filings.toolsItem 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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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 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 development, 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. 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, HBM, 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, notebook PCs, and gaming consoles), as well as into the automotive, industrial, consumer, and datacenter markets. HBM is a stacked DRAM technology optimized for memory-bandwidth intensive applications.
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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 through 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 six months of 2024, increasing demand growth, driven in part by deployment of artificial intelligence and mostly normal customer inventories, combined with industry-wide supply discipline, resulted in an improved industry supply and demand balance. As a result, we have experienced improvements in pricing and margins in 2024.
We reduced capital expenditures and wafer starts for both DRAM and NAND in response to challenging market conditions that began in the latter part of 2022 and increased levels of our inventories. In the first quarter of 2024, we recognized $165 million of period costs due to wafer start reductions. In the second quarter of 2024, fabrication facility underutilization was reduced and principally related to legacy manufacturing capacity, accordingly period costs were not significant. In addition, to improve capital efficiency, we have redeployed equipment from older technology nodes to support conversions to leading-edge nodes, which has resulted in a meaningful reduction in DRAM and NAND 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 goal is to retain our worldwide DRAM and NAND market share.
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Results of Operations
Consolidated Results
| Second Quarter | First Quarter | Second Quarter | Six months ended | |||||||||||||||||||||||||||||
| 2024 | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||||||||
| Revenue | $ | 5,824 | 100 | % | $ | 4,726 | 100 | % | $ | 3,693 | 100 | % | $ | 10,550 | 100 | % | $ | 7,778 | 100 | % | ||||||||||||
| Cost of goods sold | 4,745 | 81 | % | 4,761 | 101 | % | 4,899 | 133 | % | 9,506 | 90 | % | 8,091 | 104 | % | |||||||||||||||||
| Gross margin | 1,079 | 19 | % | (35) | (1) | % | (1,206) | (33) | % | 1,044 | 10 | % | (313) | (4) | % | |||||||||||||||||
| Research and development | 832 | 14 | % | 845 | 18 | % | 788 | 21 | % | 1,677 | 16 | % | 1,637 | 21 | % | |||||||||||||||||
| Selling, general, and administrative | 280 | 5 | % | 263 | 6 | % | 231 | 6 | % | 543 | 5 | % | 482 | 6 | % | |||||||||||||||||
| Restructure and asset impairments | — | — | % | — | — | % | 86 | 2 | % | — | — | % | 99 | 1 | % | |||||||||||||||||
| Other operating (income) expense, net | (224) | (4) | % | (15) | — | % | (8) | — | % | (239) | (2) | % | (19) | — | % | |||||||||||||||||
| Operating income (loss) | 191 | 3 | % | (1,128) | (24) | % | (2,303) | (62) | % | (937) | (9) | % | (2,512) | (32) | % | |||||||||||||||||
| Interest income (expense), net | (14) | — | % | — | — | % | 30 | 1 | % | (14) | — | % | 67 | 1 | % | |||||||||||||||||
| Other non-operating income (expense), net | (7) | — | % | (27) | (1) | % | 2 | — | % | (34) | — | % | (2) | — | % | |||||||||||||||||
| Income tax (provision) benefit | 622 | 11 | % | (73) | (2) | % | (54) | (1) | % | 549 | 5 | % | (62) | (1) | % | |||||||||||||||||
| Equity in net income (loss) of equity method investees | 1 | — | % | (6) | — | % | 13 | — | % | (5) | — | % | 2 | — | % | |||||||||||||||||
| Net income (loss) | $ | 793 | 14 | % | $ | (1,234) | (26) | % | $ | (2,312) | (63) | % | $ | (441) | (4) | % | $ | (2,507) | (32) | % |
Total Revenue: Total revenue for the second quarter and first six months of 2024 was impacted by the factors described in the section titled “Industry Conditions” above. These conditions drove significant quarterly declines in average selling prices throughout 2023 and a subsequent recovery of average selling prices in the first two quarters of 2024.
Total revenue for the second quarter of 2024 increased 23% as compared to the first quarter of 2024 due to increases in sales of both DRAM and NAND products.
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Sales of DRAM products in the second quarter of 2024 increased 21% as compared to the first quarter of 2024 primarily due to increases in average selling prices in the high-teens percentage range and a low-single-digit percent range increase in bit shipments.
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Sales of NAND products in the second quarter of 2024 increased 27% as compared to the first quarter of 2024 primarily due to a low-30% range increase in average selling prices, partially offset by a low-single-digit percent range decrease in bit shipments.
Total revenue for the second quarter of 2024 increased 58% as compared to the second quarter of 2023 due to increases in sales of both DRAM and NAND products.
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Sales of DRAM products in the second quarter of 2024 increased 53% as compared to the second quarter of 2023 primarily due to a high-50% range increase in bit shipments.
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Sales of NAND products in the second quarter of 2024 increased 77% as compared to the second quarter of 2023 primarily due to a low-60% range increase in bit shipments and an approximate 10% increase in average selling prices.
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Total revenue for the first six months of 2024 increased 36% as compared to the first six months of 2023 due to increases in both DRAM and NAND sales.
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Sales of DRAM products in the first six months of 2024 increased 37% as compared to the first six months of 2023 primarily due to a high-60% range increase in bit shipments, partially offset by a high-teens percentage range decline in average selling prices.
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Sales of NAND products in the first six months of 2024 increased 41% as compared to the first six months of 2023 primarily due to a high-60% range increase in bit shipments, partially offset by a high-teens percentage range decline in average selling prices.
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 19% for the second quarter of 2024 from negative 1% for the first quarter of 2024, as a result of improvements in margins for both DRAM and NAND products, primarily due to increases in average selling prices and manufacturing cost reductions. Our consolidated gross margin percentage improved to 19% for the second quarter of 2024 from negative 33% for the second quarter of 2023 primarily due to increases in average selling prices for NAND, the effects of charges to write down inventories to their net realizable value (“NRV”) in 2023, and the sale of previously written down inventories (see “Inventory NRV write-downs” below). Our consolidated gross margin percentage improved to 10% for the first six months of 2024 from negative 4% for the first six months of 2023 primarily due to cost reductions resulting from the effects of NRV write-downs as presented in the table below, partially offset by declines in average selling prices for both DRAM and NAND.
Inventory NRV write-downs: Our consolidated gross margin was impacted by charges in the second and third quarters of 2023 to write inventories down to their estimated NRV 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:
| Second Quarter | First Quarter | Second Quarter | Six months ended | |||||||||||||||||
| 2024 | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||
| Provision to write down inventory to NRV | $ | — | $ | — | $ | (1,430) | $ | — | $ | (1,430) | ||||||||||
| Lower costs from sale of inventory written down in prior periods | 382 | 605 | — | 987 | — | |||||||||||||||
| $ | 382 | $ | 605 | $ | (1,430) | $ | 987 | $ | (1,430) |
Revenue by Business Unit
| Second Quarter | First Quarter | Second Quarter | Six months ended | |||||||||||||||||||||||||||||
| 2024 | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||||||||
| CNBU | $ | 2,185 | 38 | % | $ | 1,737 | 37 | % | $ | 1,375 | 37 | % | $ | 3,922 | 37 | % | $ | 3,121 | 40 | % | ||||||||||||
| MBU | 1,598 | 27 | % | 1,293 | 27 | % | 945 | 26 | % | 2,891 | 27 | % | 1,600 | 21 | % | |||||||||||||||||
| EBU | 1,111 | 19 | % | 1,037 | 22 | % | 865 | 23 | % | 2,148 | 20 | % | 1,865 | 24 | % | |||||||||||||||||
| SBU | 905 | 16 | % | 653 | 14 | % | 507 | 14 | % | 1,558 | 15 | % | 1,187 | 15 | % | |||||||||||||||||
| All Other | 25 | — | % | 6 | — | % | 1 | — | % | 31 | — | % | 5 | — | % | |||||||||||||||||
| $ | 5,824 | $ | 4,726 | $ | 3,693 | $ | 10,550 | $ | 7,778 |
Percentages of total revenue may not total 100% due to rounding.
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Changes in revenue for each business unit for the second quarter of 2024 as compared to the first quarter of 2024 were as follows:
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CNBU revenue increased 26% primarily due to increases in DRAM average selling prices and bit shipments driven by improving demand in cloud and data center end markets.
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MBU revenue increased 24% primarily due to increases in average selling prices for both mobile DRAM and NAND, partially offset by decreases in bit shipments.
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EBU revenue increased 7% primarily due to increases in bit shipments driven by solid demand for leading-edge products in industrial markets.
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SBU revenue increased 39% primarily due to increases in NAND average selling prices and bit shipments driven by strong demand across markets.
Changes in revenue for each business unit for the second quarter and first six months of 2024 as compared to the corresponding periods of 2023 were as follows:
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CNBU revenue increased 59% and 26%, respectively, primarily due to increases in bit shipments, partially offset by declines in average selling prices.
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MBU revenue increased 69% and 81%, respectively, primarily due to increases in bit shipments for both DRAM and NAND. MBU average selling prices increased for the second quarter of 2024 as compared to the second quarter of 2023 and decreased slightly for the first six months of 2024 as compared to the first six months of 2023.
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EBU revenue increased 28% and 15%, respectively, primarily due to increases in bit shipments, partially offset by declines in average selling prices.
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SBU revenue increased 79% and 31%, respectively, primarily due to increases in bit shipments. SBU average selling prices increased for the second quarter of 2024 as compared to the second quarter of 2023 and decreased for the first six months of 2024 as compared to the first six months of 2023.
Operating Income (Loss) by Business Unit
| Second Quarter | First Quarter | Second Quarter | Six months ended | |||||||||||||||||||||||||||||
| 2024 | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||||||||
| CNBU | $ | 28 | 1 | % | $ | (397) | (23) | % | $ | (35) | (3) | % | $ | (369) | (9) | % | $ | 155 | 5 | % | ||||||||||||
| MBU | (9) | (1) | % | (687) | (53) | % | (344) | (36) | % | (696) | (24) | % | (539) | (34) | % | |||||||||||||||||
| EBU | (1) | — | % | 10 | 1 | % | 88 | 10 | % | 9 | — | % | 282 | 15 | % | |||||||||||||||||
| SBU | (217) | (24) | % | (490) | (75) | % | (357) | (70) | % | (707) | (45) | % | (614) | (52) | % | |||||||||||||||||
| All Other | 21 | 84 | % | 4 | 67 | % | 1 | 100 | % | 25 | 81 | % | 4 | 80 | % | |||||||||||||||||
| $ | (178) | $ | (1,560) | $ | (647) | $ | (1,738) | $ | (712) |
Percentages reflect operating income (loss) as a percentage of revenue for each business unit.
For the second quarter of 2024 as compared to the first quarter of 2024, CNBU, MBU, and SBU operating income (loss) improved primarily due to increases in average selling prices as a result of improving conditions across most markets. Manufacturing cost reductions in the second quarter of 2024 also contributed to increases in operating income (loss). For EBU, operating income (loss) for the second quarter of 2024 deteriorated from the first quarter of 2024 primarily due to declines in average selling prices.
For the second quarter of 2024 as compared to the second quarter of 2023, MBU and SBU operating income (loss) improved primarily due to increases in average selling prices as a result of improving conditions across most markets in 2024. For CNBU, operating income (loss) for the second quarter of 2024 improved from the second quarter of 2023 primarily due to increases in bits sold and manufacturing cost reductions, partially offset by lower average selling prices that had not fully recovered from prior declines. For EBU, operating income (loss) for the second quarter of 2024 deteriorated from the second quarter of 2023 primarily due to declines in average selling prices in 2023, which had not yet fully recovered.
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For the first six months of 2024 as compared to the first six months of 2023, operating income (loss) deteriorated for all business units due to lower average selling prices, which had not fully recovered from the steep decline in market conditions across memory and storage markets that occurred throughout 2023. Manufacturing cost reductions and increases in DRAM bit shipments partially offset the adverse effects of pricing on operating margins.
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 second quarter of 2024 compared to the first quarter of 2024 were relatively unchanged as lower volumes of development and prequalification wafers were offset by increases in employee compensation. R&D expenses for the second quarter and first six months of 2024 increased 6% and 2%, respectively, as compared to the corresponding periods of 2023, primarily due to an increase in employee compensation, partially offset by lower volumes of development and prequalification wafers.
Selling, General, and Administrative: SG&A expenses for the second quarter of 2024 increased 6% as compared to the first quarter of 2024 primarily due to an increase in employee compensation. SG&A expenses for the second quarter and first six months of 2024 increased 21% and 13%, respectively, as compared to the corresponding periods of 2023, primarily due to an increase in employee compensation.
Restructure and Asset Impairments: See “Item 1. Financial Statements – Notes to Consolidated Financial
Statements – Restructure and Asset Impairments”.
Other Operating (Income) Expense, Net: See “Item 1. Financial Statements – Notes to Consolidated Financial
Statements – Other Operating (Income) Expense, Net”.
Interest (Income) Expense, Net: Interest income (expense) was not significant for the second quarter of 2024. Interest income (expense) deteriorated for the second quarter and first six months of 2024 as compared to the corresponding periods of 2023 primarily due to increases in interest expense as a result of higher debt balances and interest rates, partially offset by increases in interest income due to higher interest rates on our cash and investments.
Income Taxes: Our income tax (provision) benefit consisted of the following:
| Second Quarter | First Quarter | Second Quarter | Six months ended | |||||||||||||||||
| 2024 | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||
| Income (loss) before taxes | $ | 170 | $ | (1,155) | $ | (2,271) | $ | (985) | $ | (2,447) | ||||||||||
| Income tax (provision) benefit | 622 | (73) | (54) | 549 | (62) | |||||||||||||||
| Effective tax rate | (365.9) | % | (6.3) | % | (2.4) | % | 55.7 | % | (2.5) | % |
In the first quarter of 2024, our tax expense was based on actual results for jurisdictions where small changes in our projected pre-tax income would have caused significant changes in the estimated annual effective tax rate. With our improved fiscal 2024 outlook, we can now estimate a more reliable annual effective tax rate and have reverted to a global annual effective tax rate method for all jurisdictions. Applying this updated rate to our year-to-date earnings resulted in the tax benefit recognized in the second quarter of 2024.
The change in our effective tax rate for the second quarter of 2024 as compared to the first quarter of 2024 was primarily due to the use of the estimated annual effective tax rate for the quarter. The change in our effective tax rate for the first six months of 2024 as compared to the first six months of 2023 was primarily due to changes in levels of profitability and the geographic mix of earnings.
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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 the low level of profitability and the 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 “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 $9.63 billion as of February 29, 2024, 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 February 29, 2024, $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. From time to time, we expect to engage in a variety of financing transactions for such purposes as well as to refinance our existing indebtedness, including the issuance of securities. As of February 29, 2024, $2.50 billion was available to draw under our Revolving Credit Facility. 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 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 February 29, 2024, we had purchase obligations of approximately $1.01 billion for the acquisition of property, plant, and equipment, of which approximately $938 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
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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 began construction of 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 February 29, 2024, 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 March 20, 2024, our Board of Directors declared a quarterly dividend of $0.115 per share, payable in cash on April 16, 2024, to shareholders of record as of the close of business on April 1, 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
| Six months ended | ||||||||
| 2024 | 2023 | |||||||
| Net cash provided by operating activities | $ | 2,620 | $ | 1,286 | ||||
| Net cash provided by (used for) investing activities | (2,709) | (4,181) | ||||||
| Net cash provided by (used for) financing activities | (458) | 4,434 | ||||||
| Effect of changes in currency exchange rates on cash, cash equivalents, and restricted cash | (8) | 9 | ||||||
| Net increase (decrease) in cash, cash equivalents, and restricted cash | $ | (555) | $ | 1,548 |
Operating Activities: Cash provided by operating activities reflects net income (loss) adjusted for certain non-cash items, including depreciation expense, amortization of intangible assets, stock-based compensation, and inventory write-downs, and the effects of changes in operating assets and liabilities. The increase in cash provided by operating activities for the first six months of 2024 as compared to the first six months of 2023 was primarily due to a smaller net loss in the current year adjusted for non-cash items and the effect of 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, partially offset by an increase in receivables and an increase in other current assets primarily due to the second quarter 2024 income tax benefit.
Investing Activities: For the first six months of 2024, net cash used for investing activities consisted primarily of $3.18 billion of expenditures for property, plant, and equipment; contributions of $234 million received from government incentives to offset capital expenditures; partially offset by $261 million of net inflows from maturities, sales, and purchases of available-for-sale securities.
For the first six months of 2023, net cash used for investing activities consisted primarily of $4.65 billion of expenditures for property, plant, and equipment, partially offset by $480 million of net inflows from maturities, sales, and purchases of available-for-sale securities.
Financing Activities: For the first six months of 2024, net cash used for financing activities consisted primarily of $1.10 billion of repayments of debt, which included the prepayment of the 2024 Term Loan A and a portion of the 2025 Term Loan A borrowings, $256 million for payments of dividends to shareholders, and $82 million of payments on equipment purchase contracts, partially offset by approximately $1.00 billion of proceeds from the issuance of the 2031 Notes. See “Item 1. Financial Statements – Notes to Consolidated Financial Statements – Debt.”
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For the first six 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, and $749 million from the issuance of the 2033 A 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, $252 million of cash payments of dividends to shareholders, and $76 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.
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