2,441] | | | | [removed: 7] [added: 10] | % | | [removed: 1,824] [added: 2,141] | | | | [removed: 9] [added: 7] | % | | [removed: 1,617] [added: 1,824] | | | | [removed: 13] [added: 9] | % |

| Other operating (income) expense, net | | [removed: (57] [added: 49] | | [removed: )] | | — | % | | [removed: 1] [added: (57] | | [added: )] | | — | % | | [removed: 61] [added: 1] | | | | — | % |

| Operating income | | [removed: 14,994] [added: 7,376] | | | | [removed: 49] [added: 32] | % | | [removed: 5,868] [added: 14,994] | | | | [removed: 29] [added: 49] | % | | [removed: 168] [added: 5,868] | | | | [removed: 1] [added: 29] | % |

| Interest income (expense), net | | [removed: (222] [added: 77] | | [removed: )] | | [removed: (1] [added: —] | [removed: )%] [added: %] | | [removed: (560] [added: (222] | | ) | | [removed: (3] [added: (1] | )% | | [removed: (395] [added: (560] | | ) | | (3 | )% |

| Other non-operating income (expense), net | | [removed: (465] [added: (405] | | ) | | (2 | )% | | [removed: (112] [added: (465] | | ) | | [removed: (1] [added: (2] | )% | | [removed: (54] [added: (112] | | ) | | [removed: —] [added: (1] | [removed: %] [added: )%] |

| Income tax [removed: provision] [added: (provision) benefit] | | [removed: (168] [added: (693] | | ) | | [removed: (1] [added: (3] | )% | | [removed: (114] [added: (168] | | ) | | (1 | )% | | [removed: (19] [added: (114] | | ) | | [removed: —] [added: (1] | [removed: %] [added: )%] |

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

| Net income attributable to noncontrolling interests | | [removed: (3] [added: (45] | | ) | | — | % | | [removed: (1] [added: (3] | | ) | | — | % | | (1 | | ) | | — | % |

| Net income [removed: (loss)] attributable to Micron | | $ | [removed: 14,135] [added: 6,313] | | | [removed: 47] [added: 27] | % | | $ | [removed: 5,089] [added: 14,135] | | | [removed: 25] [added: 47] | % | | $ | [removed: (276] [added: 5,089] | [removed: )] | | [removed: (2] [added: 25] | [removed: )%] [added: %] |

Total [removed: net sales] [added: revenue] for 2018 increased 50% as compared to 2017.

Higher [removed: sales] [added: revenue] in 2018 for both DRAM and NAND [removed: 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 [removed: trade] NAND products for 2018 increased [removed: 26%] [added: 20%] from 2017 despite declines in average selling prices primarily due to an increase in sales volumes of approximately [removed: 40%] [added: 30%] 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.

[added: Property, plant, and equipment:] We periodically assess the estimated useful lives of our property, plant, and [removed: equipment.][added: equipment based on technology node transitions, capital spending, and equipment re-use rates.]

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

| CNBU | | $ | [removed: 15,252] [added: 9,968] | | | [removed: 50] [added: 43] | % | | $ | [removed: 8,624] [added: 15,252] | | | [removed: 42] [added: 50] | % | | $ | [removed: 4,529] [added: 8,624] | | | [removed: 37] [added: 42] | % |

| MBU | | [removed: 6,579] [added: 6,403] | | | | [removed: 22] [added: 27] | % | | [removed: 4,424] [added: 6,579] | | | | 22 | % | | [removed: 2,569] [added: 4,424] | | | | [removed: 21] [added: 22] | % |

| SBU | | [removed: 5,022] [added: 3,826] | | | | [removed: 17] [added: 16] | % | | [removed: 4,514] [added: 5,022] | | | | [removed: 22] [added: 17] | % | | [removed: 3,262] [added: 4,514] | | | | [removed: 26] [added: 22] | % |

| EBU | | [removed: 3,479] [added: 3,137] | | | | [removed: 11] [added: 13] | % | | [removed: 2,695] [added: 3,479] | | | | [removed: 13] [added: 11] | % | | [removed: 1,939] [added: 2,695] | | | | [removed: 16] [added: 13] | % |

| All Other | | [removed: 59] [added: 72] | | | | — | % | | [removed: 65] [added: 59] | | | | — | % | | [removed: 100] [added: 65] | | | | [removed: 1] [added: —] | % |

| | | $ | [removed: 30,391] [added: 23,406] | | | | | | $ | [removed: 20,322] [added: 30,391] | | | | | | $ | [removed: 12,399] [added: 20,322] | | | | |

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

CNBU [removed: sales] [added: revenue] for 2018 increased 77% as compared to 2017 due to strong market conditions and demand in key markets, including cloud server, client, enterprise [removed: server markets,] [added: server,] and [removed: graphics markets,] [added: graphics,] which drove increases in pricing and sales volumes.

MBU [removed: sales] [added: revenue] for [removed: 2018, which were comprised primarily of mobile LPDRAM and managed NAND products,] [added: 2018] 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 [added: revenue for 2018 from all other] sales of [removed: trade] NAND products [removed: for 2018] [added: (excluding sales to Intel at prices approximating cost)] 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.

SBU [removed: sales also include "non-trade" products consisting of] [added: revenue includes] products manufactured and sold to Intel [removed: through IMFT] under a long-term supply agreement at prices approximating cost, which included 3D XPoint memory and [removed: NAND products,] [added: NAND,] aggregating [removed: $541] [added: $682] million, [removed: $553] [added: $541] million, and [removed: $501] [added: $553] million, for [added: 2019,] 2018, [removed: 2017,] and [removed: 2016,] [added: 2017,] respectively.

EBU [removed: sales] [added: revenue] 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 | | $ | [removed: 9,773] [added: 4,645] | | | [removed: 64] [added: 47] | % | | $ | [removed: 3,755] [added: 9,773] | | | [removed: 44] [added: 64] | % | | $ | [removed: (25] [added: 3,755] | [removed: )] | | [removed: (1] [added: 44] | [removed: )%] [added: %] |

| MBU | | [removed: 3,033] [added: 2,606] | | | | [removed: 46] [added: 41] | % | | [removed: 927] [added: 3,033] | | | | [removed: 21] [added: 46] | % | | [removed: 97] [added: 927] | | | | [removed: 4] [added: 21] | % |

| SBU | | [removed: 964] [added: (386] | | [added: )] | | [removed: 19] [added: (10] | [removed: %] [added: )%] | | [removed: 552] [added: 964] | | | | [removed: 12] [added: 19] | % | | [removed: (123] [added: 552] | | [removed: )] | | [removed: (4] [added: 12] | [removed: )%] [added: %] |

| EBU | | [removed: 1,473] [added: 923] | | | | [removed: 42] [added: 29] | % | | [removed: 975] [added: 1,473] | | | | [removed: 36] [added: 42] | % | | [removed: 473] [added: 975] | | | | [removed: 24] [added: 36] | % |

| All Other | | [removed: —] [added: 13] | | | | [removed: —] [added: 18] | % | | [removed: 23] [added: —] | | | | [removed: 35] [added: —] | % | | [removed: 28] [added: 23] | | | | [removed: 28] [added: 35] | % |

| | | $ | [removed: 15,243] [added: 7,801] | | | | | | $ | [removed: 6,232] [added: 15,243] | | | | | | $ | [removed: 450] [added: 6,232] | | | | |

Percentages reflect operating income (loss) as a percentage of [removed: net sales] [added: revenue] for each business unit.

MBU operating income for [removed: 2017 improved] [added: 2019 decreased] from [removed: 2016] [added: 2018] primarily due to [removed: manufacturing cost reductions and higher sales volumes,] [added: declines in pricing] partially offset by [removed: higher R&D costs and declines] [added: increases] in [removed: average selling prices for trade] [added: sales of high-value managed] NAND [removed: products.][added: products and manufacturing cost reductions.]

| Revenue | | $ | 23,406 | | | 100 | % | | $ | 30,391 | | | 100 | % | | $ | 20,322 | | | 100 | % |

Total Revenue

Total revenue for 2019 decreased 23% as compared to 2018 primarily due to pricing declines resulting from the challenging memory market environment in 2019.

Sales of DRAM products for 2019 decreased 28% as compared to 2018 primarily due to declines in average selling prices of approximately 30% resulting from supply and demand imbalances, customer inventory corrections, and CPU shortages.

Sales of NAND products for 2019 decreased 12% as compared to 2018 primarily due to declines in average selling prices in the mid-40% range resulting from supply and demand imbalances, which were partially offset by significant increases in sales volumes.

In addition, demand for our NAND products was adversely affected by the transition from SATA SSDs to NVMe SSDs.

The higher NAND sales volumes in 2019 were driven by increases in sales of high-value mobile managed NAND products as well as discrete NAND products enabled by our execution in ramping 64- and 96-layer TLC 3D NAND.

Our overall gross margin percentage decreased to 46% for 2019 from 59% for 2018 primarily due to declines in average selling prices partially offset by cost reductions resulting from strong execution in delivering products featuring advanced technologies and from continuous improvement initiatives to reduce production costs.

Underutilization of IMFT assets adversely impacted our gross margin by a per-quarter average of approximately $100 million in 2019 and $65 million in 2018, and we anticipate the adverse impact of underutilization at IMFT to increase to approximately $150 million per quarter beginning in the first quarter of 2020.

We continue to evaluate planned technology node transitions, capital spending and re-use rates for NAND equipment.

Based on our preliminary assessment, we anticipate changing the depreciable life of our NAND equipment from five to seven years beginning in the first quarter of 2020.

We anticipate this change will reduce our depreciation expense included in cost of goods sold for the first quarter of 2020 by approximately $80 million, increasing to approximately $100 to $150 million per quarter for the remainder of 2020.

CNBU revenue for 2019 decreased 35% as compared to 2018 due to challenging market conditions in 2019, which led to price declines.

MBU revenue for 2019 decreased 3% as compared to 2018 primarily due to price declines offset by strong execution in developing and qualifying mobile managed NAND products and continued content growth in smartphones, which combined to drive significant increase in shipment volumes.

SBU revenue for 2019 decreased 24% as compared to 2018 primarily due to price declines, partially offset by significant growth in shipment volumes as a result of strong execution in ramping 64-layer and 96-layer TLC NAND products.

EBU revenue for 2019 decreased 10% as compared to 2018 primarily due to lower sales to consumer markets as a result of weak demand and pricing, partially offset by increases in sales to automotive and industrial markets.

| For the year ended | | 2019 | | | | | | | 2018 | | | | | | | 2017 | | | | | |

CNBU operating income for 2019 decreased from 2018 primarily due to declines in pricing and higher R&D costs, partially offset by cost reductions.

SBU operating results for 2019 and 2018 were adversely impacted by the underutilization charges at IMFT.

SG&A expenses for 2019 were 3% higher than 2018 primarily due to increases in legal costs and consulting fees, partially offset by a reduction in employee compensation and sales commissions.

R&D expenses for 2019 were 14% higher than 2018 primarily due to decreases in reimbursements from our R&D cost-sharing arrangements as described below, increases in depreciation expense as a result of increases in capital spending, and increases in employee compensation.

The decrease in R&D reimbursements for 2019 was primarily due to reductions in our joint development activities with Intel for 3D NAND and 3D XPoint technologies.

In 2018, we and Intel agreed to independently develop subsequent generations of 3D NAND and we substantially completed this cost-sharing agreement in the third quarter of 2019.

In 2018, we announced that we and Intel will no longer jointly develop 3D XPoint technology beyond the second generation and we substantially completed this cost-sharing agreement in the first quarter of 2020.

During

2019, we finalized the computations of the income tax effects of the Tax Act.

As such, in accordance with SAB 118, our accounting for the effects of the Tax Act is complete.

| For the year ended | | 2019 | | | | 2018 | | | | 2017 | | |

Our effective tax rate increased in 2019 primarily as a result of the Foreign Minimum Tax.

Interest income increased 71% for 2019 as compared to 2018 primarily due to increases in interest rates.

Interest expense decreased 63% as compared to 2018 primarily due to prepayments, repurchases, and conversions of debt in 2018 and 2019 and increases in capitalized interest from higher levels of capital spending, partially offset by the issuance of the 2024 Notes, 2026 Notes, 2027 Notes, 2029 Notes, and 2030 Notes in 2019.

Interest income increased 193% for 2018 as compared to 2017 primarily due to increases in marketable investments and interest rates.

As of August 29, 2019, we had undrawn credit facilities totaling $3.75 billion consisting of (1) an undrawn revolving credit facility that matures in July 2023 and provides for borrowings of up to $2.50 billion and (2) a term loan facility of up to $1.25 billion available to be drawn in a single advance prior to November 9, 2019 which matures on the fifth anniversary of the funding date.

We expect to draw under the term loan facility prior to acquiring Intel's interest in IMFT in the first quarter of 2020.

In January 2019, we exercised our option to acquire Intel's interest in IMFT.

Intel has set the closing date to occur on October 31, 2019.

In connection with our acquisition, in the first quarter of 2020, we expect to pay Intel approximately $1.4 billion for Intel's interest in IMFT as well as IMFT member debt owed to Intel.

As of August 29, 2019, current debt included $693 million of IMFT member debt.

| For the year ended | | 2019 | | | | 2018 | | | | 2017 | | |

Financing Activities: For 2019, net cash used for financing activities consisted primarily of $2.66 billion for the acquisition of 67 million shares of treasury stock under our $10 billion share repurchase authorization and cash payments to reduce our debt, including $1.65 billion to settle conversions of notes, $728 million to prepay the 2022 Term Loan B, $316 million for IMFT member debt repayments, and $643 million for scheduled repayment of other notes and capital leases.

All production data includes the production of IMFT and Inotera.

| Net sales | | $ | 30,391 | | | 100 | % | | $ | 20,322 | | | 100 | % | | $ | 12,399 | | | 100 | % |

Total Net Sales

Total net sales for 2017 increased 64% as compared to 2016 due to strong conditions across our primary markets, particularly for enterprise, mobile, client, and SSD storage.

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 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.

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 42% for 2017 from 20% for 2016 primarily due to strong markets that drove favorable pricing conditions and solid execution in manufacturing cost reductions from improvements in product and process technology.

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.

In the fourth quarter of 2016, we identified factors such as the lengthening period of time between DRAM product technology node transitions, an increased re-use rate of equipment, and industry trends.

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.

The effect of the revision was not material for 2016 and reduced depreciation expense at the time by approximately $100 million per quarter.

From January 2013 through December 2015, we purchased all of Inotera's DRAM output under supply agreements at prices reflecting discounts from market prices for our comparable components.

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

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

EBU sales were comprised of products incorporating DRAM, NAND, and NOR Flash in decreasing order of revenue.

CNBU sales for 2017 increased 90% as compared to 2016 due to increases in average selling prices 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.

MBU sales for 2017 increased 72% as compared to 2016 primarily due to significant increases in sales 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.

MBU sales growth in 2017 was partially offset by declines in average selling prices for trade NAND products.

SBU sales of trade NAND products for 2017 increased 41% as compared to 2016 primarily due to increases in sales volumes from strong demand, particularly for component NAND and client and cloud SSD storage products, partially offset by declines in average selling prices.

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 TLC 3D NAND technology.

EBU sales for 2017 increased 39% as compared to 2016 primarily due to strong demand and higher sales volumes for DRAM and eMCP in consumer markets and DRAM and eMMC products in the automotive markets.

CNBU operating margin for 2017 improved from 2016 primarily due to improved pricing from strong market conditions, manufacturing cost reductions, and product mix.

SG&A expenses for 2017 were 13% higher than 2016 primarily due to increases in employee compensation as well as transaction costs related to the Inotera Acquisition.

R&D expenses for 2017 were 13% higher than 2016 primarily due to higher volumes of development and pre-qualification wafers and increases in employee compensation, partially offset by lower engineering and other professional services costs.

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.

Our U.S. statutory federal rate was 25.7% for 2018 (based on the 35% corporate rate through December 31, 2017 and 21% from that date through the end of fiscal year 2018) and will be 21% beginning in 2019.

The Tax Act allows us to elect to pay any Repatriation Tax due in eight annual, interest-free payments in increasing amounts beginning in December 2018.

The provisional amounts below for 2018 represent reasonable estimates of the effects of the Tax Act for which our analysis is not yet complete.

As we complete our analysis of the Tax Act, including collecting, preparing, and analyzing necessary information, performing and refining calculations, and obtaining additional guidance from the IRS, U.S. Treasury Department, FASB, or other standard setting and regulatory bodies on the Tax Act, we may record adjustments to the provisional amounts, which may be material.

In accordance with SAB 118, our accounting for the tax effects of the Tax Act will be completed during the measurement period, which should not extend beyond one year from the enactment date.

At August 30, 2018, there were no provisions for which we were unable to record a reasonable estimate of the impact.

As of August [removed: 30, 2018] [added: 29, 2019] and August [removed: 31, 2017,] [added: 30, 2018,] we had fixed-rate debt of [removed: $3.1] [added: $5.3] billion and [removed: $5.7] [added: $3.1] 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: 30, 2018] [added: 29, 2019] and August [removed: 31, 2017,] [added: 30, 2018,] a decrease in market interest rates of 1% would increase the fair value of our fixed-rate debt by approximately [removed: $79] [added: $290] million and [removed: $273] [added: $79] million, respectively.

As of August 30, [removed: 2018 and August 31, 2017,] [added: 2018,] we had variable-rate debt of $725 [removed: million and $4.2 billion, respectively.][added: million.]

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

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: $78] [added: $149] million as of August [removed: 30, 2018] [added: 29, 2019] and [removed: $391] [added: $78] million as of August [removed: 31, 2017.][added: 30, 2018.]

We hedge our exposure to changes in currency exchange rates by utilizing a rolling hedge strategy for our primary currency exposures with currency forward contracts that generally mature within [removed: nine] [added: three] months.

As of August 29, 2019, we had no variable-rate debt.

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

Backed by 40 years of technology leadership, our memory and storage solutions enable disruptive trends, including artificial intelligence, [added: 5G,] machine learning, and autonomous vehicles, in key market segments like [removed: cloud,] [added: mobile,] data center, [removed: networking,] [added: client, consumer, industrial, graphics, automotive,] and [removed: mobile.][added: networking.]

We manufacture our products at [removed: our worldwide,] wholly-owned and joint venture [removed: facilities.][added: facilities and also utilize subcontractors to perform certain manufacturing processes.]

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

We continue to introduce new generations of products that offer improved performance characteristics, including higher data transfer rates, [removed: reduced package size,] [added: advanced packaging solutions to meet industry standards,] lower power consumption, improved read/write reliability, and increased memory density.

[removed: Storage products incorporating] [added: Our managed NAND and SSD storage products, which incorporate] NAND, a controller, and [removed: firmware] [added: firmware,] constitute a significant [removed: and increasing] portion of our [removed: sales.][added: revenues.]

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

We face intense competition in the semiconductor memory and storage markets and, [removed: in order] to remain competitive, we must continuously develop and implement new products and technologies and decrease manufacturing costs.

Our success is largely dependent on [removed: market acceptance of] [added: obtaining returns on] our [removed: diversified portfolio of semiconductor-based memory and storage solutions,] [added: R&D investments,] efficient utilization of our manufacturing infrastructure, [removed: successful ongoing] development and integration of advanced product and process [removed: technology,] [added: technologies, market acceptance of our diversified portfolio of semiconductor-based memory and storage solutions, and] return-driven capital [removed: spending, and successful R&D investments.][added: spending.]

Our product portfolio of memory and storage solutions, advanced solutions, and storage platforms are based on our high-performance semiconductor memory and storage technologies, including DRAM, NAND, [added: NOR,] 3D XPoint memory, and other technologies.

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

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

CNBU includes memory products and solutions sold into [added: client,] cloud server, enterprise, [removed: client,] graphics, and networking markets.

CNBU reported revenue of [removed: $15.25] [added: $9.97] billion in [removed: 2018, $8.62] [added: 2019, $15.25] billion in [removed: 2017,] [added: 2018,] and [removed: $4.53] [added: $8.62] billion in [removed: 2016.][added: 2017.]

[removed: Artificial intelligence] [added: Cloud] servers [added: supporting artificial intelligence workloads] require significantly increasing quantities of DRAM [removed: and] [added: 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.

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

Our enterprise RDIMM DRAM memory modules provide the high performance, [removed: reliability,] [added: quality,] and [removed: integrity requirements] [added: reliability required] for [removed: such] [added: these] applications.

[removed: Client:] In [removed: 2018,] [added: 2019,] we achieved significant production and sales to the client market from our 1Xnm [added: and 1Ynm] technology.

Our products sold to the client market support both [added: commercial and consumer] PC unit growth, [added: with commercial growth] driven primarily by [removed: corporate] replacement cycles from upgraded operating [removed: systems, as well as increases in content per unit.][added: systems.]

Networking: The networking memory market is characterized by long life-cycle DRAM products, and accordingly, a significant portion of our sales [removed: to the networking market] consisted of products manufactured on our legacy [removed: 30nm] [added: 25nm] and [removed: 25nm-series] [added: 20nm-series] DRAM technology.

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

MBU reported revenue of [removed: $6.58] [added: $6.40] billion in [removed: 2018, $4.42] [added: 2019, $6.58] billion in [removed: 2017,] [added: 2018,] and [removed: $2.57] [added: $4.42] billion in [removed: 2016.][added: 2017.]

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

SBU reported revenue of [removed: $5.02] [added: $3.83] billion in [removed: 2018, $4.51] [added: 2019, $5.02] billion in [removed: 2017,] [added: 2018,] and [removed: $3.26] [added: $4.51] billion in [removed: 2016.][added: 2017.]

[removed: Both the 64-layer QLC and 96-layer TLC] [added: Our] 3D NAND technologies utilize CMOS under the array ("CuA") technology to reduce die sizes and deliver improved performance when compared to competitive approaches.

SSDs: SSD storage products incorporate NAND, a controller, and firmware and offer [removed: benefits] [added: significant performance and features] over [removed: HDDs of] [added: HDDs, including] a smaller form factor, faster read and write speeds, [removed: and] solid-state [removed: architecture.][added: architecture, reliability, and lower power consumption.]

Enterprise and Cloud SSDs: SBU sales to the enterprise and cloud SSD markets in [removed: 2018] [added: 2019] consisted primarily of our flagship SATA [removed: 5100 and] 5200 [added: and 5100] series SSDs.

Artificial intelligence servers require significantly higher SSD [removed: capacity,] [added: capacity] and our 64-layer QLC NAND technology provides cost-optimized storage [removed: solutions, providing] [added: solutions with] significantly lower total cost of ownership for read-intensive cloud workloads.

[removed: Our] [added: In 2019, we continued offering our] 5200 series SATA SSDs, which deliver best-in-class performance and [removed: capacity, are based on the same proven architecture as] [added: capacity and achieved revenue crossover from] our 5100 [removed: series.][added: series SSDs.]

By leveraging our advanced CuA NAND in enterprise and cloud SSDs, we deliver [removed: low cost, high density, high performance] [added: low-cost, high-density, high-performance] storage solutions.

Client SSDs: SBU sales to the client SSD market in [removed: 2018] [added: 2019] consisted primarily of our 1100 series 3D NAND SATA Client [removed: SSD,] [added: SSDs,] which [removed: is] [added: are] targeted for leading personal computer OEMs as a replacement to HDDs.

Our client SSDs, used in notebooks, desktops, workstations, and [removed: related] [added: other] consumer applications, deliver high performance, power efficiency, security, and capacity to our customers.

Consumer SSDs: SBU sales to the consumer SSD market in [removed: 2018] [added: 2019] consisted primarily of our Crucial-branded MX500 SATA SSD, utilizing our 64-layer TLC 3D NAND.

3D XPoint [removed: memory: 3D XPoint memory] [added: technology] has [removed: 10 times the] [added: higher] chip density [removed: of] [added: than] DRAM, [added: up to] 1,000 times [removed: the endurance capability of NAND,] [added: lower latency,] and [removed: is 1,000 times faster] [added: exponentially greater endurance] than NAND.

[removed: These specifications] create a significant value opportunity for 3D XPoint [removed: memory] [added: technology] in solutions between DRAM and NAND in the memory and storage hierarchy.

Trends in machine learning, big data analytics, and artificial intelligence are driving demand for the features offered by 3D XPoint [removed: memory.][added: technology.]

EBU includes memory and storage products sold into automotive, industrial, and consumer markets and includes discrete [added: and module] DRAM, discrete NAND, managed NAND, and NOR.

EBU reported revenue of [removed: $3.48] [added: $3.14] billion in [removed: 2018, $2.70] [added: 2019, $3.48] billion in [removed: 2017,] [added: 2018,] and [removed: $1.94] [added: $2.70] billion in [removed: 2016.][added: 2017.]

The embedded market [removed: is] [added: has traditionally been] characterized by long life-cycle DRAM and [removed: NAND] [added: non-volatile] products manufactured on [removed: our] mature process technologies.

Automotive: Our DDR3 [removed: DRAM and eMMC] [added: DRAM, e.MMC] managed [removed: NAND] [added: NAND, and LPDDR4 DRAM] automotive memory and storage products enable connected, large display infotainment systems and higher definition 4K displays and support improved voice and gesture control in automotive applications.

We develop firmware and, in 2019, introduced our proprietary controllers into our SSDs.

MCP products combine DRAM, NAND, and/or NOR and in some cases also include a controller and firmware.

We achieved bit shipment crossover to 1Xnm DRAM products in 2019 and began shipments of our 1Ynm DRAM.

In 2019, we began enablement of our 1Znm products, designed to meet the need for better performance, higher density, and reduced power consumption in data center and other applications, and became the first memory company to begin mass production of 16Gb DDR4 memory products using 1Znm technology.

Our 1Znm 16Gb DDR4 product delivers substantially higher bit density as well as significant

performance enhancements and lower cost compared to the previous generation 1Ynm node and reduces power consumption by approximately 40% compared to previous generations of 8Gb DDR4-based products.

Client: The client market was CNBU's largest revenue segment in 2019 and consisted predominantly of our DDR4 DRAM products.

We also offer LPDDR4/4X and LPDDR3 products that are incorporated into ultra-thin notebooks with low power features.

Growth was primarily driven by increases in memory content per unit.

Cloud Server: CNBU sales to the cloud market in 2019 consisted predominantly of our second-generation 1Xnm DDR4 DRAM.

In 2019, we qualified RDIMM products incorporating our 1Ynm DRAM with key cloud server customers.

The cloud server market continues to experience significant growth, offering improved costs, security, stability, and flexibility.

Enterprise: CNBU sales in 2019 into the enterprise market consisted predominantly of our second-generation 1Xnm DDR4 DRAM products.

In 2019, we qualified our 64GB DDR4 modules incorporating our 1Ynm DRAM with key enterprise customers for use in servers.

Graphics: The graphics market is driven by the need for high-performance, high-bandwidth, and cost-effective memory solutions.

Our GDDR6 and GDDR5 DRAM graphics products are incorporated into game consoles, PC graphics cards and graphics processing unit-based data center solutions, which are the driving force behind applications such as artificial intelligence, virtual and augmented reality, 4K and 8K gaming, and professional design.

In 2018, we started volume production of our 8Gb GDDR6 DRAM and, in 2019, expanded our customer base and introduced our high-performance 16Gb GDDR6 DRAM.

In 2019, we accelerated sales of 4Gb and 8Gb DDR4 DRAM into emerging 5G applications and supported further build-out of advanced networking infrastructure to our large corporate and cloud data center customers.

In 2019, we introduced our 1Ynm 12Gb LPDDR5 mobile DRAM, which offers the highest performance and density available for the mobile market.

We also started volume shipments of our 1Znm 16Gb LPDDR4 mobile DRAM in discrete and MCP packages, which is the world's first 16Gb monolithic LPDRAM, enabling higher densities for the mobile market at a more competitive cost structure.

In 2019, we launched our second-generation UFS product with best-in-class endurance.

Smartphone: MBU sales to the smartphone market in 2019 consisted primarily of our 1Xnm LPDDR4 and managed NAND solutions.

Our managed NAND bit shipments in 2019 more than tripled year-on-year, driven by growth of MCP and discrete NAND e.MMC and UFS products.

In the fourth quarter of 2019, we started volume shipments of a new leading-edge UFS-based MCP ("uMCP") that uses our 1Z LPDRAM.

This new UFS MCP enables flagship-like performance and densities to mid and high-end smartphones.

Our LPDRAM solutions are engineered to meet the demanding performance and power specifications of industry-leading smartphone manufacturers.

Other: MBU sales also include products sold into the feature phone, mobile PC, and tablet markets.

Sales primarily consist of LPDDR4, LPDDR3, and TLC NAND.

In 2019, we continued to ramp our 96-layer 3D NAND, enabling cost reductions as compared to our 64-layer 3D NAND.

In 2019, we continued to make progress on our 128-layer 3D NAND, which uses replacement gate technology.

Our first replacement gate node will be based on our 128-layer 3D NAND, but is expected to be used across a select set of products.

With the high initial capital requirements of transitioning from floating gate to replacement gate technology, we don't expect meaningful cost reductions until 2021, when our second-generation replacement gate node is broadly deployed.

We believe our replacement gate architecture will allow us to deliver performance improvements and provide an efficient path towards scaling multiple future generations of 3D NAND.

Given a more limited initial deployment of our first node of replacement gate technology, we expect that our NAND bit supply growth in calendar 2020 will be below industry demand levels and plan to utilize our cost-effective floating gate inventory to meet growth in customer demand.

In 2019, we launched our 9300 Datacenter NVMe SSDs for enterprise and cloud markets.

These 9300 NVMe SSDs feature industry-leading sequential write performance and latency, increased capacities, and nearly a 30% reduction in power consumption over the previous generation.

In 2019, we introduced our next-generation 1300 series SATA SSD, which is one of the industry's first 96-layer TLC 3D NAND-based SSDs.

Our 1300 series SATA SSD offers fast storage, device-level security, thermal management, and extended battery life for mobile, desktop, and workstation PCs.

We also introduced our 2200 series PCIe NVMe SSD portfolio, which supports the NVM Express™ protocol, bringing increased bandwidth and reduced latency to client computing markets.

The 2200 PCIe NVMe SSD is a vertically integrated solution that includes our 3D TLC NAND, internally designed ASIC, and firmware in an M.2 form factor.

We generally develop firmware and expect to introduce proprietary controllers into our SSDs in the first half of 2019.

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.

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.

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.

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.

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

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.

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.

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.

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.

In 2018, we advanced development of our third-generation 96-tier 3D NAND structure, providing a 50 percent increase in layers.

By leveraging four planes versus two, our new NAND flash memory can write and read more cells in parallel, which delivers faster throughput and higher bandwidth at the system level.

SSDs offer significant performance and features, including speed, reliability, and lower power consumption.

In 2018, our SATA 5200 series SSD achieved qualification at enterprise server OEMs, cloud service providers, and enterprise customers.

We shipped our first 5200 series SATA SSDs in the third quarter of 2018 and received broad acceptance in the enterprise and cloud SSD markets.

In the first half of 2019, we expect to introduce our 2200 series 3D NAND PCIe client SSD incorporating our internally-developed controller, enabling us to offer additional differentiated storage solutions for our client customers.

Components and Wafers: SBU sales of components and wafers in 2018 consisted primarily of our 32-layer TLC NAND technology and our 64-layer TLC and QLC NAND technology.

We continue to transition our business from a storage components supplier to a storage solutions provider with a richer mix of high-value solutions such as SSDs and mobile managed NAND.

As a result, SBU sales of products in component and wafer form declined in 2018 as compared to 2017.

We are collaborating with our customers to develop 3D XPoint memory products and expect to sample such products in late calendar 2019.

In 2018, we announced availability of our 128GB and 256GB density of edge storage microSD card solutions and collaboration with several leading video surveillance solution providers to promote surveillance-grade edge storage, utilizing our 64-layer TLC 3D NAND technology.

This newly released solution enables greater capacity in a smaller space, delivering up to 30 days of surveillance video storage in the camera.

A significant portion of our semiconductor equipment is generally replaced every five to seven years with increasingly advanced equipment.

IMFT sales to Intel were $507 million, $438 million, and $457 million in 2018, 2017, and 2016, respectively.

The IMFT joint venture agreement extends through 2024 and includes certain buy-sell rights.

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 a price that approximates Intel's interest in the net book value of IMFT plus member debt at the time of the closing.

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

If we exercise our call right, Intel can elect to set the closing date of the transaction to be any time between six months and one year following such election.

The secured creditors [removed: will be] [added: were] paid in full on or before the sixth installment payment date, while the unsecured creditors will be paid in seven installments.

The final creditor payment under MMJ's plan of reorganization is scheduled to occur in December 2019.

MMJ's reorganization proceedings in Japan and oversight of the Tokyo District Court will terminate following the distribution of the final creditor payment and the Tokyo District Court's approval and issuance of an order concluding the reorganization proceedings.

MMJ's reorganization proceedings in Japan, and oversight of the 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 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 Tokyo District Court will grant any such petition in this particular case.

For the fiscal year ended August [removed: 30, 2018][added: 29, 2019]

| Delaware | [added: | | |] 75-1618004 |

| (State or other jurisdiction of incorporation or organization) | [added: | | |] (IRS Employer Identification No.) |

| 8000 S. Federal Way, Boise, Idaho | [added: | | |] 83716-9632 |

| (Address of principal executive offices) | [added: | | |] (Zip Code) |

| Registrant's telephone number, including area code | [added: | | |] (208) 368-4000 |

| Securities registered pursuant to Section 12(b) of the Act: | | [added: | | |]

| Title of each class | [added: | Trading Symbol | |] Name of each exchange on which registered |

| Common Stock, par value $0.10 per share | [added: | MU | |] NASDAQ Global Select Market |

Yes [removed: T] [added: x] No ¨

Yes ¨ No [removed: T][added: x]

Indicate by check mark whether the registrant has submitted electronically [removed: and posted on its corporate Website, if any,] every Interactive Data File required to be submitted [removed: and posted] pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit [removed: and post] such files).

The aggregate market value of the voting [removed: stock] [added: and non-voting common equity] held by non-affiliates [removed: of the registrant,] [added: was $36.2 billion] based [removed: upon] [added: on] the closing price [removed: of such stock on March 1, 2018, as] reported [removed: by] [added: on] the NASDAQ Global Select [removed: Market, was approximately $45.0 billion.][added: Market on February 28, 2019.]

Shares of common stock held by each executive officer and director and by each person who owns 5% or more of the outstanding common stock [removed: have been] [added: were] excluded [removed: in that such persons] [added: as they] may be deemed to be affiliates.

The number of outstanding shares of the registrant's common stock as of October [removed: 8, 2018] [added: 10, 2019] was [removed: 1,134,255,375.][added: 1,107,050,823.]

DOCUMENTS INCORPORATED BY REFERENCE: Portions of the Proxy Statement for the registrant's Fiscal [removed: 2018] [added: 2019] Annual Meeting of Shareholders to be held on January 16, [removed: 2019] [added: 2020] are incorporated by reference into Part II and Part III of this Annual Report on Form 10-K.

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

| [removed: 2021 MSAC] [added: 2022] Term Loan [added: B] | | [removed: Variable Rate MSAC] Senior Secured Term Loan [added: B] due [removed: 2021] [added: 2022] | | Micron | | Micron Technology, Inc. (Parent Company) |

| [removed: 2022] [added: 2024] Notes | | [removed: 5.88%] [added: 5.25%] Senior Notes due [removed: 2022] [added: 2024] | | MMJ | | Micron Memory Japan, Inc. |

| [removed: 2022 Term Loan B] [added: 2025 Notes] | | [added: 5.50%] Senior [removed: Secured Term Loan B] [added: Notes] due [removed: 2022] [added: 2025] | | MMJ Companies | | MAI and MMJ |

| [removed: 2023] [added: 2026] Notes | | [removed: 5.25%] [added: 5.63%] Senior Notes due [removed: 2023] [added: 2026] | | MMJ Group | | MMJ and its subsidiaries |

| [removed: 2023 Secured] [added: 2027] Notes | | [removed: 7.50%] [added: 4.19%] Senior [removed: Secured] Notes due [removed: 2023] [added: 2027] | | MMT | | Micron Memory Taiwan Co., Ltd. |

| [removed: 2024] [added: 2029] Notes | | [removed: 5.25%] [added: 5.33%] Senior Notes due [removed: 2024] [added: 2029] | | MSP | | Micron Semiconductor Products, Inc. |

| [removed: 2025] [added: 2030] Notes | | [removed: 5.50%] [added: 4.66%] Senior Notes due [removed: 2025] [added: 2027] | | MSTW | | Micron Semiconductor Taiwan Co., Ltd. |

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

| [removed: 2032C] [added: 2043G] Notes | | [removed: 2.38%] [added: 3.00%] Convertible Senior Notes due [removed: 2032] [added: 2043] | | Nanya | | Nanya Technology Corporation |

| 2033F Notes | | 2.13% Convertible Senior Notes due 2033 | | [removed: R&D] [added: NAND] | | [removed: Research and Development] [added: Not And] |

| Inotera | | Inotera Memories, Inc. | | SSD | | [removed: Solid-State] [added: Solid State] Drive |

| [removed: LPDRAM] [added: Intel] | | [removed: Mobile Low-Power DRAM] [added: Intel Corporation] | | TLC | | Triple-Level Cell (three bits per cell) |

| MCP | | Multi-Chip Package | | [added: VIE] | | [added: Variable Interest Entity] |

3D XPoint is a trademark of Intel [removed: or its subsidiaries] in the United States and/or other [added: countries 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 [removed: registered or unregistered] trademarks of their respective owners.

10-K 1 a2019q4.htm 10-K 2019


Yes x No ¨

Yes x No ¨

| | | | | |

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

| | | | | |



Forward-looking statements include, but are not limited to, statements such as those made regarding the timing and effects of our conversion to replacement gate technology, timing of bit crossover of our 96-layer 3D NAND, timing of our production of 128-layer 3D NAND, timing of and purchase price for Intel's interest in IMFT; debt incurred to finance our capital investments and noncontrolling interest in IMFT; the sufficiency of our cash and investments; capital spending in 2020; increase in underutilization of IMFT manufacturing capacity; anticipated change to the depreciable life of our NAND equipment and resulting change in depreciation expense; and the effects of adopting the new lease accounting standard in 2020.

| ASIC | | Application-Specific Integrated Circuit | | NOR | | Not Or |

| CuA | | CMOS Under the Array | | NVMe | | Non-Volatile Memory Express |

| DDR | | Double Data Rate | | OEM | | Original Equipment Manufacturer |

| DRAM | | Dynamic Random Access Memory | | PCIe | | Peripheral Component Interconnect Express |

| e.MMC | | Embedded Multi-Media Controller | | Qimonda | | Qimonda AG |

| eMCP | | An e.MMC or UFS solution with LPDRAM in the same package | | QLC | | Quad-Level Cell (four bits per cell) |

| GDDR | | Graphics Double Data Rate | | RDIMM | | Registered Dual In-line Memory Module |

| HDD | | Hard Disk Drive | | SATA | | Serial AT Attachment |

| LPDDR | | Low Power Double Data Rate | | UFS | | Universal Flash Storage |

| MAI | | Micron Akita, Inc. | | uMCP | | UFS-based MCP |

10-K 1 a2018q4.htm 10-K 2018

| | |

| --- | --- |

| Common Stock Purchase Rights | |

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

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.

| 2021 MSTW Term Loan | | Variable Rate MSTW Senior Secured Term Loan due 2021 | | MLC | | Multi-Level Cell (two bits per cell) |

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

| 2033 Notes | | 2033E and 2033F Notes | | Qimonda | | Qimonda AG |

| 2033E Notes | | 1.63% Convertible Senior Notes due 2033 | | QLC | | Quad-Level Cell (four bits per cell) |

| 2043G Notes | | 3.00% Convertible Senior Notes due 2043 | | SG&A | | Selling, General, and Administration |

| Intel | | Intel Corporation | | Tera Probe | | Tera Probe, Inc. |

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

The following is a summary of our principal facilities as of August [removed: 30, 2018:][added: 29, 2019:]

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

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

| Malaysia | | Component assembly [added: and test, module assembly and test] |

We own or lease [removed: a number of] [added: numerous] other facilities in locations throughout the world [removed: that are] used for design, R&D, and sales and marketing activities.

We generally utilize all of our manufacturing capacity; however, a portion of our IMFT facility was underutilized for 2019 and 2018.

Substantially all of our manufacturing capacity is fully utilized.

Certain of our properties are collateral to secured borrowing arrangements.

(See "Part II – Item 8.

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

As of October [removed: 8, 2018,] [added: 10, 2019,] there were [removed: 2,062] [added: 2,009] 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: 2018] [added: 2019] 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: 30, 2018.][added: 29, 2019.]

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

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

| 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 | | [added: |] (d) Maximum number (or approximate dollar value) of shares (or units) that may yet be purchased under publicly announced plans or programs | | |

| July [removed: 6, 2018] [added: 5, 2019] | – | August [removed: 2, 2018] [added: 1, 2019] | | — | | | — | | | | [added: —] | | | | | [added: |]

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: 2013,] [added: 2014,] through August 31, [removed: 2018.][added: 2019.]

[removed: ][added: ]

The performance graph above assumes $100 was invested on August 31, [removed: 2013] [added: 2014] in common stock of Micron Technology, Inc., the S&P 500 Composite Index, and the Philadelphia Semiconductor Index (SOX).

| | | [removed: 2013 | | | |] 2014 | | | | 2015 | | | | 2016 | | | | 2017 | | | | 2018 | | | [added: | 2019 | | |]

| May 31, 2019 | – | July 4, 2019 | | — | | | $ | — | | | — | | | | | |

| August 2, 2019 | – | August 29, 2019 | | — | | | — | | | | — | | | | | |

| | | | | — | | | | | | | | | | $ | 7,337,838,234 | |

| Micron Technology, Inc. | | $ | 100 | | | $ | 50 | | | $ | 51 | | | $ | 98 | | | $ | 161 | | | $ | 139 | |

| S&P 500 Composite Index | | 100 | | | | 100 | | | | 113 | | | | 131 | | | | 157 | | | | 162 | | |

| Philadelphia Semiconductor Index (SOX) | | 100 | | | | 97 | | | | 130 | | | | 184 | | | | 235 | | | | 257 | | |

Market for Common Stock

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 2018 and 2017:

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

| | | Fourth Quarter | | | | Third Quarter | | | | Second Quarter | | | | First Quarter | | |

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

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

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

| 2017 | | | | | | | | | | | | | | | | |

| High | | $ | 32.50 | | | $ | 30.77 | | | $ | 24.79 | | | $ | 20.13 | |

| Low | | 27.49 | | | | 25.15 | | | | 18.61 | | | | 16.62 | | |

Dividends

We have not declared or paid cash dividends since 1996 and do not intend to pay cash dividends for the foreseeable future.

As a result of the Japan Proceedings, for so long as such proceedings continue, MMJ is subject to certain restrictions on dividends, loans, and advances.

Our ability to access IMFT's cash and other assets through dividends, loans, or advances, including to finance our other operations, is subject to agreement by Intel.

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

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

| June 1, 2018 | – | July 5, 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 | | |

| | | [removed: 2018] [added: 2019] | | | | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | | | [removed: 2015] [added: 2016] | | | | [removed: 2014] [added: 2015] | | |

| | | (in [removed: millions] [added: millions,] except per share amounts) | | | | | | | | | | | | | | | | | | |

| [removed: Net sales] [added: Revenue] | | $ | [removed: 30,391] [added: 23,406] | | | $ | [removed: 20,322] [added: 30,391] | | | $ | [removed: 12,399] [added: 20,322] | | | $ | [removed: 16,192] [added: 12,399] | | | $ | [removed: 16,358] [added: 16,192] | |

| Gross margin | | [removed: 17,891] [added: 10,702] | | | | [removed: 8,436] [added: 17,891] | | | | [removed: 2,505] [added: 8,436] | | | | [removed: 5,215] [added: 2,505] | | | | [removed: 5,437] [added: 5,215] | | |

| Operating income | | [removed: 14,994] [added: 7,376] | | | | [removed: 5,868] [added: 14,994] | | | | [removed: 168] [added: 5,868] | | | | [removed: 2,998] [added: 168] | | | | [removed: 3,087] [added: 2,998] | | |

| Net income (loss) | | [added: 6,358 | | | |] 14,138 | | | | 5,090 | | | | (275 | | ) | | 2,899 | | | [removed: | 3,079 | | |]

| Net income (loss) attributable to Micron | | [added: 6,313 | | | |] 14,135 | | | | 5,089 | | | | (276 | | ) | | 2,899 | | | [removed: | 3,045 | | |]

| Diluted earnings (loss) per share | | [added: 5.51 | | | |] 11.51 | | | | 4.41 | | | | (0.27 | | ) | | 2.47 | | | [removed: | 2.54 | | |]

| Cash and short-term investments | | [removed: 6,802] [added: 7,955] | | | | [removed: 5,428] [added: 6,802] | | | | [removed: 4,398] [added: 5,428] | | | | [removed: 3,521] [added: 4,398] | | | | [removed: 4,534] [added: 3,521] | | |

| Total current assets | | [removed: 16,039] [added: 16,503] | | | | [removed: 12,457] [added: 16,039] | | | | [removed: 9,495] [added: 12,457] | | | | [removed: 8,596] [added: 9,495] | | | | [removed: 10,245] [added: 8,596] | | |

| Property, plant, and equipment | | [removed: 23,672] [added: 28,240] | | | | [removed: 19,431] [added: 23,672] | | | | [removed: 14,686] [added: 19,431] | | | | [removed: 10,554] [added: 14,686] | | | | [removed: 8,682] [added: 10,554] | | |

| Total assets | | [removed: 43,376] [added: 48,887] | | | | [removed: 35,336] [added: 43,376] | | | | [removed: 27,540] [added: 35,336] | | | | [removed: 24,143] [added: 27,540] | | | | [removed: 22,416] [added: 24,143] | | |

| Total current liabilities | | [removed: 5,754] [added: 6,390] | | | | [removed: 5,334] [added: 5,754] | | | | [removed: 4,835] [added: 5,334] | | | | [removed: 3,905] [added: 4,835] | | | | [removed: 4,791] [added: 3,905] | | |

| Long-term debt | | [removed: 3,777] [added: 4,541] | | | | [removed: 9,872] [added: 3,777] | | | | [removed: 9,154] [added: 9,872] | | | | [removed: 6,252] [added: 9,154] | | | | [removed: 4,893] [added: 6,252] | | |

| Total Micron [removed: shareholders’] [added: shareholders'] equity | | [removed: 32,294] [added: 35,881] | | | | [removed: 18,621] [added: 32,294] | | | | [removed: 12,080] [added: 18,621] | | | | [removed: 12,302] [added: 12,080] | | | | [removed: 10,760] [added: 12,302] | | |

| Noncontrolling interests in subsidiaries | | [removed: 870] [added: 889] | | | | [removed: 849] [added: 870] | | | | [removed: 848] [added: 849] | | | | [removed: 937] [added: 848] | | | | [removed: 802] [added: 937] | | |

| Total equity | | [removed: 33,164] [added: 36,770] | | | | [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: (See Item] [added: See "Item] 8.

| Redeemable convertible notes | | 3 | | | | 21 | | | | — | | | | 49 | | | | 68 | | |

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

| Consolidated Financial Statements as of August [removed: 30, 2018] [added: 29, 2019] and August [removed: 31, 2017] [added: 30, 2018] and for the fiscal years ended August [added: 29, 2019, August] 30, 2018, [added: and] August 31, [removed: 2017, and September 1, 2016] [added: 2017] | |

| Consolidated Statements of Operations | [removed: [41](#sD4ABAC4D241395D1323BE1DD95A1D847)] [added: [44](#sE969D7FCAD6457FAA3953A02E4B4571C)] |

[removed: | Consolidated Statements of Comprehensive Income (Loss) | [42](#s4D14C29DE95027DC6E64E1DD95B1F41C) |][added: CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME]

| Consolidated Balance Sheets | [removed: [43](#s7BDF086B6E36EC1E58F5E1DD95C1064A)] [added: [46](#s740377FFB551570FB31DDE54AA54199B)] |

| Consolidated Statements of Changes in Equity | [removed: [44](#s9AEFEE8CA3EC0112AB2FE1DD95E0274A)] [added: [47](#sA05795C843115884B134A59B1060C7DD)] |

| Consolidated Statements of Cash Flows | [removed: [45](#sF9DFCCB1C5A6422B2BBEE1DD962E9ECE)] [added: [48](#s440220D3A8AC5407B561FBDE3B0695EF)] |

| Notes to Consolidated Financial Statements | [removed: [46](#s7161490565C6114DEF32E1DDB38AD1C6)] [added: [49](#s065CF08009A35277BB6C51E79FFCF2C5)] |

| Report of Independent Registered Public Accounting Firm | [removed: [80](#s65CE23CA4F374C262905E1DDB9A5FB8C)] [added: [83](#s779DB744A68C574E9A41590EB5F6E39A)] |

(in [removed: millions] [added: millions,] except per share amounts)

| For the year ended | | August [removed: 30, 2018] [added: 29, 2019] | | | | August [removed: 31, 2017] [added: 30, 2018] | | | | [removed: September 1, 2016] [added: August 31, 2017] | | |

| Cost of goods sold | | [removed: 12,500] [added: 12,704] | | | | [removed: 11,886] [added: 12,500] | | | | [removed: 9,894] [added: 11,886] | | |

| Gross margin | | [removed: 17,891] [added: 10,702] | | | | [removed: 8,436] [added: 17,891] | | | | [removed: 2,505] [added: 8,436] | | |

| Selling, general, and administrative | | [removed: 813] [added: 836] | | | | [removed: 743] [added: 813] | | | | [removed: 659] [added: 743] | | |

| Research and development | | [removed: 2,141] [added: 2,441] | | | | [removed: 1,824] [added: 2,141] | | | | [removed: 1,617] [added: 1,824] | | |

| Other operating (income) expense, net | | [removed: (57] [added: 49] | | [removed: )] | | [removed: 1] [added: (57] | | [added: )] | | [removed: 61] [added: 1] | | |

| Operating income | | [removed: 14,994] [added: 7,376] | | | | [removed: 5,868] [added: 14,994] | | | | [removed: 168] [added: 5,868] | | |

| Interest income | | [removed: 120] [added: 205] | | | | [removed: 41] [added: 120] | | | | [removed: 42] [added: 41] | | |

| Interest expense | | [removed: (342] [added: (128] | | ) | | [removed: (601] [added: (342] | | ) | | [removed: (437] [added: (601] | | ) |

| Other non-operating income (expense), net | | [removed: (465] [added: (405] | | ) | | [removed: (112] [added: (465] | | ) | | [removed: (54] [added: (112] | | ) |

| | | [removed: 14,307] [added: 7,048] | | | | [removed: 5,196] [added: 14,307] | | | | [removed: (281] [added: 5,196] | | [removed: )] |

| Income tax [removed: provision] [added: (provision) benefit] | | [removed: (168] [added: (693] | | ) | | [removed: (114] [added: (168] | | ) | | [removed: (19] [added: (114] | | ) |

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

| Net income [removed: (loss)] | | [removed: 14,138] [added: 6,358] | | | | [removed: 5,090] [added: 14,138] | | | | [removed: (275] [added: 5,090] | | [removed: )] |

| Net income attributable to noncontrolling interests | | [removed: (3] [added: (45] | | ) | | [removed: (1] [added: (3] | | ) | | (1 | | ) |

| Net income [removed: (loss)] attributable to Micron | | $ | [removed: 14,135] [added: 6,313] | | | $ | [removed: 5,089] [added: 14,135] | | | $ | [removed: (276] [added: 5,089] | [removed: )] |

| Earnings [removed: (loss)] per share | | | | | | | | | | | | |

| Basic | | $ | [removed: 12.27] [added: 5.67] | | | $ | [removed: 4.67] [added: 12.27] | | | $ | [removed: (0.27] [added: 4.67] | [removed: )] |

| Diluted | | [removed: 11.51] [added: 5.51] | | | | [removed: 4.41] [added: 11.51] | | | | [removed: (0.27] [added: 4.41] | | [removed: )] |

| Basic | | [removed: 1,152] [added: 1,114] | | | | [removed: 1,089] [added: 1,152] | | | | [removed: 1,036] [added: 1,089] | | |

| Diluted | | [removed: 1,229] [added: 1,143] | | | | [removed: 1,154] [added: 1,229] | | | | [removed: 1,036] [added: 1,154] | | |

[removed: CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)][added: | Consolidated Statements of Comprehensive Income | [45](#sBD046CB55E7E5C24B6674634DD5EEB2E) |]

| Net income [removed: (loss)] | | $ | [removed: 14,138] [added: 6,358] | | | $ | [removed: 5,090] [added: 14,138] | | | $ | [removed: (275] [added: 5,090] | [removed: )] |

| Gains (losses) on derivative instruments | | [removed: (15] [added: (3] | | ) | | [removed: 15] [added: (15] | | [added: )] | | [removed: 7] [added: 15] | | |

| Pension liability adjustments | | [removed: (3] [added: (6] | | ) | | [removed: 1] [added: (3] | | [added: )] | | [removed: (9] [added: 1] | | [removed: )] |

| [removed: Unrealized gains] [added: Gains] (losses) on investments | | [removed: (2] [added: 9] | | [removed: )] | | [removed: —] [added: (2] | | [added: )] | | [removed: 3] [added: —] | | |

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

| Other comprehensive income (loss) | | [removed: (19] [added: (1] | | ) | | [removed: 64] [added: (19] | | [added: )] | | [removed: (48] [added: 64] | | [removed: )] |

| Total comprehensive income [removed: (loss)] | | [removed: 14,119] [added: 6,357] | | | | [removed: 5,154] [added: 14,119] | | | | [removed: (323] [added: 5,154] | | [removed: )] |

| Comprehensive [removed: (income)] [added: income] attributable to noncontrolling interests | | [removed: (3] [added: (45] | | ) | | [removed: (1] [added: (3] | | ) | | (1 | | ) |

| Comprehensive income [removed: (loss)] attributable to Micron | | $ | [removed: 14,116] [added: 6,312] | | | $ | [removed: 5,153] [added: 14,116] | | | $ | [removed: (324] [added: 5,153] | [removed: )] |

| Revenue | | $ | 23,406 | | | $ | 30,391 | | | $ | 20,322 | |

| For the year ended | | August 29, 2019 | | | | August 30, 2018 | | | | August 31, 2017 | | |

| Other current liabilities | | 454 | | | | 521 | | |

| Noncurrent unearned government incentives | | 636 | | | | 227 | | |

| Cumulative effect of adopting new accounting standards | | | | | | | | | | | | | 92 | | | | | | | | | | | | 92 | | | | | | | | 92 | | |

| Net income | | | | | | | | | | | | | 6,313 | | | | | | | | | | | | 6,313 | | | | 36 | | | | 6,349 | | |

| Repurchase of stock | | (2 | ) | | — | | | | 103 | | | | (39 | | ) | | (2,792 | | ) | | | | | | (2,728 | | ) | | | | | | (2,728 | | ) |

| Balance at August 29, 2019 | | 1,182 | | | $ | 118 | | | $ | 8,214 | | | $ | 30,761 | | | $ | (3,221 | ) | | $ | 9 | | | $ | 35,881 | | | $ | 889 | | | $ | 36,770 | |

| For the year ended | | August 29, 2019 | | | | August 30, 2018 | | | | August 31, 2017 | | |

| Net income | | $ | 6,358 | | | $ | 14,138 | | | $ | 5,090 | |

| Accounts payable and accrued expenses | | (174 | | ) | | 668 | | | | 456 | | |

| Other | | (160 | | ) | | (378 | | ) | | 362 | | |

| Other | | 120 | | | | 144 | | | | 79 | | |

| Payments to acquire treasury stock | | (2,729 | | ) | | (71 | | ) | | (36 | | ) |

Intercompany balances and transactions have been eliminated in consolidation.

Information prior to 2019 is presented in accordance with the accounting guidance in effect during that period and has not been recast for recently adopted accounting standards.

See "Recently Adopted Accounting Standards" note.

Revenue Recognition: Revenue is primarily recognized at a point in time when control of the promised goods is transferred to our customers in an amount that reflects the consideration we expect to be entitled to in exchange for those goods.

Contracts with our customers are generally short-term in duration at fixed, negotiated prices with payment generally due shortly after delivery.

We estimate a liability for returns using the expected value method based on historical rates of return.

In addition, we generally offer price protection to our distributors, which is a form of variable consideration that decreases the transaction

price.

We use the expected value method, based on historical price adjustments and current pricing trends, to estimate the amount of revenue recognized from sales to distributors.

Differences between the estimated and actual amounts are recognized as adjustments to revenue.

Unconsolidated VIE

In January 2019, we exercised our option to acquire Intel's interest in IMFT.

Subsequently, Intel set the closing date to occur on October 31, 2019, at which time IMFT will become a wholly-owned subsidiary.

We adopted this ASU in the first quarter of 2019 under the modified retrospective method and, in connection therewith, made certain adjustments as noted in the table below.

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

We adopted ASC 606 in the first quarter of 2019 under the modified retrospective method and, in connection therewith, made certain adjustments as noted in the table below.

We applied ASC 606 to contracts with customers that had not yet been completed as of the adoption date.

The following table summarizes the effects of adopting ASU 2016-16 and ASC 606:

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

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

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

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

| | Ending Balance as of August 30, 2018 | | | | ASU 2016-16 | | | | ASC 606 | | | | Opening Balance as of August 31, 2018 | | |

| Receivables | $ | 5,478 | | | $ | — | | | $ | 114 | | | $ | 5,592 | |

| Inventories | 3,595 | | | | — | | | | (5 | | ) | | 3,590 | | |

| Other current assets | 164 | | | | (14 | | ) | | 30 | | | | 180 | | |

| | |

| --- | --- |

| Net sales | | $ | 30,391 | | | $ | 20,322 | | | $ | 12,399 | |

| Deferred income | | 284 | | | | 408 | | |

| Balance at September 3, 2015 | | 1,084 | | | $ | 108 | | | $ | 7,474 | | | $ | 5,588 | | | $ | (881 | ) | | $ | 13 | | | $ | 12,302 | | | $ | 937 | | | $ | 13,239 | |

| Acquisitions of noncontrolling interests | | | | | | | | | | | | | | | | | | | | | | | | | — | | | | (93 | | ) | | (93 | | ) |

| Repurchase and retirement of stock | | (1 | ) | | — | | | | (10 | | ) | | (13 | | ) | | | | | | | | | | (23 | | ) | | | | | | (23 | | ) |

| Repurchase of treasury stock | | | | | | | | | | | | | | | | | (125 | | ) | | | | | | (125 | | ) | | | | | | (125 | | ) |

| Settlement of capped calls | | | | | | | | | 23 | | | | | | | | (23 | | ) | | | | | | — | | | | | | | | — | | |

| Contributions from noncontrolling interests | | | | | | | | | | | | | | | | | | | | | | | | | — | | | | 18 | | | | 18 | | |

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

| Payments to settle hedging activities | | (185 | | ) | | (274 | | ) | | (152 | | ) |

| Proceeds from settlement of hedging activities | | 163 | | | | 184 | | | | 335 | | |

| Other | | 166 | | | | 169 | | | | (90 | | ) |

| Proceeds from equipment sale-leaseback transactions | | — | | | | — | | | | 765 | | |

For derivative instruments designated as cash flow hedges, the effective portion of the realized and unrealized gains or losses on derivatives is included as a component of accumulated other comprehensive income.

Amounts in accumulated other comprehensive income are reclassified into earnings in the same line items and in the same periods in which the underlying transactions affect earnings.

For the periods presented prior to the second quarter of 2018, the ineffective and excluded portion of the realized and unrealized gain or loss was included in other non-operating income (expense).

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).

We periodically assess the estimated useful lives of our property, plant, and equipment.

In the fourth quarter of 2016, we revised the estimated useful lives of equipment in our DRAM wafer fabrication facilities from five to seven years as a result of the lengthening period of time between DRAM product technology node transitions, an increased re-use rate of equipment, and industry trends.

The effect of the revision reduced depreciation expense at the time by approximately $100 million per quarter.

Revenue Recognition: We recognize product or license revenue when persuasive evidence that a sales arrangement exists, delivery has occurred, the price is fixed or determinable, and collectibility is reasonably assured, which is generally at the time

of shipment to our customers.

If we are unable to reasonably estimate returns or the price is not fixed or determinable, sales made under agreements allowing rights of return or price protection are deferred until customers have resold the product.

Unconsolidated VIEs

This ASU, as amended, will be effective for us in the first quarter of 2020 with early adoption permitted and allows for either a modified retrospective adoption or a retrospective adoption by recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption.

We are evaluating the timing and other effects of our adoption of this ASU on our financial statements.

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

This ASU is effective for us in the first quarter of 2019 and we expect to elect the modified retrospective adoption method.

As a result of the adoption of this ASU, we will recognize revenue from sales of products to our distributors (which generally have agreements allowing rights of return or price protection) at the time control transfers to our distributors, which is generally earlier than recognizing revenue only upon resale by our distributors under existing revenue recognition guidance.

Revenue recognized upon resale by our distributors under these arrangements was 19%, 20%, and 25% of our consolidated revenue for the 2018, 2017, and 2016, respectively.

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.

| | | August 31, 2017 | | | | September 1, 2016 | | |

The pro forma information for 2016 includes our results for the year ended September 1, 2016, the results of Inotera for the twelve months ended August 31, 2016, and the adjustments described above.

During the fourth quarter of [removed: 2018,] [added: 2019,] 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: 30, 2018.][added: 29, 2019.]

The effectiveness of our internal control over financial reporting as of August [removed: 30, 2018] [added: 29, 2019] 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.

Certain information concerning our executive officers is included under the caption, [removed: "Directors] [added: "Information About Our Directors] and Executive [removed: Officers of the Registrant,"] [added: Officers"] in Part I, Item 1 of this report.

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: 30, 2018] [added: 29, 2019] and is incorporated herein by reference.

| | Balance at Beginning of Year | | | | [removed: Business Acquisitions | | | |] Charged (Credited) to Income Tax Provision | | | | Currency Translation and Charges to Other Accounts | | | | Balance at End of Year | | |

| Deferred Tax Asset Valuation Allowance | | | | | | | | | | | | | | | | [removed: | | | |]

| Year ended August 30, 2018 | [removed: $ |] 2,321 | | | [removed: $] | [removed: — | | | $ |] (2,079 | [removed: )] | [added: )] | [removed: $] | (14 | [removed: )] | [added: )] | [removed: $] | 228 | | [added: |]

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

| 3.2 | [Bylaws of the Registrant, Amended and [removed: Restated](http://www.sec.gov/Archives/edgar/data/723125/000072312514000079/exh-991.htm)] [added: Restated](http://www.sec.gov/Archives/edgar/data/723125/000072312519000037/ex992amendedbylaws712019.htm)] | | 8-K | | [removed: 99.1] [added: 99.2] | [removed: 4/15/14] [added: 7/1/19] |

| 4.1 | [Indenture dated as of April 18, 2012, by and between Micron Technology, Inc. and U.S. Bank National Association, as Trustee for [removed: 2.375%] [added: 3.125%] Convertible Senior Notes due [removed: 2032](http://www.sec.gov/Archives/edgar/data/723125/000110465912026222/a12-9302_3ex4d1.htm)] [added: 2032](http://www.sec.gov/Archives/edgar/data/723125/000110465912026222/a12-9302_3ex4d3.htm)] | | 8-K | | [removed: 4.1] [added: 4.3] | 4/18/12 |

| [removed: 4.2] [added: 4.3] | [removed: [Indenture] [added: [Indenture,] dated as of [removed: April 18, 2012,] [added: February 12, 2013,] by and between Micron Technology, Inc. and U.S. Bank National Association, as [removed: Trustee for 3.125% Convertible Senior Notes due 2032](http://www.sec.gov/Archives/edgar/data/723125/000110465912026222/a12-9302_3ex4d3.htm)] [added: trustee](http://www.sec.gov/Archives/edgar/data/723125/000110465913009753/a13-4300_4ex4d3.htm)] | | 8-K | | 4.3 | [removed: 4/18/12] [added: 2/12/13] |