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Item 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 (AI) and compute-intensive 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 nine 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 and third quarters 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. Since the number of wafer processing steps is higher for leading-edge nodes, this approach has resulted in a meaningful structural reduction in DRAM and NAND wafer capacity. We are now fully utilized on our high-volume manufacturing nodes where we are maximizing output against the structurally lowered capacity. We believe this approach to node migration and consequent wafer capacity reduction is an industry-wide phenomenon.

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

Third QuarterSecond QuarterThird QuarterNine months ended
20242024202320242023
Revenue$6,811100%$5,824100%$3,752100%$17,361100%$11,530100%
Cost of goods sold4,97973%4,74581%4,420118%14,48583%12,511109%
Gross margin1,83227%1,07919%(668)(18)%2,87617%(981)(9)%
Research and development85012%83214%75820%2,52715%2,39521%
Selling, general, and administrative2914%2805%2196%8345%7016%
Restructure and asset impairments——%——%682%——%1671%
Other operating (income) expense, net(28)—%(224)(4)%481%(267)(2)%29—%
Operating income (loss)71911%1913%(1,761)(47)%(218)(1)%(4,273)(37)%
Interest income (expense), net(14)—%(14)—%8—%(28)—%751%
Other non-operating income (expense), net10—%(7)—%——%(24)—%(2)—%
Income tax (provision) benefit(377)(6)%62211%(139)(4)%1721%(201)(2)%
Equity in net income (loss) of equity method investees(6)—%1—%(4)—%(11)—%(2)—%
Net income (loss)$3325%$79314%$(1,896)(51)%$(109)(1)%$(4,403)(38)%

Total Revenue: Total revenue for the third quarter and first nine 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 three quarters of 2024.

Total revenue for the third quarter of 2024 increased 17% as compared to the second quarter of 2024 due to increases in sales of both DRAM and NAND products.

  • Sales of DRAM products in the third quarter of 2024 increased 13% as compared to the second quarter of 2024 primarily due to increases in average selling prices by approximately 20%, partially offset by a mid-single-digit percent range decrease in bit shipments.

  • Sales of NAND products in the third quarter of 2024 increased 32% as compared to the second quarter of 2024 primarily due to an approximate 20% increase in average selling prices and a high-single-digit percent range increase in bit shipments.

Total revenue for the third quarter of 2024 increased 82% as compared to the third quarter of 2023 due to increases in sales of both DRAM and NAND products.

  • Sales of DRAM products in the third quarter of 2024 increased 76% as compared to the third quarter of 2023 primarily due to a mid-30% range increase in both average selling prices and bit shipments.

  • Sales of NAND products in the third quarter of 2024 increased 104% as compared to the third quarter of 2023 primarily due to a low-60% range increase in average selling prices and a high-20% range increase in bit shipments.

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Total revenue for the first nine months of 2024 increased 51% as compared to the first nine months of 2023 due to increases in both DRAM and NAND sales.

  • Sales of DRAM products in the first nine months of 2024 increased 49% as compared to the first nine months of 2023 primarily due to a mid-50% range increase in bit shipments, partially offset by a low-single-digit percentage range decline in average selling prices.

  • Sales of NAND products in the first nine months of 2024 increased 62% as compared to the first nine months of 2023 primarily due to a low-50% range increase in bit shipments and a high-single-digit percentage range increase 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 and inventory write-downs in 2023 as detailed in the table below. Our consolidated gross margin percentage improved to 27% for the third quarter of 2024 from 19% for the second 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 NAND manufacturing cost reductions, partially offset by a reduction in the benefits from the sale of inventories previously written down to their net realizable value. Our consolidated gross margin percentage improved to 27% for the third quarter of 2024 from negative 18% for the third quarter of 2023 primarily due to increases in average selling prices, manufacturing cost reductions, the effects of charges to write down inventories to their NRV in 2023, and the sale of previously written down inventories. Our consolidated gross margin percentage improved to 17% for the first nine months of 2024 from negative 9% for the first nine months of 2023 primarily due to manufacturing cost reductions, the effects of charges to write down inventories to their NRV in 2023, and the sale of previously written down inventories.

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:

Third QuarterSecond QuarterThird QuarterNine months ended
20242024202320242023
Provision to write down inventory to NRV$—$—$(401)$—$(1,831)
Lower costs from sale of inventory written down in prior periods—382281987281
$—$382$(120)$987$(1,550)

Revenue by Business Unit

Third QuarterSecond QuarterThird QuarterNine months ended
20242024202320242023
CNBU$2,57338%$2,18538%$1,38937%$6,49537%$4,51039%
MBU1,58823%1,59827%81922%4,47926%2,41921%
EBU1,29419%1,11119%91224%3,44220%2,77724%
SBU1,35320%90516%62717%2,91117%1,81416%
All Other3—%25—%5—%34—%10—%
$6,811$5,824$3,752$17,361$11,530

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

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

  • CNBU revenue increased 18% primarily due to increases in DRAM average selling prices driven by strong growth in the data center market.

  • MBU revenue decreased 1% reflecting decreases in bit shipments, partially offset by increases in average selling prices for both mobile DRAM and NAND.

  • EBU revenue increased 16% primarily due to increases in DRAM average selling prices and bit shipments driven by strong demand in automotive markets.

  • SBU revenue increased 50% primarily due to increases in NAND average selling prices and bit shipments driven by strong demand in data center markets.

Changes in revenue for each business unit for the third quarter and first nine months of 2024 as compared to the corresponding periods of 2023 were as follows:

  • CNBU revenue increased 85% and 44%, respectively, driven by increases in bit shipments. CNBU DRAM average selling prices increased for the third quarter of 2024 as compared to the third quarter of 2023 and decreased slightly for the first nine months of 2024 as compared to the first nine months of 2023.

  • MBU revenue increased 94% and 85%, respectively, primarily due to increases in average selling prices and bit shipments for both mobile DRAM and NAND.

  • EBU revenue increased 42% and 24%, respectively, primarily due to increases in bit shipments, partially offset by declines in average selling prices.

  • SBU revenue increased 116% and 60%, respectively, primarily due to increases in average selling prices and bit shipments.

Operating Income (Loss) by Business Unit

Third QuarterSecond QuarterThird QuarterNine months ended
20242024202320242023
CNBU$44217%$281%$(337)(24)%$731%$(182)(4)%
MBU30119%(9)(1)%(478)(58)%(395)(9)%(1,017)(42)%
EBU12410%(1)—%657%1334%34712%
SBU766%(217)(24)%(601)(96)%(631)(22)%(1,215)(67)%
All Other(2)(67)%2184%240%2368%660%
$941$(178)$(1,349)$(797)$(2,061)

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

For the third quarter of 2024 as compared to the second quarter of 2024, operating income (loss) improved for all segments primarily due to increases in average selling prices as a result of improving conditions across most markets.

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For the third quarter of 2024 as compared to the third quarter of 2023, CNBU, MBU, and SBU operating income (loss) improved primarily due to increases in average selling prices, manufacturing cost reductions, and increases in bit sales as a result of improving conditions across most markets in 2024. SBU and CNBU experienced higher R&D expenses for the third quarter of 2024 as compared to the third quarter of 2023. For EBU, operating income (loss) for the third quarter of 2024 also improved from the third quarter of 2023 primarily due to increases in bits sold and manufacturing cost reductions, partially offset by lower average selling prices.

For the first nine months of 2024 as compared to the first nine months of 2023, operating income (loss) improved for CNBU, MBU, and SBU primarily due to manufacturing cost reductions, increases in bit sales, and increases in MBU and SBU average selling prices as a result of improving conditions across most markets in 2024. SBU and CNBU experienced higher R&D expenses for the first nine months of 2024 as compared to the first nine months of 2023. For EBU, operating income (loss) for the first nine months of 2024 deteriorated from the first nine months of 2023 primarily due to lower average selling prices, partially offset by manufacturing cost reduction and increases in bit shipments.

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 2024 increased 2% as compared to the second quarter of 2024 primarily due to an increase in employee compensation and subcontractor expense. R&D expenses for the third quarter of 2024 increased 12% as compared to the third quarter of 2023 primarily due to an increase in employee compensation and subcontractor expense, partially offset by an increase in government incentives. R&D expenses for the first nine months of 2024 increased 6% as compared to the first nine months of 2023 primarily due to an increase in employee compensation, partially offset by an increase in government incentives.

Selling, General, and Administrative: SG&A expenses for the third quarter of 2024 increased 4% as compared to the second quarter of 2024 primarily due to an increase in employee compensation. SG&A expenses for the third quarter and first nine months of 2024 increased 33% and 19%, respectively, as compared to the corresponding periods of 2023, primarily due to an increase in employee compensation and legal fees.

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) for the third quarter of 2024 compared to the second quarter of 2024 was unchanged. Interest income (expense) deteriorated for the third quarter and first nine 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:

Third QuarterSecond QuarterThird QuarterNine months ended
20242024202320242023
Income (loss) before taxes$715$170$(1,753)$(270)$(4,200)
Income tax (provision) benefit(377)622(139)172(201)
Effective tax rate52.7%(365.9)%(7.9)%63.7%(4.8)%

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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 were able to estimate a more reliable annual effective tax rate and have reverted to a global annual effective tax rate method for all jurisdictions beginning in the second quarter of 2024.

The change in our effective tax rate for the third quarter of 2024 as compared to the second quarter of 2024 was primarily due to the change in tax rate methodology applied in the second quarter of 2024. The changes in our effective tax rate for the third quarter and first nine months of 2024 as compared to the corresponding periods of 2023 were primarily due to changes in profitability and discrete items primarily related to tax return filings.

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 $9.15 billion as of May 30, 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 May 30, 2024, $2.51 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 May 30, 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 approximately $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 May 30, 2024, we had purchase obligations of approximately $1.31 billion for the acquisition of property, plant, and equipment, of which approximately $1.20 billion 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.”

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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 U.S. CHIPS and Science Act of 2022 (“CHIPS Act”), we announced plans to invest in two leading-edge memory manufacturing fab facilities 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 early calendar 2026 and first output in mid calendar 2026. In addition, in October 2022, we announced plans to build a second leading-edge DRAM manufacturing facility, consisting of up to four fabs to be built over the next 20-plus years, in Clay, New York. We expect construction site preparation to begin in calendar 2025, 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.

We have signed a non-binding preliminary memorandum of terms with the U.S. Department of Commerce for up to $6.1 billion in direct funding under the CHIPS Act for our planned fab in Boise, Idaho and the first two planned fabs in Clay, New York. We are also eligible for federal loans up to $7.5 billion. In addition, we receive a 25% investment tax credit on qualified investments in U.S. semiconductor manufacturing under the CHIPS Act. We have also signed a non-binding term sheet with the state of New York that provides up to $5.5 billion in funding for the planned four-fab facility over the next 20-plus years through a combination of tax credits for qualified capital investments and incentives for eligible new job wages.

Additionally, we began enablement of cleanroom space within our existing manufacturing fab in Hiroshima, Japan, that will support production of DRAM using EUV lithography. We also continue to advance 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 have started construction to expand our existing assembly and test facility in Xi’an, China, to provide space to add more product capability, to allow us over time to serve more of the demand from our customers in China. Construction is also progressing for the 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 May 30, 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 June 26, 2024, our Board of Directors declared a quarterly dividend of $0.115 per share, payable in cash on July 23, 2024, to shareholders of record as of the close of business on July 8, 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, expected funding from government incentives, 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
20242023
Net cash provided by operating activities$5,102$1,310
Net cash provided by (used for) investing activities(4,711)(5,361)
Net cash provided by (used for) financing activities(1,368)5,095
Effect of changes in currency exchange rates on cash, cash equivalents, and restricted cash(15)(13)
Net increase (decrease) in cash, cash equivalents, and restricted cash$(992)$1,031

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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, 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 nine months of 2024 as compared to the first nine months of 2023 was primarily due to a smaller net loss in the current year adjusted for non-cash items, 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.

Investing Activities: For the first nine months of 2024, net cash used for investing activities consisted primarily of $5.27 billion of expenditures for property, plant, and equipment, partially offset by contributions of $267 million received from government incentives to offset capital expenditures and $323 million of net inflows from maturities, sales, and purchases of available-for-sale securities.

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, partially offset by contributions of $248 million received from government incentives to offset capital expenditures and $696 million of net inflows from maturities, sales, and purchases of available-for-sale securities.

Financing Activities: For the first nine months of 2024, net cash used for financing activities consisted primarily of $1.82 billion of repayments of debt, which included the prepayment of the 2024 Term Loan A and the 2025 Term Loan A borrowings, $384 million for payments of dividends to shareholders, and $127 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.”

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. 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.

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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