Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This discussion should be read in conjunction with the consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended September 1, 2022. All period references are to our fiscal periods unless otherwise indicated. Our fiscal year is the 52 or 53-week period ending on the Thursday closest to August 31. Fiscal years 2023 and 2022 each contain 52 weeks. All tabular dollar amounts are in millions, except per share amounts.

Overview

We are an industry leader in innovative memory and storage solutions transforming how the world uses information to enrich life for all. With a relentless focus on our customers, technology leadership, and manufacturing and operational excellence, Micron delivers a rich portfolio of high-performance DRAM, NAND, and NOR memory and storage products through our Micron® and Crucial® brands. Every day, the innovations that our people create fuel the data economy, enabling advances in artificial intelligence and 5G applications that unleash opportunities — from the data center to the intelligent edge and across the client and mobile user experience.

We manufacture our products at wholly-owned facilities and also utilize subcontractors for certain manufacturing processes. Our global network of manufacturing centers of excellence not only allows us to benefit from scale while streamlining processes and operations, but it also brings together some of the world’s brightest talent to work on the most advanced memory technology. Centers of excellence bring expertise together in one location, providing an efficient support structure for end-to-end manufacturing, with quicker cycle times, in partnership with teams such as research and development (“R&D”), product engineering, human resources, procurement, and supply chain. For our locations in Singapore and Taiwan, this is also a combination of bringing fabrication and back-end manufacturing together. We make significant investments to develop proprietary product and process technology, which generally increases bit density per wafer and reduces per-bit manufacturing costs of each generation of product. We continue to introduce new generations of products that offer improved performance characteristics, including higher data transfer rates, advanced packaging solutions, lower power consumption, improved read/write reliability, and increased memory density.

We face intense competition in the semiconductor memory and storage markets and to remain competitive we must continuously develop and implement new products and technologies and decrease manufacturing costs in spite of ongoing inflationary cost pressures. Our success is largely dependent on obtaining returns on our R&D investments, efficient utilization of our manufacturing infrastructure, development and integration of advanced product and process technologies, market acceptance of our diversified portfolio of semiconductor-based memory and storage solutions, and efficient capital spending.

Product Technologies

Our product portfolio of memory and storage solutions, advanced solutions, and storage platforms is based on our high-performance semiconductor memory and storage technologies, including DRAM, NAND, and NOR. We sell our products into various markets through our business units in numerous forms, including components, modules, SSDs, managed NAND, MCPs, and wafers. Our system-level solutions, including SSDs and managed NAND, combine NAND, a controller, firmware, and in some cases DRAM.

DRAM: DRAM products are dynamic random access memory semiconductor devices with low latency that provide high-speed data retrieval with a variety of performance characteristics. DRAM products lose content when power is turned off (“volatile”) and are most commonly used in client, cloud server, enterprise, networking, graphics, industrial, and automotive markets. LPDRAM products, which are engineered to meet standards for performance and power consumption, are sold into smartphone and other mobile-device markets (including client markets for Chromebooks and notebook PCs), as well as into the automotive, industrial, and consumer markets.

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NAND: NAND products are non-volatile, re-writeable semiconductor storage devices that provide high-capacity, low-cost storage with a variety of performance characteristics. NAND is used in SSDs for the enterprise and cloud, client, and consumer markets and in removable storage markets. Managed NAND is used in smartphones and other mobile devices, and in consumer, automotive, and embedded markets. Low-density NAND is ideal for applications like automotive, surveillance, machine-to-machine, automation, printer, and home networking.

NOR: NOR products are non-volatile re-writable semiconductor memory devices that provide fast read speeds. NOR is most commonly used for reliable code storage (e.g., boot, application, operating system, and execute-in-place code in an embedded system) and for frequently changing small data storage and is ideal for automotive, industrial, and consumer applications.

Industry Conditions

The memory and storage industry environment deteriorated sharply in the fourth quarter of 2022 through the first nine months of 2023 due to weak demand in many end markets combined with global and macroeconomic challenges and reduced demand resulting from customer adjustments to lower elevated inventory levels. This led to significant reductions in average selling prices and bit shipments for both DRAM and NAND, resulting in declines in revenue across all our business segments and nearly all our end markets. Due to the challenging pricing environment, we recognized charges of $401 million and $1.43 billion to write down inventories to their estimated net realizable value in the third and second quarters of 2023, respectively. Further write-downs of inventories in future quarters could occur if pricing expectations deteriorate. The ongoing improvement of customer inventories and memory content growth are driving higher industry demand in the second half of calendar 2023, while production cuts across the industry continue to help reduce excess supply. As a result, pricing trends have started to improve. However, given the challenging pricing environment, elevated levels of inventories for suppliers and customers, and significant supply-demand mismatch, we expect industry profitability will remain challenged into 2024.

As a result of these conditions and increases in our inventory levels, we have reduced capital expenditures and also plan to further reduce wafer starts to approach 30% in both DRAM and NAND from peak capacity. We expect reduced wafer starts will continue well into 2024 as we remain focused on managing down our inventories and controlling our supply. We recognized period costs from fabrication facility underutilization of $132 million in the third quarter of 2023 due to wafer start reductions. We estimate approximately $200 million of period costs from underutilization due to wafer start reductions in the fourth quarter of 2023. We are also taking significant steps to reduce our costs and operating expenses. These actions include the 2023 Restructure Plan discussed below and additional reductions in external spending, including implementing productivity programs across the business, suspension of our 2023 bonus company-wide, reductions in select product programs, lower discretionary spending, and cuts to 2023 executive salaries across the company.

Impact of China Cyberspace Administration Decision

On March 31, 2023, China’s Cyberspace Administration (the “CAC”) notified us that it was conducting a cybersecurity review of our products sold in China. On May 21, 2023, we received notice that the CAC had concluded its review and decided that our products presented a cybersecurity risk. As such, the CAC determined that critical information infrastructure operators in China cannot purchase Micron products. There is no list of the companies that have been designated as critical information infrastructure operators published by the Chinese government or otherwise available to us. Therefore, the impact that the CAC decision will have on our business remains uncertain and fluid. For example, several of our customers, including mobile OEMs, have been contacted by certain critical information infrastructure operators or representatives of the government in China concerning the future use of our products.

Our revenue with companies headquartered in mainland China and Hong Kong, including direct sales as well as indirect sales through distributors, is approximately a quarter of our worldwide revenue and remains the principal exposure to the CAC decision. Although the impact of the CAC decision remains uncertain and fluid, we currently estimate that approximately half of that China-headquartered customer revenue, which equates to a low-double-digit percentage of our worldwide revenue, is at risk of being impacted. This significant headwind is impacting our outlook and slowing our recovery. We are working to mitigate this impact over time and expect increased quarter-to-quarter revenue variability. Our long-term goal is to retain our worldwide DRAM and NAND share.

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2023 Restructure Plan

We initiated the 2023 Restructure Plan in response to challenging industry conditions. Under the plan, we expect our headcount reduction to approach 15% by the end of calendar 2023, through a combination of voluntary attrition and personnel reductions. In connection with the plan, we incurred restructure charges of $68 million and $167 million in the third quarter and first nine months of 2023, respectively, primarily related to employee severance costs. The 2023 Restructure Plan was substantially completed in the third quarter of 2023 and we expect to pay substantially all of the remaining $46 million of accrued severance in the fourth quarter of 2023. As a result of the 2023 Restructure Plan, we expect to realize cost savings of approximately $130 million per quarter (approximately 60% in cost of goods sold, 30% in R&D, and 10% in SG&A) starting in the fourth quarter of 2023. Further information on restructure activities can be found in “Item 1. Financial Statements – Notes to Consolidated Financial Statements – Restructure and Asset Impairments.”

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Results of Operations

Consolidated Results

			Third Quarter						Second Quarter						Third Quarter						Nine months ended
			2023						2023						2022						2023						2022
Revenue			$	3,752		100		%	$	3,693		100		%	$	8,642		100		%	$	11,530		100		%	$	24,115		100		%
Cost of goods sold			4,420			118		%	4,899			133		%	4,607			53		%	12,511			109		%	12,839			53		%
Gross margin			(668)			(18)		%	(1,206)			(33)		%	4,035			47		%	(981)			(9)		%	11,276			47		%
Research and development			758			20		%	788			21		%	773			9		%	2,395			21		%	2,277			9		%
Selling, general, and administrative			219			6		%	231			6		%	264			3		%	701			6		%	786			3		%
Restructure and asset impairments			68			2		%	86			2		%	—			—		%	167			1		%	43			—		%
Other operating (income) expense, net			48			1		%	(8)			—		%	(6)			—		%	29			—		%	(11)			—		%
Operating income (loss)			(1,761)			(47)		%	(2,303)			(62)		%	3,004			35		%	(4,273)			(37)		%	8,181			34		%
Interest income (expense), net			8			—		%	30			1		%	(24)			—		%	75			1		%	(102)			—		%
Other non-operating income (expense), net			—			—		%	2			—		%	8			—		%	(2)			—		%	(61)			—		%
Income tax (provision) benefit			(139)			(4)		%	(54)			(1)		%	(358)			(4)		%	(201)			(2)		%	(832)			(3)		%
Equity in net income (loss) of equity method investees			(4)			—		%	13			—		%	(4)			—		%	(2)			—		%	9			—		%
Net income (loss)			$	(1,896)		(51)		%	$	(2,312)		(63)		%	$	2,626		30		%	$	(4,403)		(38)		%	$	7,195		30		%

Total Revenue: Total revenue for the third quarter and first nine months of 2023 has been adversely impacted by the factors described in the section titled “Industry Conditions” above.

Total revenue for the third quarter of 2023 increased 2% as compared to the second quarter of 2023 primarily due to increases in bit shipments of both DRAM and NAND products partially offset by declines in average selling prices.

• Sales of DRAM products decreased 2% primarily due to an approximate 10 percent decline in average selling prices partially offset by an increase in bit shipments in the 10 percent range.

• Sales of NAND products increased 14% primarily due to an upper-30 percent range increase in bit shipments partially offset by a mid-teens percent range decline in average selling prices.

Total revenue for the third quarter of 2023 decreased 57% as compared to the third quarter of 2022 primarily due to decreases in sales of both DRAM and NAND products.

• Sales of DRAM products decreased 57% primarily due to a low-50s percent range decline in average selling prices and decreases in bit shipments in the low-teens percent range.

• Sales of NAND products decreased 56% primarily due to a mid-50s percent range decline in average selling prices.

Total revenue for the first nine months of 2023 decreased 52% as compared to the first nine months of 2022 primarily due to decreases in sales of both DRAM and NAND products.

• Sales of DRAM products decreased 53% primarily due to a mid-40s percent range decline in average selling prices and decreases in bit shipments in the mid-teens percent range.

• Sales of NAND products decreased 51% primarily due to a mid-40s percent range decline in average selling prices and decreases in bit shipments in the 10 percent range.

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Consolidated Gross Margin**:** Our consolidated gross margin has been adversely impacted by the factors described in the section titled “Industry Conditions” above. Our consolidated gross margin percentage improved to negative 18% for the third quarter of 2023 from negative 33% for the second quarter of 2023 primarily due to a lesser impact from charges to write down inventories to their estimated net realizable value, as detailed in “Inventory NRV write-downs” below, partially offset by the declines in average selling prices for both DRAM and NAND and higher facility underutilization costs. The inventory associated with $281 million of the inventory write-downs taken during the second quarter of 2023 has been sold through to customers as of the end of the third quarter of 2023.

Our consolidated gross margin percentage decreased to negative 18% for the third quarter of 2023 from 47% for the third quarter of 2022 primarily due to the charge to write down inventories, declines in average selling prices for both DRAM and NAND, and higher underutilization costs.

Our consolidated gross margin percentage decreased to negative 9% for the first nine months of 2023 from 47% for the first nine months of 2022 primarily due to the charges to write down inventories and declines in average selling prices for both DRAM and NAND.

Inventory NRV write-downs: Our consolidated gross margin was impacted by charges to write down inventories to their estimated net realizable value as a result of declines in average selling prices for both DRAM and NAND. As charges to write down inventories are recorded in advance of when inventories are sold, costs of goods sold in subsequent periods are lower than they otherwise would be. The impact of inventory NRV write-downs for each period reflects (1) inventory write-downs in that period, offset by (2) lower costs in that period on the sale of inventory written down in prior periods. The impacts of inventory NRV write-downs are summarized below:

			Third Quarter			Second Quarter			Third Quarter						Nine months ended
			2023			2023			2022						2023			2022
Provision to write down inventory to NRV			$	(401)		$	(1,430)		$	—					$	(1,831)		$	—
Lower costs from sale of inventory written down in prior periods			281			—			—						281			—
			$	(120)		$	(1,430)		$	—					$	(1,550)		$	—

Revenue by Business Unit

			Third Quarter						Second Quarter						Third Quarter						Nine months ended
			2023						2023						2022						2023						2022
CNBU			$	1,389		37		%	$	1,375		37		%	$	3,895		45		%	$	4,510		39		%	$	10,762		45		%
MBU			819			22		%	945			26		%	1,967			23		%	2,419			21		%	5,749			24		%
EBU			912			24		%	865			23		%	1,435			17		%	2,777			24		%	3,932			16		%
SBU			627			17		%	507			14		%	1,341			16		%	1,814			16		%	3,662			15		%
All Other			5			—		%	1			—		%	4			—		%	10			—		%	10			—		%
			$	3,752					$	3,693					$	8,642					$	11,530					$	24,115

Percentages of total revenue may not total 100% due to rounding.

Changes in revenue for each business unit for the third quarter of 2023 as compared to the second quarter of 2023 were as follows:

• CNBU revenue increased 1% primarily due to higher bit shipments driven by growth in server and enterprise markets partially offset by declines in DRAM average selling prices.

• MBU revenue decreased 13% primarily due to declines in average selling prices for both DRAM and NAND and decreases in bit shipments due to timing of shipments between quarters.

• EBU revenue increased 5% primarily due to higher sales in automotive and consumer markets partially offset by declines in average selling prices.

• SBU revenue increased 24% primarily due to increases in bit shipments across market segments partially offset by declines in average selling prices.

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Changes in revenue for each business unit for the third quarter and first nine months of 2023 as compared to the corresponding periods of 2022 were as follows:

• CNBU revenue decreased 64% and 58%, respectively, primarily due to declines in DRAM average selling prices and decreases in bit shipments.

• MBU revenue decreased 58% in each period, primarily due to declines in average selling prices for both DRAM and NAND and decreases in NAND bit shipments.

• EBU revenue decreased 36% and 29%, respectively, primarily due to declines in average selling prices and decreases in bit shipments.

• SBU revenue decreased 53% and 50%, respectively, primarily due to declines in average selling prices for NAND.

Operating Income (Loss) by Business Unit

			Third Quarter						Second Quarter						Third Quarter						Nine months ended
			2023						2023						2022						2023						2022
CNBU			$	(337)		(24)		%	$	(35)		(3)		%	$	1,778		46		%	$	(182)		(4)		%	$	4,864		45		%
MBU			(478)			(58)		%	(344)			(36)		%	640			33		%	(1,017)			(42)		%	1,852			32		%
EBU			65			7		%	88			10		%	504			35		%	347			12		%	1,347			34		%
SBU			(601)			(96)		%	(357)			(70)		%	221			16		%	(1,215)			(67)		%	551			15		%
All Other			2			40		%	1			100		%	1			25		%	6			60		%	5			50		%
			$	(1,349)					$	(647)					$	3,144					$	(2,061)					$	8,619

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

Changes in operating income or loss for each business unit for the third quarter of 2023 as compared to the second quarter of 2023 were as follows:

• CNBU operating loss increased primarily due to declines in average selling prices and higher manufacturing costs per bit due to increased facility underutilization.

• MBU operating loss increased primarily due to declines in average selling prices for both DRAM and NAND and higher manufacturing costs per bit due to increased facility underutilization.

• EBU operating income decreased primarily due to declines in average selling prices for both DRAM and NAND.

• SBU operating loss increased primarily due to declines in average selling prices and higher manufacturing costs per bit due to increased facility underutilization.

Changes in operating income or loss for each business unit for the third quarter and first nine months of 2023 as compared to the corresponding periods of 2022 were as follows:

• CNBU operating income (loss) declined primarily due to declines in average selling prices and lower bit shipments.

• MBU operating income (loss) declined primarily due to declines in average selling prices and lower NAND bit shipments.

• EBU operating income decreased primarily due to declines in average selling prices and lower bit shipments.

• SBU operating income (loss) declined primarily due to declines in average selling prices.

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Operating Expenses and Other

Research and Development: R&D expenses vary primarily with the number of development and pre-qualification wafers processed, the cost of advanced equipment dedicated to new product and process development, and personnel costs. Because of the lead times necessary to manufacture our products, we typically begin to process wafers before completion of performance and reliability testing. Development of a product is deemed complete when it is qualified through internal reviews and tests for performance and reliability. R&D expenses can vary significantly depending on the timing of product qualification.

R&D expenses for the third quarter of 2023 were 4% lower as compared to the second quarter of 2023 primarily due to lower volumes of development and prequalification wafers and decreases in employee compensation. R&D expenses for the third quarter of 2023 were relatively unchanged compared to the third quarter of 2022 as decreases in employee compensation were offset by higher depreciation expense. R&D expenses for the first nine months of 2023 were 5% higher as compared to the first nine months of 2022 primarily due to higher volumes of development and prequalification wafers and higher depreciation expense.

Selling, General, and Administrative: SG&A expenses for the third quarter of 2023 were 5% lower as compared to the second quarter of 2023 primarily due to decreases in legal fees, employee compensation, and professional services. SG&A expenses for the third quarter and first nine months of 2023 decreased 17% and 11%, respectively, as compared to the corresponding periods of 2022, primarily due to decreases in employee compensation, legal fees, professional services, and advertising.

Interest Income (Expense), Net**:** Interest income (expense) for the third quarter of 2023 was relatively unchanged compared to the second quarter of 2023. Interest income (expense) improved for the third quarter and first nine months of 2023 as compared to the corresponding periods of 2022, primarily as a result of increases in interest income due to higher interest rates on our cash and investments, partially offset by increases in interest expense due to higher debt balances.

Income Taxes: Our income tax (provision) benefit consisted of the following:

			Third Quarter			Second Quarter			Third Quarter			Nine months ended
			2023			2023			2022			2023			2022
Income (loss) before taxes			$	(1,753)		$	(2,271)		$	2,988		$	(4,200)		$	8,018
Income tax (provision) benefit			(139)			(54)			(358)			(201)			(832)
Effective tax rate			(7.9)		%	(2.4)		%	12.0		%	(4.8)		%	10.4		%

The changes in our effective tax rate for the third quarter and first nine months of 2023 as compared to the corresponding periods of 2022 were primarily due to pre-tax losses incurred in the first nine months of 2023. Despite a consolidated pre-tax loss on a worldwide basis, we have taxes payable in certain geographies due to minimum taxable income reportable in those geographies. The increase in our effective tax rate for the third quarter of 2023 as compared to the second quarter of 2023 was driven by discrete items related to tax return filings and changes in current and prior year uncertain tax positions.

We operate in a number of jurisdictions outside the United States, including Singapore, where we have tax incentive arrangements. These incentives expire, in whole or in part, at various dates through 2034 and are conditional, in part, upon meeting certain business operations and employment thresholds. As a result of a loss before taxes and geographical mix of income, the benefit from tax incentive arrangements was not material for the first nine months of 2023. These arrangements reduced our tax provision by $361 million (benefiting our diluted earnings per share by $0.32) for the third quarter of 2022 and $955 million ($0.85 per diluted share) for the first nine months of 2022.

Other: Further information on other items can be found in the following notes contained in “Item 1. Financial Statements – Notes to Consolidated Financial Statements”:

• Equity Plans

• Restructure and Asset Impairments

• Other Operating (Income) Expense, Net

• Other Non-Operating Income (Expense), Net

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Liquidity and Capital Resources

Our primary sources of liquidity are cash generated from operations and financing obtained from capital markets and financial institutions. Cash generated from operations is highly dependent on selling prices for our products, which can vary significantly from period to period. Cash and marketable investments totaled $11.33 billion as of June 1, 2023, and $10.98 billion as of September 1, 2022. Our cash and investments consist primarily of bank deposits, money market funds, and liquid investment-grade, fixed-income securities, which are diversified among industries and individual issuers. To mitigate credit risk, we invest through high-credit-quality financial institutions and by policy generally limit the concentration of credit exposure by restricting the amount of investments with any single obligor. As of June 1, 2023, $1.98 billion of our cash and marketable investments was held by our foreign subsidiaries.

We continuously evaluate alternatives for efficiently funding our capital expenditures and ongoing operations. We expect, from time to time, to engage in a variety of financing transactions for such purposes, including the issuance of securities. As of June 1, 2023, $2.50 billion was available to draw under our Revolving Credit Facility. On March 27, 2023, we entered into amendments to the Term Loan Agreement and the agreements governing the Revolving Credit Facility and the 2024 Term Loan A to revise the leverage ratio covenant in each such agreement, as further described in “Item 1. Financial Statements – Notes to Consolidated Financial Statements – Debt.” Funding of certain significant capital projects is also dependent on the receipt of government incentives, which are subject to conditions and may not be obtained.

To develop new product and process technology, support future growth, achieve operating efficiencies, and maintain product quality, we must continue to invest in manufacturing technologies, facilities and equipment, and R&D. We estimate capital expenditures in 2023 for property, plant, and equipment, net of partner contributions, to be approximately $7.0 billion. Actual amounts for 2023 will vary depending on market conditions. As of June 1, 2023, we had purchase obligations of approximately $2.70 billion for the acquisition of property, plant, and equipment, of which approximately $1.74 billion is expected to be paid within one year. For a description of other contractual obligations, such as leases, debt, and commitments, see “Item 1. Financial Statements – Notes to Consolidated Financial Statements – Leases,” “ – Debt,” and “ – Commitments.”

To support expected memory demand in the second half of the decade, we plan to add new DRAM wafer capacity. Following the enactment of the U.S. CHIPS and Science Act of 2022 (“CHIPS Act”), we announced plans to invest in two leading-edge memory manufacturing fabs in the United States, contingent on CHIPS Act support through grants and investment tax credits. As part of this plan, in September 2022, we broke ground on a leading-edge memory manufacturing fab in Boise, Idaho. Construction of the fab is expected to begin in calendar 2023 with DRAM production targeted to start in calendar 2025 and first output in early calendar 2026. In addition, in October 2022, we announced plans to build a second leading-edge DRAM manufacturing fab in Clay, New York. We plan to start site preparation work in calendar 2023 and expect construction to begin in calendar 2024, with production anticipated to ramp in the latter half of the decade. We expect these new fabs to fulfill our requirements for additional wafer capacity starting in the second half of the decade and beyond, in line with industry demand trends.

We are also advancing our global back-end assembly and test network in order to support our product portfolio and extend our ability to deliver on global customer demand in the future. We intend to make investments at our back-end facility in Xi’an, China, including a new building to provide space to add more product capability, to allow us over time to serve more of the demand from our customers in China from the Xi’an facility. We also intend to build a new assembly and test facility in Gujarat, India to address demand in the latter half of this decade.

On November 1, 2021, we issued $1 billion in aggregate principal amount of unsecured 2032 Green Bonds. Over time, we plan to allocate an amount equal to the net proceeds to fund eligible sustainability-focused projects involving renewable energy, green buildings, energy efficiency, water management, waste abatement, and a circular economy. Through November 1, 2022, the date of our 2022 Green Bond Report, we had allocated $676 million toward this commitment. We currently anticipate that 100% of net proceeds of the 2032 Green Bonds will be allocated and dispersed for eligible projects by November 1, 2023.

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Our Board of Directors has authorized the discretionary repurchase of up to $10 billion of our outstanding common stock through open-market purchases, block trades, privately-negotiated transactions, derivative transactions, and/or pursuant to Rule 10b5-1 trading plans. The repurchase authorization has no expiration date, does not obligate us to acquire any common stock, and is subject to market conditions and our ongoing determination of the best use of available cash. Through June 1, 2023, we had repurchased an aggregate of $6.89 billion of the authorized amount. See “Item 1. Financial Statements – Notes to Consolidated Financial Statements – Equity.”

On June 28, 2023, our Board of Directors declared a quarterly dividend of $0.115 per share, payable in cash on July 25, 2023, to shareholders of record as of the close of business on July 10, 2023. The declaration and payment of any future cash dividends are at the discretion and subject to the approval of our Board of Directors. Our Board of Directors' decisions regarding the amount and payment of dividends will depend on many factors, including, but not limited to, our financial condition, results of operations, capital requirements, business conditions, debt service obligations, contractual restrictions, industry practice, legal requirements, regulatory constraints, and other factors that our Board of Directors may deem relevant.

We expect that our cash and investments, cash flows from operations, and available financing will be sufficient to meet our requirements at least through the next 12 months and thereafter for the foreseeable future.

Cash Flows

			Nine months ended
			2023			2022
Net cash provided by operating activities			$	1,310		$	11,404
Net cash provided by (used for) investing activities			(5,361)			(7,761)
Net cash provided by (used for) financing activities			5,095			(2,140)
Effect of changes in currency exchange rates on cash, cash equivalents, and restricted cash			(13)			(71)
Net increase (decrease) in cash, cash equivalents, and restricted cash			$	1,031		$	1,432

Operating Activities: Cash provided by operating activities reflects net income (loss) adjusted for certain non-cash items, including depreciation expense, amortization of intangible assets, and stock-based compensation, and the effects of changes in operating assets and liabilities. The decrease in cash provided by operating activities for the first nine months of 2023 as compared to the first nine months of 2022 was primarily due to a net loss in the current year adjusted for non-cash items and the effect of an increase in inventories and a decline in accounts payable and accrued expenses, partially offset by a decrease in receivables.

Investing Activities: For the first nine months of 2023, net cash used for investing activities consisted primarily of $6.22 billion of expenditures for property, plant, and equipment; inflows of $248 million of partner contributions for capital expenditures; and $696 million of net inflows from maturities, sales, and purchases of available-for-sale securities.

For the first nine months of 2022, net cash used for investing activities consisted primarily of $8.45 billion of expenditures for property, plant, and equipment; inflows of $104 million of partner contributions for capital expenditures; $888 million of net inflows from the sale of the Lehi, Utah fab; and $137 million of net outflows from purchases, sales, and maturities of available-for-sale securities.

Financing Activities: For the first nine months of 2023, net cash provided by financing activities consisted primarily of $3.20 billion of proceeds from our 2025, 2026, and 2027 Term Loan A borrowings, $1.27 billion from the issuance of the 2029 B Notes, $896 million from the issuance of the 2033 B Notes, $749 million from the issuance of the 2033 A Notes, and $599 million from the issuance of the 2028 Notes. See “Item 1. Financial Statements – Notes to Consolidated Financial Statements – Debt.” Cash used for financing activities included $706 million for repayments of debt, $425 million for the acquisition of 8.6 million shares of our common stock under our share repurchase authorization, $378 million for payments of dividends to shareholders, and $112 million of payments on equipment purchase contracts.

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For the first nine months of 2022, net cash used for financing activities included $2.01 billion for repayments of debt primarily to redeem the 2023 Notes and 2024 Notes, $1.65 billion for the acquisition of 22.2 million shares of our common stock under our share repurchase authorization, $335 million for payments of dividends to shareholders, and $132 million of payments on equipment purchase contracts. Cash used for financing activities was partially offset by aggregate proceeds of $2.00 billion from the issuance of the unsecured 2032 Green Bonds, 2041 Notes, and 2051 Notes.

Critical Accounting Estimates

For a discussion of our critical accounting estimates, see “Part II – Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Critical Accounting Estimates” of our Annual Report on Form 10-K for the year ended September 1, 2022. Except for the significant accounting estimate associated with inventories as discussed below, there have been no changes to our critical accounting estimates since our Annual Report on Form 10-K for the year ended September 1, 2022.

Inventories**:** Inventories are stated at the lower of cost or net realizable value, with cost being determined on a first-in, first-out (“FIFO”) basis. Cost includes depreciation, labor, material, and overhead costs, including product and process technology costs. Determining net realizable value of inventories involves significant judgments, including projecting future average selling prices, future sales volumes, and estimated costs to complete. To project average selling prices and sales volumes, we review recent sales volumes, existing customer orders, current contract prices, industry analyses of supply and demand, seasonal factors, general economic trends, and other information. Actual selling prices and volumes may vary significantly from projected prices and volumes due to the volatile nature of the semiconductor memory and storage markets. When these analyses reflect estimated net realizable values below our manufacturing costs, we record a charge to cost of goods sold in advance of when inventories are actually sold. As a result, the timing of when product costs are charged to costs of goods sold can vary significantly. Differences in forecasted average selling prices used in calculating lower of cost or net realizable value adjustments can result in significant changes in the estimated net realizable value of product inventories and accordingly the amount of write-down recorded. For example, a 5% decrease in forecasted average selling prices would have increased the estimated inventory net realizable value write-down in the third quarter of 2023 by approximately $500 million. Due to the volatile nature of the semiconductor memory and storage markets, actual selling prices and volumes often vary significantly from projected prices and volumes; as a result, the timing of when product costs are charged to operations can vary significantly.

U.S. GAAP provides for products to be grouped into categories in order to compare costs to net realizable values. The amount of any inventory write-down can vary significantly depending on the determination of inventory categories. We review the major characteristics of product type and markets in determining the unit of account for which we perform the lower of cost or net realizable value analysis and categorize all inventories (including DRAM, NAND, and other memory) as a single group.

Recently Adopted Accounting Standards

No material items.

Recently Issued Accounting Standards

No material items.

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