Micron Technology 10-Q 2023-11-30

Filed 2023-12-21. 8 sections, 209K characters. Original on sec.gov · Markdown · JSON

Cover and table of contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


(Mark One)
☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended November 30, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 1-10658

Micron Technology, Inc.

(Exact name of registrant as specified in its charter)


Delaware		75-1618004
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)
Address of principal executive offices, including zip code		8000 S. Federal Way, Boise, Idaho 83716-9632
Registrant’s telephone number, including area code		(208) 368-4000

Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $0.10 per share	MU	Nasdaq Global Select Market


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.					Yes	☒	No	☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).					Yes	☒	No	☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer	Accelerated Filer	Non-Accelerated Filer	Smaller Reporting Company	Emerging Growth Company
☒	☐	☐	☐	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.								☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).					Yes	☐	No	☒

The number of outstanding shares of the registrant’s common stock as of December 14, 2023 was 1,103,908,880.

Table of Contents



Introduction		3
PART I. Financial Information
Item 1.	Financial Statements:	5
	Consolidated Statements of Operations	5
	Consolidated Statements of Comprehensive Income (Loss)	6
	Consolidated Balance Sheets	7
	Consolidated Statements of Changes in Equity	8
	Consolidated Statements of Cash Flows	9
	Notes to Consolidated Financial Statements	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
	Results of Operations	27
	Liquidity and Capital Resources	30
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	32
Item 4.	Controls and Procedures	33
PART II. Other Information
Item 1.	Legal Proceedings	33
Item 1A.	Risk Factors	34
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	53
I tem 5.	Other In formation	54
Item 6.	Exhibits	55
Signatures		56

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Definitions of Commonly Used Terms

As used herein, “we,” “our,” “us,” and similar terms include Micron Technology, Inc. and its consolidated subsidiaries, unless the context indicates otherwise. Abbreviations, terms, or acronyms are commonly used or found in multiple locations throughout this report and include the following:


Term	Definition	Term	Definition

2024 Term Loan A	Senior Term Loan A due October 2024	2051 Notes	3.477% Senior Notes due November 2051
2025 Term Loan A	Senior Term Loan A due November 2025	CAC	China’s Cyberspace Administration
2026 Term Loan A	Senior Term Loan A due November 2026	DDR	Double data rate DRAM
2027 Term Loan A	Senior Term Loan A due November 2027	EBITDA	Earnings before interest, taxes, depreciation, and amortization
2026 Notes	4.975% Senior Notes due February 2026	EUV	Extreme ultraviolet lithography
2027 Notes	4.185% Senior Notes due February 2027	HBM	High-bandwidth memory, a stacked DRAM technology optimized for memory-bandwidth intensive applications
2028 Notes	5.375% Senior Notes due April 2028	LPDRAM	Low-power DRAM
2029 A Notes	5.327% Senior Notes due February 2029	MCP	Multichip packaged solutions with managed NAND and LPDRAM
2029 B Notes	6.750% Senior Notes due November 2029	Micron	Micron Technology, Inc. (Parent Company)
2030 Notes	4.663% Senior Notes due February 2030	NRV	Net realizable value
2032 Green Bonds	2.703% Senior Notes due April 2032	Revolving Credit Facility	$2.5 billion Revolving Credit Facility due May 2026
2033 A Notes	5.875% Senior Notes due February 2033	SOFR	Secured Overnight Financing Rate
2033 B Notes	5.875% Senior Notes due September 2033	SSD	Solid state drive
2041 Notes	3.366% Senior Notes due November 2041

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.

Micron, Crucial, any associated logos, and all other Micron trademarks are the property of Micron. Other product names or trademarks that are not owned by Micron are for identification purposes only and may be the trademarks of their respective owners.

Available Information

Investors and others should note that we announce material financial information about our business and products through a variety of means, including our investor relations website (investors.micron.com), filings with the U.S. Securities and Exchange Commission (“SEC”), press releases, public conference calls, blog posts (micron.com/about/blog), and webcasts. We use these channels to achieve broad, non-exclusionary distribution of information to the public and for complying with our disclosure obligations under Regulation FD. Therefore, we encourage investors, the media, and others interested in our company to review the information we post on such channels.

3 | 2024 Q1 10-Q

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Forward-Looking Statements

This Form 10-Q contains trend information and other forward-looking statements that involve a number of risks and uncertainties. Such forward-looking statements may be identified by words such as "anticipate," "expect," "intend," "pledge," "committed," "plan," "opportunities," "future," "believe," "target," "on track," "estimate," "continue," "likely," "may," "will," "would," "should," "could," and variations of such words and similar expressions. However, the absence of these words or similar expressions does not mean that a statement is not forward-looking. Specific forward-looking statements include, but are not limited to, statements such as those made regarding potential change in our effective tax rate; the timing for construction and ramping of production for new memory manufacturing fabs in the United States; intent to make investments at our backend facility in Xi’an, China and build a new assembly and test facility in Gujarat, India; expected wafer starts and underutilization charges for the second quarter of 2024, the payment of future cash dividends; market conditions and profitability in our industry; the impact of the Cyberspace Administration of China decision; capital spending in 2024; and the sufficiency of our cash and investments. Our actual results could differ materially from our historical results and those discussed in the forward-looking statements. Factors that could cause actual results to differ materially include, but are not limited to, those identified in “Part II. Other Information – Item 1A. Risk Factors.”

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PART I. FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

Micron Technology, Inc.

Consolidated Statements of Operations

(In millions, except per share amounts)

(Unaudited)


Three months ended	November 30, 2023		December 1, 2022

Revenue	$	4,726	$	4,085
Cost of goods sold	4,761		3,192
Gross margin	(35)		893

Research and development	845		849
Selling, general, and administrative	263		251
Restructure and asset impairments	—		13
Other operating (income) expense, net	(15)		(11)
Operating income (loss)	(1,128)		(209)

Interest income	132		88
Interest expense	(132)		(51)
Other non-operating income (expense), net	(27)		(4)
	(1,155)		(176)

Income tax (provision) benefit	(73)		(8)
Equity in net income (loss) of equity method investees	(6)		(11)
Net income (loss)	$	(1,234)	$	(195)

Earnings (loss) per share
Basic	$	(1.12)	$	(0.18)
Diluted	(1.12)		(0.18)

Number of shares used in per share calculations
Basic	1,100		1,090
Diluted	1,100		1,090

See accompanying notes to consolidated financial statements.

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Micron Technology, Inc.

Consolidated Statements of Comprehensive Income (Loss)

(In millions)

(Unaudited)


Three months ended	November 30, 2023		December 1, 2022

Net income (loss)	$	(1,234)	$	(195)

Other comprehensive income (loss), net of tax
Gains (losses) on derivative instruments	44		108
Unrealized gains (losses) on investments	7		(19)
Pension liability adjustments	2		1
Foreign currency translation adjustments	(1)		(3)
Other comprehensive income (loss)	52		87
Total comprehensive income (loss)	$	(1,182)	$	(108)

See accompanying notes to consolidated financial statements.

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Micron Technology, Inc.

Consolidated Balance Sheets

(In millions, except par value amounts)

(Unaudited)


As of	November 30, 2023		August 31, 2023

Assets
Cash and equivalents	$	8,075	$	8,577
Short-term investments	973		1,017
Receivables	2,943		2,443
Inventories	8,276		8,387
Other current assets	791		820
Total current assets	21,058		21,244
Long-term marketable investments	720		844
Property, plant, and equipment	37,677		37,928
Operating lease right-of-use assets	648		666
Intangible assets	416		404
Deferred tax assets	781		756
Goodwill	1,150		1,150
Other noncurrent assets	1,326		1,262
Total assets	$	63,776	$	64,254

Liabilities and equity
Accounts payable and accrued expenses	$	3,946	$	3,958
Current debt	908		278
Other current liabilities	1,108		529
Total current liabilities	5,962		4,765
Long-term debt	12,597		13,052
Noncurrent operating lease liabilities	601		603
Noncurrent unearned government incentives	705		727
Other noncurrent liabilities	1,026		987
Total liabilities	20,891		20,134

Commitments and contingencies

Shareholders’ equity
Common stock, $0.10 par value, 3,000 shares authorized, 1,245 shares issued and 1,104 outstanding (1,239 shares issued and 1,098 outstanding as of August 31, 2023)	124		124
Additional capital	11,217		11,036
Retained earnings	39,356		40,824
Treasury stock, 141 shares held (141 shares as of August 31, 2023)	(7,552)		(7,552)
Accumulated other comprehensive income (loss)	(260)		(312)
Total equity	42,885		44,120
Total liabilities and equity	$	63,776	$	64,254

See accompanying notes to consolidated financial statements.

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Micron Technology, Inc.

Consolidated Statements of Changes in Equity

(In millions, except per share amounts)

(Unaudited)


	Common Stock			Additional Capital		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Income (Loss)		Total Shareholders’ Equity
	Number of Shares	Amount

Balance at August 31, 2023	1,239	$	124	$	11,036	$	40,824	$	(7,552)	$	(312)	$	44,120
Net income (loss)	—	—		—		(1,234)		—		—		(1,234)
Other comprehensive income (loss), net	—	—		—		—		—		52		52
Stock issued under stock plans	8	—		9		—		—		—		9
Stock-based compensation expense	—	—		188		—		—		—		188
Repurchase of stock - withholdings on employee equity awards	(2)	—		(16)		(105)		—		—		(121)
Dividends and dividend equivalents declared ($0.115 per share)	—	—		—		(129)		—		—		(129)
Balance at November 30, 2023	1,245	$	124	$	11,217	$	39,356	$	(7,552)	$	(260)	$	42,885


			Common Stock						Additional Capital			Retained Earnings			Treasury Stock			**Accumul

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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 August 31, 2023. 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 2024 and 2023 each contain 52 weeks. All tabular dollar amounts are in millions, except per share amounts.

Overview

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, consumer, and datacenter 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, consumer, and automotive 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 and throughout 2023 due to weak demand in many end markets combined with global and macroeconomic challenges and lower demand resulting from customer actions to reduce inventory levels. This led to significant reductions in average selling prices for both DRAM and NAND and reductions in bit shipments for DRAM, resulting in declines in revenue across all our business segments and nearly all our end markets. For the first quarter of 2024, improving demand growth driven in part by deployment of artificial intelligence, customer inventory normalization, and industry-wide supply discipline, resulted in an improved industry supply and demand balance. As a result, we have experienced improvements in pricing and margins.

As a result of challenging market conditions that have persisted since the fourth quarter of 2022 and increased levels of our inventories, in recent quarters we have reduced capital expenditures and wafer starts for both DRAM and NAND. We expect wafer starts will remain below peak capacity levels for the second quarter of 2024 as we remain focused on managing down our inventories and controlling our supply. We recognized period costs from fabrication facility underutilization of $165 million in first quarter of 2024 and $222 million in the fourth quarter of 2023 due to wafer start reductions. We expect reduced underutilization charges in the second quarter of 2024. In addition, we have strategically diverted underutilized equipment toward ramping new technology nodes, which will help us increase leading edge production in a capital efficient manner. Since the number of wafer processing steps is higher for leading-edge nodes, this approach of diverting underutilized tools to the leading edge meaningfully reduces our overall wafer capacity.

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 may not purchase Micron products. The CAC decision has impacted our business, particularly in the domestic data center and networking markets in China, and we have been working to mitigate that impact. Our long-term goal is to retain our worldwide DRAM and NAND market share.

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Results of Operations

Consolidated Results


	First Quarter				Fourth Quarter				First Quarter
	2024				2023				2023

Revenue	$	4,726	100	%	$	4,010	100	%	$	4,085	100	%
Cost of goods sold	4,761		101	%	4,445		111	%	3,192		78	%
Gross margin	(35)		(1)	%	(435)		(11)	%	893		22	%

Research and development	845		18	%	719		18	%	849		21	%
Selling, general, and administrative	263		6	%	219		5	%	251		6	%
Restructure and asset impairments	—		—	%	4		—	%	13		—	%
Other operating (income) expense, net	(15)		—	%	95		2	%	(11)		—	%
Operating income (loss)	(1,128)		(24)	%	(1,472)		(37)	%	(209)		(5)	%

Interest income (expense), net	—		—	%	5		—	%	37		1	%
Other non-operating income (expense), net	(27)		(1)	%	9		—	%	(4)		—	%
Income tax (provision) benefit	(73)		(2)	%	24		1	%	(8)		—	%
Equity in net income (loss) of equity method investees	(6)		—	%	4		—	%	(11)		—	%
Net income (loss)	$	(1,234)	(26)	%	$	(1,430)	(36)	%	$	(195)	(5)	%

Total Revenue: Total revenue for the first quarter of 2024 was impacted by the factors described in the section titled “Industry Conditions” above. Total revenue for the first quarter of 2024 increased 18% as compared to the fourth quarter of 2023 primarily due to increases in sales of both DRAM and NAND products.

Sales of DRAM products in the first quarter of 2024 increased 24% as compared to the fourth quarter of 2023 primarily due to a low-20s percent range increase in bit shipments and increases in average selling prices in the low single-digit-percent range.
Sales of NAND products in the first quarter of 2024 increased 2% as compared to the fourth quarter of 2023 primarily due to an approximate 20% increase in average selling prices partially offset by decreases in bit shipments in the mid-teens percent range after record NAND bit shipments in the fourth quarter of 2023.

Total revenue for the first quarter of 2024 increased 16% as compared to the first quarter of 2023 primarily due to increases in sales of both DRAM and NAND products.

Sales of DRAM products in the first quarter of 2024 increased 21% as compared to the first quarter of 2023 primarily due to a low-80s percent range increase in bit shipments partially offset by a decrease in average selling prices in the low-30s percent range.
Sales of NAND products in the first quarter of 2024 increased 12% as compared to the first quarter of 2023 primarily due to a high-70s percent range increase in bit shipments partially offset by a decrease in average selling prices in the high-30s percent range.

Consolidated Gross Margin**:** Our consolidated gross margin has been impacted by the factors described in the section titled “Industry Conditions” above. Our consolidated gross margin percentage improved to negative 1% for the first quarter of 2024 from negative 11% for the fourth quarter of 2023, as a result of improvements in margins for both DRAM and NAND products, primarily due to increases in average selling prices, and a higher mix of revenue from DRAM. Our consolidated gross margin percentage declined to negative 1% for the first quarter of 2024 from 22% for the first quarter of 2023 primarily due to declines in average selling prices for both DRAM and NAND and $165 million of facility underutilization costs in the first quarter of 2024.

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Inventory NRV write-downs: Our consolidated gross margin was impacted by charges in the third and second quarters of 2023 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:


	First Quarter		Fourth Quarter		First Quarter
	2024		2023		2023

Provision to write down inventory to NRV	$	—	$	—	$	—
Lower costs from sale of inventory written down in prior periods	605		563		—
	$	605	$	563	$	—

Revenue by Business Unit


	First Quarter				Fourth Quarter				First Quarter
	2024				2023				2023

CNBU	$	1,737	37	%	$	1,200	30	%	$	1,746	43	%
MBU	1,293		27	%	1,211		30	%	655		16	%
EBU	1,037		22	%	860		21	%	1,000		24	%
SBU	653		14	%	739		18	%	680		17	%
All Other	6		—	%	—		—	%	4		—	%
	$	4,726			$	4,010			$	4,085

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

Changes in revenue for each business unit for the first quarter of 2024 as compared to the fourth quarter of 2023 were as follows:

CNBU revenue increased 45% primarily due to increases in bit shipments driven by strong demand in data center and client end markets.
MBU revenue increased 7% primarily due to increases in average selling prices and NAND bit shipments, driven by improved end market demand.
EBU revenue increased 21% primarily due to increases in bit shipments reflecting growth across most end markets.
SBU revenue decreased 12% primarily due to declines in component NAND sales, partially offset by increases in SSD sales.

Changes in revenue for each business unit for the first quarter of 2024 as compared to the first quarter of 2023 were as follows:

CNBU revenue decreased 1% as declines in average selling prices were largely offset by increases in bit shipments.
MBU revenue increased 97% primarily due to increases in bit shipments for both DRAM and NAND, partially offset by declines in average selling prices.
EBU revenue increased 4% primarily due to increases in bit shipments, partially offset by declines in average selling prices.
SBU revenue decreased 4% primarily due to declines in average selling prices, partially offset by increases in bit shipments.

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Operating Income (Loss) by Business Unit


	First Quarter				Fourth Quarter				First Quarter
	2024				2023				2023

CNBU	$	(397)	(23)	%	$	(403)	(34)	%	$	190	11	%
MBU	(687)		(53)	%	(733)		(61)	%	(195)		(30)	%
EBU	10		1	%	35		4	%	194		19	%
SBU	(490)		(75)	%	(672)		(91)	%	(257)		(38)	%
All Other	4		67	%	2		—	%	3		75	%
	$	(1,560)			$	(1,771)			$	(65)

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 first quarter of 2024 as compared to the fourth quarter of 2023 were as follows:

CNBU operating income (loss) was relatively unchanged.
MBU operating income (loss) improved primarily due to increases in average selling prices.
EBU operating income decreased slightly primarily due to declines in average selling prices.
SBU operating income (loss) improved primarily due to increases in average selling prices.

Changes in operating income or loss for each business unit for the first quarter of 2024 as compared to the first quarter of 2023 were as follows:

CNBU operating income (loss) deteriorated primarily due to declines in average selling prices.
MBU operating income (loss) deteriorated primarily due to declines in average selling prices.
EBU operating income decreased primarily due to declines in average selling prices.
SBU operating income (loss) deteriorated primarily due to declines in average selling prices.

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 first quarter of 2024 increased 18% as compared to the fourth quarter of 2023 due to higher volumes of development and prequalification wafers and an increase in employee compensation. R&D expenses for the first quarter of 2024 compared to the first quarter of 2023 were relatively unchanged as lower volumes of development and prequalification wafers were largely offset by increases in employee compensation.

Selling, General, and Administrative: SG&A expenses for the first quarter of 2024 increased 20% as compared to the fourth quarter of 2023 primarily due to an increase in employee compensation. SG&A expenses for the first quarter of 2024 were relatively unchanged compared to the first quarter of 2023.

Other operating (income) expense, net: In the fourth quarter of 2023, we recognized a charge of $101 million included in other operating (income) expense, net to impair all of the goodwill assigned to our SBU reporting unit based on a quantitative assessment for impairment.

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


	First Quarter			Fourth Quarter			First Quarter
	2024			2023			2023

Income (loss) before taxes	$	(1,155)		$	(1,458)		$	(176)
Income tax (provision) benefit	(73)			24			(8)
Effective tax rate	(6.3)		%	1.6		%	(4.5)		%

For the first quarter of 2024, we recorded tax expense based on actual first quarter results for jurisdictions where small changes in our projected pre-tax income may cause significant changes in the estimated annual effective tax rate.

In future quarters where a reliable annual effective tax rate can be estimated for all jurisdictions, we would revert back to a global annual effective tax rate method, which may result in a significant adjustment due to the change in methodology during that period.

The change in our effective tax rate for the first quarter of 2024 as compared to the fourth quarter of 2023 was primarily due to discrete tax benefits occurring in the fourth quarter of 2023 and interim tax expense methodology in the first quarter of 2024. The change in our effective tax rate for the first quarter of 2024 as compared to the first quarter of 2023 was primarily due to changes in levels of profitability, interim tax expense methodology, and our geographic mix of earnings. 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.

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 periods presented.

Various tax reforms are being considered in multiple jurisdictions that, if enacted, contain provisions that could materially impact our tax expense. We continue to monitor the potential impact of these various tax reform proposals to our overall global effective tax rate and financial statements.

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

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 $9.77 billion as of November 30, 2023, and $10.44 billion as of August 31, 2023. 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 November 30, 2023, $2.56 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 November 30, 2023, $2.50 billion was available to draw under our Revolving Credit Facility.

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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 2024 for property, plant, and equipment, net of proceeds from government incentives, to be in the range of $7.5 billion to $8.0 billion. Actual amounts for 2024 will vary depending on market conditions and may vary from quarter to quarter due to the timing of expenditures. As of November 30, 2023, we had purchase obligations of approximately $1.03 billion for the acquisition of property, plant, and equipment, of which approximately $963 million is expected to be paid within one year. For a description of other contractual obligations, such as leases and debt, see “Item 1. Financial Statements – Notes to Consolidated Financial Statements – Leases,” and “ – Debt.”

To support expected memory demand in the second half of the decade, we will need to add new DRAM wafer capacity. Following the enactment of the CHIPS Act in 2022, 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 began in October 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 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 be key to meeting our requirements for additional wafer capacity starting in the second half of the decade and beyond, in line with industry demand trends. On August 21, 2023, we announced that two of our subsidiaries had each submitted full applications on August 18, 2023 for federal funding in the form of grants under the CHIPS Act for both of these projects.

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 backend 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.

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 November 30, 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 December 20, 2023, our Board of Directors declared a quarterly dividend of $0.115 per share, payable in cash on January 18, 2024, to shareholders of record as of the close of business on January 2, 2024. 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


	First Quarter
	2024		2023

Net cash provided by operating activities	$	1,401	$	943
Net cash provided by (used for) investing activities	(1,558)		(2,266)
Net cash provided by (used for) financing activities	(352)		2,632
Effect of changes in currency exchange rates on cash, cash equivalents, and restricted cash	(1)		(6)
Net increase (decrease) in cash, cash equivalents, and restricted cash	$	(510)	$	1,303

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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 increase in cash provided by operating activities for the first quarter of 2024 as compared to the first quarter of 2023 was primarily due to a larger net loss in the current year adjusted for non-cash items and the effect of an increase in receivables, which was more than offset by a decrease in inventories, an increase in accounts payable and accrued expenses, and an increase in other current liabilities largely due to approximately $600 million of customer prepayments to secure product supply.

Investing Activities: For the first quarter of 2024, net cash used for investing activities consisted primarily of $1.80 billion of expenditures for property, plant, and equipment; contributions of $85 million received from government incentives to offset capital expenditures; partially offset by $175 million of net inflows from maturities, sales, and purchases of available-for-sale securities.

For the first quarter of 2023, net cash used for investing activities consisted primarily of $2.45 billion of expenditures for property, plant, and equipment; partially offset by $272 million of net inflows from maturities, sales, and purchases of available-for-sale securities.

Financing Activities: For the first quarter of 2024, net cash used for financing activities consisted primarily of $129 million for payments of dividends to shareholders, $56 million of payments on equipment purchase contracts, and $53 million for repayments of debt.

For the first quarter of 2023, net cash provided by financing activities consisted primarily of $2.60 billion of proceeds from our 2025, 2026, and 2027 Term Loan A borrowings and $749 million (net of original issue discount) from the issuance of the 2029 B Notes. Cash used for financing activities included $425 million for the acquisition of 8.6 million shares of our common stock under our share repurchase authorization, $126 million of cash payments of dividends to shareholders, and $47 million of payments on equipment purchase contracts.

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 August 31, 2023. There have been no significant changes to our critical accounting estimates since our Annual Report on Form 10-K for the year ended August 31, 2023.

Recently Adopted Accounting Standards

No material items.

Recently Issued Accounting Standards

No material items.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

For further discussion about market risk and sensitivity analysis related to changes in interest rates and currency exchange rates, see “Part II – Item 7A. Quantitative and Qualitative Disclosures About Market Risk” in our Annual Report on Form 10-K for the year ended August 31, 2023.

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Item 4. CONTROLS AND PROCEDURES

An evaluation was carried out under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based upon that evaluation, the principal executive officer and principal financial officer concluded that those disclosure controls and procedures were effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act are recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including the principal executive officer and principal financial officer, to allow timely decisions regarding disclosure.

During the first quarter of 2024, 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.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

For a discussion of legal proceedings, see “Part I – Item 3. Legal Proceedings” of our Annual Report on Form 10-K for the year ended August 31, 2023 and the sections titled “Part I. Financial Information – Item 1. Financial Statements – Notes to Consolidated Financial Statements – Contingencies” and “Item 1A. Risk Factors” in this Quarterly Report on Form 10-Q.

SEC regulations require disclosure of certain proceedings related to environmental matters unless we reasonably believe that the related monetary sanctions, if any, will be less than a specified threshold. We use a threshold of $1 million for this purpose.

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Item 1A. RISK FACTORS

In addition to the factors discussed elsewhere in this Form 10-Q, this section discusses important factors which could cause actual results or events to differ materially from those contained in any forward-looking statements made by us. The order of presentation is not necessarily indicative of the level of risk that each factor poses to us. Any of these factors could have a material adverse effect on our business, results of operations, financial condition, or stock price. Our operations could also be affected by other factors that are presently unknown to us or not considered significant.

Risk Factor Summary

Risks Related to Our Business, Operations, and Industry

volatility in average selling prices of our products;
a range of factors that may adversely affect our gross margins;
our international operations, including geopolitical risks;
the highly competitive nature of our industry;
our ability to develop and produce new and competitive memory and storage technologies and products;
realizing expected returns from capacity expansions;
achieving or maintaining certain performance or other obligations associated with incentives from various governments;
availability and quality of materials, supplies, and capital equipment and dependency on third-party service providers;
a downturn in regional or worldwide economies;
disruptions to our manufacturing process from operational issues, natural disasters, or other events;
dependency on a select number of key customers, including international customers;
products that fail to meet specifications, are defective, or are incompatible with end uses;
breaches of our security systems or products, or those of our customers, suppliers, or business partners;
attracting, retaining, and motivating highly skilled employees;
responsible sourcing requirements and related regulations;
environmental, social, and governance considerations;
acquisitions and/or alliances; and
restructure plans may not realize expected savings or other benefits.

Risks Related to Intellectual Property and Litigation

protecting our intellectual property and retaining key employees who are knowledgeable of and develop our intellectual property;
legal proceedings and claims; and
claims that our products or manufacturing processes infringe or otherwise violate the intellectual property rights of others or failure to obtain or renew license agreements covering such intellectual property.

Risks Related to Laws and Regulations

impacts of government actions and compliance with tariffs, trade restrictions, and/or trade regulations;
tax expense and tax laws in key jurisdictions; and
compliance with laws, regulations, or industry standards, including environmental considerations.

Risks Related to Capitalization and Financial Markets

our ability to generate sufficient cash flows or obtain access to external financing;
our debt obligations;
changes in foreign currency exchange rates;
counterparty default risk;
volatility in the trading price of our common stock; and
fluctuations in the amount and frequency of our common stock repurchases and payment of cash dividends and resulting impacts.

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Risks Related to Our Business, Operations, and Industry

Volatility in average selling prices for our semiconductor memory and storage products may adversely affect our business.

We have experienced significant volatility in our average selling prices and may continue to experience such volatility in the future. For example, average selling prices for DRAM declined in the high-40s percent range and NAND declined in the low-50s percent range for 2023 as compared to 2022. Since 2017, annual percentage changes in DRAM average selling prices have ranged from plus mid-30s percent range to a minus high-40s percent range. Since 2017, annual percentage changes in NAND average selling prices have ranged from nearly flat to a minus low-50s percent range. In current and recent periods, average selling prices for our products have been below our manufacturing costs and we may experience such circumstances in the future. Average selling prices for our products that decline faster than our costs have recently had an adverse effect on our business and results of operations, and in future periods could have a material adverse effect on our business, results of operations, or financial condition.

Our gross margins may be adversely affected by a range of factors.

Our gross margins are dependent, in part, upon continuing decreases in per gigabit manufacturing costs achieved through improvements in our manufacturing processes and product designs. Factors that may limit our ability to reduce our per gigabit manufacturing costs at sufficient levels to prevent deterioration of or improve gross margins include, but are not limited to:

strategic product diversification decisions affecting product mix;
increasing complexity of manufacturing processes;
difficulties in transitioning to smaller line-width process technologies or additional 3D memory layers or NAND cell levels;
process complexity including number of mask layers and fabrication steps;
manufacturing yield;
technological barriers;
changes in process technologies;
new products that may require relatively larger die sizes;
start-up or other costs associated with capacity expansions;
higher costs of goods and services due to inflationary pressures or market conditions; and
higher manufacturing costs per gigabit due to fabrication facility underutilization, lower wafer output, and insufficient volume to run new technology nodes to achieve cost optimization.

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, difficulties in ramping emerging technologies, supply chain disruptions, and delays from equipment suppliers. See “Part I. Financial Information – Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Overview – Industry Conditions” for information regarding our current underutilization. A significant portion of our manufacturing costs are fixed and do not vary proportionally with changes in production output. As a result, lower utilization, lower wafer output, and corresponding increases in our per gigabit manufacturing costs have resulted in higher inventory carrying costs, and have had, and may continue to have, an adverse effect on our gross margins, business, results of operations, or financial condition.

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We have a broad portfolio of products to address our customers’ needs, which span multiple market segments and are subject to rapid technological changes. Our manufacturing costs on a per gigabit basis vary across our portfolio as they are largely influenced by the technology node in which the solution was developed. We strive to balance our demand and supply for each technology node, but the dynamics of our markets and our customers can create periods of imbalance, which can lead us to carry elevated inventory levels. Consequently, we may incur charges in connection with obsolete or excess inventories, or we may not fully recover our costs, which would reduce our gross margins. For example, in 2023, we recorded aggregate charges of $1.83 billion to write down the carrying value of our inventories to their estimated net realizable value. In addition, due to the customized nature of certain products we manufacture, we may be unable to sell ce

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Item 5. OTHER INFORMATION

Securities Trading Plans of Directors and Executive Officers

The following officer, as defined in Rule 16a-1(f) of the Exchange Act, adopted a “Rule 10b5-1 trading arrangement,” as defined in Item 408 of Regulation S-K, as follows:

On November 14, 2023, April Arnzen, our Executive Vice President and Chief People Officer, adopted a Rule 10b5-1 trading arrangement providing for the sale of an aggregate of up to 19,560 shares of our common stock acquired by Ms. Arnzen pursuant to our Restricted Stock Awards. The trading arrangement is intended to satisfy the affirmative defense in Rule 10b5-1(c). The first date that sales of any shares are permitted to be sold under the trading arrangement will be March 27, 2024, and subsequent sales under the trading arrangement may occur on a regular basis for the duration of the trading arrangement until December 31, 2024, or earlier if all transactions under the trading arrangement are completed.

No other officers or directors, as defined in Rule 16a-1(f), adopted and/or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement,” as defined in Item 408 of Regulation S-K, during the last fiscal quarter.

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Item 6. EXHIBITS


Exhibit Number	Description of Exhibit	Filed Herewith	Form	Period Ending	Exhibit/ Appendix	Filing Date
3.1	Restated Certificate of Incorporation of the Registrant		8-K		99.2	1/26/15
3.2	Bylaws of the Registrant, Amended and Restated		8-K		3.1	2/16/21
10.1	Executive Officer Cash Severance Policy	X
10.2*	Severance Policy Acknowledgement Letter for Sanjay Mehrotra	X
10.3*	Amended and Restated Severance Agreement by and between Micron Technology, Inc. and Scott J. DeBoer	X
10.4*	Amended and Restated 2008 Director Compensation Plan	X
31.1	Rule 13a-14(a) Certification of Chief Executive Officer	X
31.2	Rule 13a-14(a) Certification of Chief Financial Officer	X
32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. 1350	X
32.2	Certification of Chief Financial Officer Pursuant to 18 U.S.C. 1350	X
101.INS	Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document	X
101.SCH	Inline XBRL Taxonomy Extension Schema Document	X
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document	X
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document	X
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document	X
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document	X
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)	X

Indicates management contract or compensatory plan or arrangement.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


			Micron Technology, Inc.
			(Registrant)


Date:	December 21, 2023	By:	/s/ Mark Murphy
			Mark Murphy
			Executive Vice President and Chief Financial Officer
			(Principal Financial Officer)

			/s/ Scott Allen
			Scott Allen
			Corporate Vice President and Chief Accounting Officer
			(Principal Accounting Officer)