filings.toolsItem 1. FINANCIAL STATEMENTS
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Item 1. FINANCIAL STATEMENTS
Micron Technology, Inc.
Consolidated Statements of Operations
(In millions, except per share amounts)
(Unaudited)
| Quarter Ended | Six months ended | ||||||||||||||||
| February 27, 2025 | February 29, 2024 | February 27, 2025 | February 29, 2024 | ||||||||||||||
| Revenue | $ | 8,053 | $ | 5,824 | $ | 16,762 | $ | 10,550 | |||||||||
| Cost of goods sold | 5,090 | 4,745 | 10,451 | 9,506 | |||||||||||||
| Gross margin | 2,963 | 1,079 | 6,311 | 1,044 | |||||||||||||
| Research and development | 898 | 832 | 1,786 | 1,677 | |||||||||||||
| Selling, general, and administrative | 285 | 280 | 573 | 543 | |||||||||||||
| Other operating (income) expense, net | 7 | (224) | 5 | (239) | |||||||||||||
| Operating income (loss) | 1,773 | 191 | 3,947 | (937) | |||||||||||||
| Interest income | 108 | 130 | 215 | 262 | |||||||||||||
| Interest expense | (112) | (144) | (230) | (276) | |||||||||||||
| Other non-operating income (expense), net | (11) | (7) | (22) | (34) | |||||||||||||
| 1,758 | 170 | 3,910 | (985) | ||||||||||||||
| Income tax (provision) benefit | (177) | 622 | (460) | 549 | |||||||||||||
| Equity in net income (loss) of equity method investees | 2 | 1 | 3 | (5) | |||||||||||||
| Net income (loss) | $ | 1,583 | $ | 793 | $ | 3,453 | $ | (441) | |||||||||
| Earnings (loss) per share | |||||||||||||||||
| Basic | $ | 1.42 | $ | 0.72 | $ | 3.10 | $ | (0.40) | |||||||||
| Diluted | 1.41 | 0.71 | 3.08 | (0.40) | |||||||||||||
| Number of shares used in per share calculations | |||||||||||||||||
| Basic | 1,115 | 1,104 | 1,113 | 1,102 | |||||||||||||
| Diluted | 1,123 | 1,114 | 1,123 | 1,102 |
See accompanying notes to consolidated financial statements.
5 | 2025 Q2 10-Q
Micron Technology, Inc.
Consolidated Statements of Comprehensive Income (Loss)
(In millions)
(Unaudited)
| Quarter Ended | Six months ended | ||||||||||||||||
| February 27, 2025 | February 29, 2024 | February 27, 2025 | February 29, 2024 | ||||||||||||||
| Net income (loss) | $ | 1,583 | $ | 793 | $ | 3,453 | $ | (441) | |||||||||
| Other comprehensive income (loss), net of tax | |||||||||||||||||
| Gains (losses) on derivative instruments | 29 | (11) | (56) | 33 | |||||||||||||
| Unrealized gains (losses) on investments | 2 | 9 | — | 16 | |||||||||||||
| Pension liability adjustments | (1) | (3) | (1) | (1) | |||||||||||||
| Foreign currency translation adjustments | — | 1 | — | — | |||||||||||||
| Other comprehensive income (loss) | 30 | (4) | (57) | 48 | |||||||||||||
| Total comprehensive income (loss) | $ | 1,613 | $ | 789 | $ | 3,396 | $ | (393) |
See accompanying notes to consolidated financial statements.
6
Micron Technology, Inc.
Consolidated Balance Sheets
(In millions, except par value amounts)
(Unaudited)
| As of | February 27, 2025 | August 29, 2024 | ||||||
| Assets | ||||||||
| Cash and equivalents | $ | 7,552 | $ | 7,041 | ||||
| Short-term investments | 663 | 1,065 | ||||||
| Receivables | 6,504 | 6,615 | ||||||
| Inventories | 9,007 | 8,875 | ||||||
| Other current assets | 963 | 776 | ||||||
| Total current assets | 24,689 | 24,372 | ||||||
| Long-term marketable investments | 1,375 | 1,046 | ||||||
| Property, plant, and equipment | 42,528 | 39,749 | ||||||
| Operating lease right-of-use assets | 637 | 645 | ||||||
| Intangible assets | 423 | 416 | ||||||
| Deferred tax assets | 552 | 520 | ||||||
| Goodwill | 1,150 | 1,150 | ||||||
| Other noncurrent assets | 1,699 | 1,518 | ||||||
| Total assets | $ | 73,053 | $ | 69,416 | ||||
| Liabilities and equity | ||||||||
| Accounts payable and accrued expenses | $ | 6,176 | $ | 7,299 | ||||
| Current debt | 504 | 431 | ||||||
| Other current liabilities | 1,197 | 1,518 | ||||||
| Total current liabilities | 7,877 | 9,248 | ||||||
| Long-term debt | 13,851 | 12,966 | ||||||
| Noncurrent operating lease liabilities | 599 | 610 | ||||||
| Noncurrent unearned government incentives | 836 | 550 | ||||||
| Other noncurrent liabilities | 1,257 | 911 | ||||||
| Total liabilities | 24,420 | 24,285 | ||||||
| Commitments and contingencies | ||||||||
| Shareholders’ equity | ||||||||
| Common stock, $0.10 par value, 3,000 shares authorized, 1,262 shares issued and 1,118 outstanding (1,253 shares issued and 1,109 outstanding as of August 29, 2024) | 126 | 125 | ||||||
| Additional capital | 12,711 | 12,115 | ||||||
| Retained earnings | 43,839 | 40,877 | ||||||
| Treasury stock, 144 shares held (144 shares as of August 29, 2024) | (7,852) | (7,852) | ||||||
| Accumulated other comprehensive income (loss) | (191) | (134) | ||||||
| Total equity | 48,633 | 45,131 | ||||||
| Total liabilities and equity | $ | 73,053 | $ | 69,416 |
See accompanying notes to consolidated financial statements.
7 | 2025 Q2 10-Q
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 29, 2024 | 1,253 | $ | 125 | $ | 12,115 | $ | 40,877 | $ | (7,852) | $ | (134) | $ | 45,131 | ||||||||||
| Net income (loss) | — | — | — | 1,870 | — | — | 1,870 | ||||||||||||||||
| Other comprehensive income (loss), net | — | — | — | — | — | (87) | (87) | ||||||||||||||||
| Stock issued under equity compensation plans | 7 | 1 | 1 | — | — | — | 2 | ||||||||||||||||
| Stock-based compensation expense | — | — | 220 | — | — | — | 220 | ||||||||||||||||
| Repurchase of stock - withholdings on employee equity awards | (2) | — | (19) | (188) | — | — | (207) | ||||||||||||||||
| Dividends and dividend equivalents declared ($0.115 per share) | — | — | — | (132) | — | — | (132) | ||||||||||||||||
| Balance at November 28, 2024 | 1,258 | $ | 126 | $ | 12,317 | $ | 42,427 | $ | (7,852) | $ | (221) | $ | 46,797 | ||||||||||
| Net income (loss) | — | — | — | 1,583 | — | — | 1,583 | ||||||||||||||||
| Other comprehensive income (loss), net | — | — | — | — | — | 30 | 30 | ||||||||||||||||
| Stock issued under equity compensation plans | 4 | — | 150 | — | — | — | 150 | ||||||||||||||||
| Stock-based compensation expense | — | — | 249 | — | — | — | 249 | ||||||||||||||||
| Repurchase of stock - withholdings on employee equity awards | — | — | (5) | (40) | — | — | (45) | ||||||||||||||||
| Dividends and dividend equivalents declared ($0.115 per share) | — | — | — | (131) | — | — | (131) | ||||||||||||||||
| Balance at February 27, 2025 | 1,262 | $ | 126 | $ | 12,711 | $ | 43,839 | $ | (7,852) | $ | (191) | $ | 48,633 |
8
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 equity compensation 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 | ||||||||||
| Net income (loss) | — | — | — | 793 | — | — | 793 | ||||||||||||||||
| Other comprehensive income (loss), net | — | — | — | — | — | (4) | (4) | ||||||||||||||||
| Stock issued under equity compensation plans | 3 | 1 | 136 | — | — | — | 137 | ||||||||||||||||
| Stock-based compensation expense | — | — | 213 | — | — | — | 213 | ||||||||||||||||
| Repurchase of stock - withholdings on employee equity awards | — | — | (2) | (22) | — | — | (24) | ||||||||||||||||
| Dividends and dividend equivalents declared ($0.115 per share) | — | — | — | (130) | — | — | (130) | ||||||||||||||||
| Balance at February 29, 2024 | 1,248 | $ | 125 | $ | 11,564 | $ | 39,997 | $ | (7,552) | $ | (264) | $ | 43,870 |
See accompanying notes to consolidated financial statements.
9 | 2025 Q2 10-Q
Micron Technology, Inc.
Consolidated Statements of Cash Flows
(In millions)
(Unaudited)
| Six months ended | February 27, 2025 | February 29, 2024 | ||||||||||||
| Cash flows from operating activities | ||||||||||||||
| Net income (loss) | $ | 3,453 | $ | (441) | ||||||||||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||||||||
| Depreciation expense and amortization of intangible assets | 4,109 | 3,839 | ||||||||||||
| Stock-based compensation | 469 | 401 | ||||||||||||
| Change in operating assets and liabilities: | ||||||||||||||
| Receivables | 338 | (1,759) | ||||||||||||
| Inventories | (132) | (57) | ||||||||||||
| Other current assets | (204) | (799) | ||||||||||||
| Accounts payable and accrued expenses | (714) | 573 | ||||||||||||
| Other current liabilities | (321) | 706 | ||||||||||||
| Other | 188 | 157 | ||||||||||||
| Net cash provided by operating activities | 7,186 | 2,620 | ||||||||||||
| Cash flows from investing activities | ||||||||||||||
| Expenditures for property, plant, and equipment | (7,261) | (3,180) | ||||||||||||
| Purchases of available-for-sale securities | (816) | (465) | ||||||||||||
| Proceeds from government incentives | 1,028 | 234 | ||||||||||||
| Proceeds from maturities and sales of available-for-sale securities | 874 | 726 | ||||||||||||
| Other | (125) | (24) | ||||||||||||
| Net cash provided by (used for) investing activities | (6,300) | (2,709) | ||||||||||||
| Cash flows from financing activities | ||||||||||||||
| Repayments of debt | (2,626) | (1,101) | ||||||||||||
| Payments of dividends to shareholders | (261) | (256) | ||||||||||||
| Payments on equipment purchase contracts | — | (82) | ||||||||||||
| Proceeds from issuance of debt | 2,682 | 999 | ||||||||||||
| Other | (121) | (18) | ||||||||||||
| Net cash provided by (used for) financing activities | (326) | (458) | ||||||||||||
| Effect of changes in currency exchange rates on cash, cash equivalents, and restricted cash | (49) | (8) | ||||||||||||
| Net increase (decrease) in cash, cash equivalents, and restricted cash | 511 | (555) | ||||||||||||
| Cash, cash equivalents, and restricted cash at beginning of period | 7,052 | 8,656 | ||||||||||||
| Cash, cash equivalents, and restricted cash at end of period | $ | 7,563 | $ | 8,101 |
See accompanying notes to consolidated financial statements.
10
Micron Technology, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All tabular amounts in millions, except per share amounts)
(Unaudited)
Significant Accounting Policies
For a discussion of our significant accounting policies, see “Part II. – Item 8. Financial Statements and Supplementary Data – Notes to Consolidated Financial Statements – Significant Accounting Policies” of our Annual Report on Form 10-K for the year ended August 29, 2024. There have been no changes to our significant accounting policies since our Annual Report on Form 10-K for the year ended August 29, 2024.
Basis of Presentation
The accompanying consolidated financial statements include the accounts of Micron Technology, Inc. and our consolidated subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) consistent in all material respects with those applied in our Annual Report on Form 10-K for the year ended August 29, 2024.
In the opinion of our management, the accompanying unaudited consolidated financial statements contain all necessary adjustments, consisting of a normal recurring nature, to fairly state the financial information set forth herein. Certain reclassifications have been made to prior period amounts to conform to current period presentation.
Our fiscal year is the 52 or 53-week period ending on the Thursday closest to August 31. Fiscal years 2025 and 2024 each contain 52 weeks. All period references are to our fiscal periods unless otherwise indicated. These interim financial statements 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 29, 2024.
Recently Issued Accounting Standards
In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07 (ASC Topic 280), Improvements to Reportable Segment Disclosures. This ASU expands on existing reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses. This ASU will be effective for our annual reporting for 2025 on a retrospective basis. Adoption of this new guidance will result in increased disclosures in the Notes to Consolidated Financial Statements.
In December 2023, the FASB issued ASU 2023-09 (ASC Topic 740), Improvements to Income Tax Disclosures. This ASU requires disaggregated income tax disclosures on the rate reconciliation and income taxes paid. This ASU will be effective for our annual reporting for 2026 on a prospective basis, with retrospective application permitted. Adoption of this new guidance will result in increased disclosures in the Notes to Consolidated Financial Statements.
In November 2024, the FASB issued ASU 2024-03 (ASC Topic 220), Disaggregation of Income Statement Expenses. This ASU requires disclosure of certain expenses in the notes to the financial statements. This ASU will be effective for our annual reporting for 2028 on a prospective basis, with retrospective application permitted. Adoption of this new guidance will result in increased disclosures in the Notes to Consolidated Financial Statements.
11 | 2025 Q2 10-Q
Variable Interest Entities
Certain third-party special purpose entities (the "Lease SPEs") facilitate equipment lease financing transactions between us and various financial institutions. Neither we nor the financial institutions have an equity interest in the Lease SPEs, which are variable interest entities. The arrangements are financing vehicles and we do not bear any significant risks from variable interests with the Lease SPEs. We do not direct the activities of the Lease SPEs that most significantly impact their economic performance and, as such, we do not consolidate them. As of February 27, 2025, we had approximately $1.38 billion of finance lease liabilities and right-of-use assets under these arrangements.
Cash and Investments
All of our short-term investments and long-term marketable investments were classified as available-for-sale as of the dates noted below. Cash and equivalents and the fair values of our available-for-sale investments, which approximated amortized costs, were as follows:
| As of February 27, 2025 | As of August 29, 2024 | ||||||||||||||||||||||||||||
| Cash and Equivalents | Short-term Investments | Long-term Marketable Investments(1) | Total Fair Value | Cash and Equivalents | Short-term Investments | Long-term Marketable Investments(1) | Total Fair Value | ||||||||||||||||||||||
| Cash | $ | 7,334 | $ | — | $ | — | $ | 7,334 | $ | 6,654 | $ | — | $ | — | $ | 6,654 | |||||||||||||
| Level 1(2) | |||||||||||||||||||||||||||||
| Money market funds | 17 | — | — | 17 | 20 | — | — | 20 | |||||||||||||||||||||
| Level 2(3) | |||||||||||||||||||||||||||||
| Certificates of deposit | 147 | 6 | — | 153 | 316 | 6 | — | 322 | |||||||||||||||||||||
| Corporate bonds | — | 520 | 880 | 1,400 | — | 771 | 571 | 1,342 | |||||||||||||||||||||
| Asset-backed securities | — | 28 | 430 | 458 | — | 46 | 433 | 479 | |||||||||||||||||||||
| Government securities | 23 | 51 | 65 | 139 | 35 | 82 | 42 | 159 | |||||||||||||||||||||
| Commercial paper | 31 | 58 | — | 89 | 16 | 160 | — | 176 | |||||||||||||||||||||
| 7,552 | $ | 663 | $ | 1,375 | $ | 9,590 | 7,041 | $ | 1,065 | $ | 1,046 | $ | 9,152 | ||||||||||||||||
| Restricted cash(4) | 11 | 11 | |||||||||||||||||||||||||||
| Cash, cash equivalents, and restricted cash | $ | 7,563 | $ | 7,052 |
*(1)*The maturities of long-term marketable investments primarily range from one to five years, except for asset-backed securities which are not due at a single maturity date.
(2)The fair value of Level 1 securities is measured based on quoted prices in active markets for identical assets.
*(3)*The fair value of Level 2 securities is measured using information obtained from pricing services, which obtain quoted market prices for similar instruments, non-binding market consensus prices that are corroborated by observable market data, or various other methodologies, to determine the appropriate value at the measurement date. We perform supplemental analysis to validate information obtained from these pricing services. No adjustments were made to the fair values indicated by such pricing information as of February 27, 2025 or August 29, 2024.
*(4)*Restricted cash is included in other current assets and primarily relates to certain government incentives received prior to being earned and for which restrictions lapse upon achieving certain performance conditions or which will be returned if performance conditions are not met.
Gross realized gains and losses from sales of available-for-sale securities were not significant for any period presented.
12
Non-marketable Equity Investments
In addition to the amounts included in the table above, we had $196 million and $190 million of non-marketable equity investments without a readily determinable fair value that were included in other noncurrent assets as of February 27, 2025 and August 29, 2024, respectively. For non-marketable investments, we recognized in other non-operating income (expense) a net loss of $31 million for the first six months of 2024. The amounts recognized for the other periods presented were not significant. Our non-marketable equity investments are recorded at fair value on a non-recurring basis and classified as Level 3.
Receivables
| As of | February 27, 2025 | August 29, 2024 | ||||||
| Trade receivables | $ | 5,092 | $ | 5,419 | ||||
| Government incentives | 951 | 834 | ||||||
| Income and other taxes | 331 | 268 | ||||||
| Other | 130 | 94 | ||||||
| $ | 6,504 | $ | 6,615 |
Inventories
| As of | February 27, 2025 | August 29, 2024 | ||||||
| Finished goods | $ | 1,355 | $ | 1,308 | ||||
| Work in process | 6,782 | 6,774 | ||||||
| Raw materials and supplies | 870 | 793 | ||||||
| $ | 9,007 | $ | 8,875 |
Property, Plant, and Equipment
| As of | February 27, 2025 | August 29, 2024 | ||||||
| Land | $ | 352 | $ | 284 | ||||
| Buildings | 20,939 | 20,141 | ||||||
| Equipment(1) | 75,024 | 70,813 | ||||||
| Construction in progress(2) | 4,427 | 3,444 | ||||||
| Software | 1,518 | 1,365 | ||||||
| 102,260 | 96,047 | |||||||
| Accumulated depreciation | (59,732) | (56,298) | ||||||
| $ | 42,528 | $ | 39,749 |
*(1)*Includes costs related to equipment not placed into service of $2.88 billion as of February 27, 2025 and $3.10 billion as of August 29, 2024.
*(2)*Primarily includes building-related construction and tool installation.
13 | 2025 Q2 10-Q
Leases
The components of lease cost are presented below:
| Quarter Ended | Six months ended | ||||||||||||||||
| February 27, 2025 | February 29, 2024 | February 27, 2025 | February 29, 2024 | ||||||||||||||
| Finance lease cost | |||||||||||||||||
| Amortization of right-of-use asset | $ | 75 | $ | 37 | $ | 137 | $ | 69 | |||||||||
| Interest on lease liability | 30 | 24 | 54 | 30 | |||||||||||||
| Operating lease cost(1) | 37 | 35 | 75 | 68 | |||||||||||||
| $ | 142 | $ | 96 | $ | 266 | $ | 167 |
*(1)*Operating lease cost includes short-term and variable lease expenses, which were not material for the periods presented.
Supplemental cash flow information related to leases was as follows:
| Six months ended | February 27, 2025 | February 29, 2024 | ||||||
| Cash flows used for operating activities | ||||||||
| Finance leases | $ | 51 | $ | 25 | ||||
| Operating leases | 73 | 66 | ||||||
| Cash flows used for financing activities – Finance leases | 138 | 60 | ||||||
| Noncash acquisitions of right-of-use assets | ||||||||
| Finance leases | 919 | 483 | ||||||
| Operating leases | 30 | 12 |
Supplemental balance sheet information related to leases was as follows:
| As of | February 27, 2025 | August 29, 2024 | ||||||
| Finance lease right-of-use assets (included in property, plant, and equipment) | $ | 2,822 | $ | 2,038 | ||||
| Current operating lease liabilities (included in accounts payable and accrued expenses) | 69 | 71 | ||||||
| Weighted-average remaining lease term (in years) | ||||||||
| Finance leases | 7 | 8 | ||||||
| Operating leases | 10 | 10 | ||||||
| Weighted-average discount rate | ||||||||
| Finance leases | 5.11 | % | 4.91 | % | ||||
| Operating leases | 3.57 | % | 3.42 | % |
14
As of February 27, 2025, maturities of lease liabilities by fiscal year were as follows:
| Finance Leases | Operating Leases | |||||||
| Remainder of 2025 | $ | 311 | $ | 46 | ||||
| 2026 | 599 | 88 | ||||||
| 2027 | 580 | 91 | ||||||
| 2028 | 559 | 84 | ||||||
| 2029 | 466 | 78 | ||||||
| 2030 and thereafter | 694 | 418 | ||||||
| Less imputed interest | (395) | (137) | ||||||
| $ | 2,814 | $ | 668 |
The table above excludes obligations for leases that have been executed but have not yet commenced. As of February 27, 2025, excluded obligations consisted of $860 million of finance lease obligations over a weighted-average period of 14 years for gas supply arrangements deemed to contain embedded leases and equipment leases. We will recognize right-of-use assets and associated lease liabilities at the time such assets become available for our use.
Intangible Assets
| As of February 27, 2025 | As of August 29, 2024 | ||||||||||||||||||||||
| Gross Amount | Accumulated Amortization | Net Carrying Amount | Gross Amount | Accumulated Amortization | Net Carrying Amount | ||||||||||||||||||
| Product and process technology | $ | 609 | $ | (197) | $ | 412 | $ | 683 | $ | (278) | $ | 405 | |||||||||||
| Other | 11 | — | 11 | 11 | — | 11 | |||||||||||||||||
| $ | 620 | $ | (197) | $ | 423 | $ | 694 | $ | (278) | $ | 416 |
In the first six months of 2025 and 2024, we capitalized $42 million and $40 million, respectively, for product and process technology with weighted-average useful lives of 10 years and 9 years, respectively. Amortization expense was $35 million and $41 million for the first six months of 2025 and 2024, respectively. Expected amortization expense is $39 million for the remainder of 2025, $61 million for 2026, $56 million for 2027, $54 million for 2028, and $46 million for 2029.
Accounts Payable and Accrued Expenses
| As of | February 27, 2025 | August 29, 2024 | ||||||
| Accounts payable | $ | 2,383 | $ | 2,726 | ||||
| Property, plant, and equipment | 2,515 | 2,925 | ||||||
| Salaries, wages, and benefits | 614 | 1,117 | ||||||
| Income and other taxes | 366 | 218 | ||||||
| Other | 298 | 313 | ||||||
| $ | 6,176 | $ | 7,299 |
15 | 2025 Q2 10-Q
Debt
| As of February 27, 2025 | As of August 29, 2024 | ||||||||||||||||||||||||||||
| Net Carrying Amount | Net Carrying Amount | ||||||||||||||||||||||||||||
| Stated Rate | Effective Rate | Current | Long-Term | Total | Current | Long-Term | Total | ||||||||||||||||||||||
| 2027 Notes(1) | 4.185 | % | 4.27 | % | $ | — | $ | 846 | $ | 846 | $ | — | $ | 838 | $ | 838 | |||||||||||||
| 2028 Notes | 5.375 | % | 5.52 | % | — | 597 | 597 | — | 597 | 597 | |||||||||||||||||||
| 2029 Term Loan A | 5.445 | % | 5.48 | % | — | 1,681 | 1,681 | — | — | — | |||||||||||||||||||
| 2029 A Notes | 5.327 | % | 5.40 | % | — | 698 | 698 | — | 698 | 698 | |||||||||||||||||||
| 2029 B Notes | 6.750 | % | 6.54 | % | — | 1,260 | 1,260 | — | 1,261 | 1,261 | |||||||||||||||||||
| 2030 Notes | 4.663 | % | 4.73 | % | — | 847 | 847 | — | 847 | 847 | |||||||||||||||||||
| 2031 Notes | 5.300 | % | 5.41 | % | — | 994 | 994 | — | 994 | 994 | |||||||||||||||||||
| 2032 Green Bonds | 2.703 | % | 2.77 | % | — | 996 | 996 | — | 996 | 996 | |||||||||||||||||||
| 2033 A Notes | 5.875 | % | 5.96 | % | — | 746 | 746 | — | 745 | 745 | |||||||||||||||||||
| 2033 B Notes | 5.875 | % | 6.01 | % | — | 891 | 891 | — | 891 | 891 | |||||||||||||||||||
| 2035 Notes | 5.800 | % | 5.90 | % | — | 992 | 992 | — | — | — | |||||||||||||||||||
| 2041 Notes | 3.366 | % | 3.41 | % | — | 497 | 497 | — | 497 | 497 | |||||||||||||||||||
| 2051 Notes | 3.477 | % | 3.52 | % | — | 496 | 496 | — | 496 | 496 | |||||||||||||||||||
| 2026 Term Loan A | N/A | N/A | — | — | — | 49 | 872 | 921 | |||||||||||||||||||||
| 2027 Term Loan A | N/A | N/A | — | — | — | 57 | 1,006 | 1,063 | |||||||||||||||||||||
| 2026 Notes | N/A | N/A | — | — | — | — | 499 | 499 | |||||||||||||||||||||
| Finance lease obligations | N/A | 5.11 | % | 504 | 2,310 | 2,814 | 325 | 1,729 | 2,054 | ||||||||||||||||||||
| $ | 504 | $ | 13,851 | $ | 14,355 | $ | 431 | $ | 12,966 | $ | 13,397 |
(1) In 2021, we entered into fixed-to-floating interest rate swaps on the 2027 Notes with an aggregate $900 million notional amount equal to the principal amount of the 2027 Notes. The resulting variable interest paid is at a rate equal to SOFR plus approximately 3.33%. The fixed-to-floating interest rate swaps are accounted for as fair value hedges, and as a result, the carrying values of our 2027 Notes reflect adjustments in fair value.
Debt Activity
The table below presents the effects of debt financing and prepayment activities in the first six months of 2025:
| Transaction Date | Increase (Decrease) in Principal | Increase (Decrease) in Carrying Value | Increase (Decrease) in Cash | |||||||||||
| Issuances | ||||||||||||||
| 2035 Notes | January 16, 2025 | $ | 1,000 | $ | 992 | $ | 992 | |||||||
| 2029 Term Loan A | January 17, 2025 | 1,684 | 1,681 | 1,681 | ||||||||||
| Prepayments | ||||||||||||||
| 2026 Notes | February 12, 2025 | (500) | (499) | (501) | ||||||||||
| 2026 Term Loan A | January 17, 2025 | (897) | (896) | (897) | ||||||||||
| 2027 Term Loan A | January 17, 2025 | (1,037) | (1,035) | (1,037) | ||||||||||
| $ | 250 | $ | 243 | $ | 238 |
2035 Notes
On January 16, 2025, we issued $1.00 billion principal amount of senior unsecured 2035 Notes in a public offering. The 2035 Notes bear interest at a rate of 5.80% per year and will mature on January 15, 2035.
16
Prior to October 15, 2034 (the “Par Call Date”), we may redeem the 2035 Notes, in whole or in part, at a redemption price equal to the greater of (i) 100% of the principal amount of the notes to be redeemed and (ii) the present value of the remaining scheduled payments of principal and interest, plus, in each case, accrued interest. On or after the Par Call Date, we may redeem the 2035 Notes, in whole or in part, at a redemption price equal to 100% of the principal amount of the 2035 Notes to be redeemed plus accrued interest.
The 2035 Notes contain covenants that, among other things, limit, in certain circumstances, our ability and/or the ability of our restricted subsidiaries (which are generally domestic subsidiaries in which we own at least 80% of the voting stock and which own principal property, as defined in the indenture governing the 2035 Notes) to (1) create or incur certain liens; (2) enter into certain sale and lease-back transactions with respect to any principal property; and (3) consolidate with or merge with or into, or convey, transfer, or lease all or substantially all of our properties and assets, to another entity. These covenants are subject to a number of limitations and exceptions. Additionally, if a change of control triggering event occurs, as defined in the indenture governing the 2035 Notes, we will be required to offer to repurchase the 2035 Notes at a price equal to 101% of the principal amount plus accrued interest up to the repurchase date.
2029 Term Loan A
On January 17, 2025, we entered into a term loan agreement and borrowed $1.68 billion in principal amount due January 17, 2029 (the “Term Loan Agreement”). Borrowings under the Term Loan Agreement will generally bear interest at adjusted term SOFR plus an applicable interest rate margin ranging from 0.875% to 1.50%, depending on our corporate credit ratings.
The Term Loan Agreement requires us to maintain, on a consolidated basis, a net leverage ratio of total net indebtedness to adjusted EBITDA, as defined in the Term Loan Agreement and calculated as of the last day of each fiscal quarter, not to exceed 3.25 to 1.00, subject to a temporary four fiscal quarter increase in such maximum ratio to 3.75 to 1.00 following certain material acquisitions. Our obligations under the Term Loan Agreement are unsecured.
Revolving Credit Facility
On March 12, 2025, we terminated our existing undrawn credit facility and entered into a new five-year unsecured Revolving Credit Facility. Under the Revolving Credit Facility, we can draw up to $3.50 billion which would generally bear interest at a rate equal to adjusted term SOFR plus 0.875% to 1.50%, depending on our corporate credit ratings. Any amounts outstanding under the Revolving Credit Facility would mature on March 12, 2030 and amounts borrowed may be prepaid without penalty.
The Revolving Credit Facility contains the same net leverage ratio and substantially the same other covenants as the Term Loan Agreement.
Maturities of Notes Payable and Term Loans
As of February 27, 2025, maturities of notes payable and term loans by fiscal year were as follows:
| Remainder of 2025 | $ | — | |||
| 2026 | — | ||||
| 2027 | 900 | ||||
| 2028 | 600 | ||||
| 2029 | 2,384 | ||||
| 2030 and thereafter | 7,750 | ||||
| Unamortized issuance costs, discounts, and premium, net | (41) | ||||
| Hedge accounting fair value adjustment | (52) | ||||
| $ | 11,541 |
17 | 2025 Q2 10-Q
Contingencies
We are currently a party to legal actions other than those described below arising from the normal course of business, none of which are expected to have a material adverse effect on our business, results of operations, or financial condition.
Patent Matters
As is typical in the semiconductor and other high-tech industries, from time to time, others have asserted, and may in the future assert, that our products or manufacturing processes infringe upon their intellectual property rights. A description of certain claims is below.
On April 28, 2021, Netlist, Inc. (“Netlist”) filed two patent infringement actions against Micron, Micron Semiconductor Products, Inc. (“MSP”), and Micron Technology Texas, LLC (“MTEC”) in the U.S. District Court for the Western District of Texas. The first complaint alleges that one U.S. patent is infringed by certain of our non-volatile dual in-line memory modules. The second complaint alleges that three U.S. patents are infringed by certain of our load-reduced dual in-line memory modules (“LRDIMMs”). Each complaint seeks injunctive relief, damages, attorneys’ fees, and costs. On March 31, 2022, Netlist filed a patent infringement complaint against Micron and Micron Semiconductor Germany, GmbH in Dusseldorf Regional Court alleging that two German patents are infringed by certain of our LRDIMMs. The complaint seeks damages, costs, and injunctive relief. In rulings issued on March 7, 2024 and November 7, 2024, the Federal Patent Court in Germany declared both patents invalid. Netlist has appealed those rulings.
On June 10, 2022, Netlist filed a patent infringement complaint against Micron, MSP, and MTEC in the U.S. District Court for the Eastern District of Texas (“E.D. Tex.”) alleging that six U.S. patents are infringed by certain of our memory modules and HBM products. On August 1, 2022, Netlist filed a second patent infringement complaint against the same defendants in E.D. Tex. alleging that one U.S. patent is infringed by certain of our LRDIMMs. On August 15, 2022, Netlist amended the second complaint to assert that two additional U.S. patents are infringed by certain of our LRDIMMs. The complaints in E.D. Tex. seek injunctive relief, damages, and attorneys’ fees. On May 23, 2024, following a four-day trial regarding the second complaint filed by Netlist in the E.D. Tex., a jury rendered a verdict that Micron’s memory modules infringe two asserted patents — U.S. Patent No. 7,619,912 (“the ‘912 patent”) and U.S. Patent No. 11,093,417 (“the ‘417 patent”) — and found that Micron should pay $425 million for infringement of the ‘912 patent and $20 million for infringement of the ‘417 patent. Micron expects to appeal the verdict. On April 17, 2024, the Patent Trial and Appeal Board (“PTAB”) of the United States Patent and Trademark Office (“USPTO”) issued a final written decision (“FWD”) finding unpatentable the sole asserted claim of the ‘912 patent. On September 10, 2024, Netlist filed a notice that it will appeal the ruling that the ‘912 patent is invalid to the U.S. Court of Appeals for the Federal Circuit (“Federal Circuit”). On July 30, 2024, the USPTO issued a FWD finding unpatentable all asserted claims of the ‘417 patent. On December 10, 2024, Netlist filed a notice that it will appeal the ruling that the ‘417 patent is invalid to the Federal Circuit. In the case of each of the ‘912 and ‘417 patents, if the United States Court of Appeals for the Federal Circuit affirms the FWD, then the affirmed FWD will preclude any pending actions asserting infringement of such patent (including any infringement verdict that is subject to an ongoing appeal).
On January 23, 2023, Besang Inc. filed a patent infringement complaint against Micron in the U.S. District Court for the E.D. Tex. The complaint alleges that one U.S. patent is infringed by certain of our 3D NAND and SSD products. The complaint seeks an injunction, damages, attorneys’ fees, and costs.
18
On November 9, 2023, Yangtze Memory Technologies Company, Ltd. (“YMTC”) filed a patent infringement complaint against Micron and one of its subsidiaries in the U.S. District Court for the Northern District of California (“N.D. Cal.”). The complaint alleges that eight U.S. patents are infringed by certain of our 3D NAND products. The complaint seeks an injunction, damages, attorneys’ fees, and costs. On January 22, 2024, Micron Semiconductor (Shanghai) Co., Ltd. (“MSS”) was served with three patent infringement complaints filed by YMTC in Beijing Intellectual Property Court and on February 27, 2024, Micron Technology, Inc. (“MTI”) was served with the same complaints. The complaints assert that MTI and MSS infringed three Chinese patents owned by YMTC by importing, selling, offering for sale, and assisting others to sell certain 3D NAND products and SSDs in China. The complaint seeks an injunction, damages, attorneys’ fees, and costs. On July 12, 2024, YMTC filed a second complaint against Micron and its subsidiary in N.D. Cal. The second complaint alleges that eleven U.S. patents are infringed by certain of our 3D NAND and DDR5 DRAM products. The complaint seeks an injunction, damages, attorneys’ fees, and costs. On September 11, 2024, MSS was served with five patent infringement complaints filed by YMTC in Shanghai Intellectual Property Court. The complaints assert that MTI and MSS infringed five Chinese patents owned by YMTC by importing, selling, offering for sale, and assisting others to sell certain 3D NAND products and SSDs in China. The complaint seeks an injunction, damages, attorneys’ fees, and costs.
On October 16, 2024, Palisade Technologies, LLP filed a patent infringement lawsuit against Micron and MSP in the U.S. District Court for the W.D. Tex. The complaint alleges that five U.S. patents are infringed by certain of our DRAM, NAND, 3D NAND, and SSD products. The complaint seeks an injunction, damages, attorneys’ fees, and costs.
The above lawsuits pertain to substantially all of our DRAM, NAND, and other memory and storage products we manufacture, which account for substantially all of our revenue.
Securities Class Action Matters
On January 9, 2025, a putative class action complaint was filed against Micron and certain individual officers in the U.S. District Court for the Southern District of Florida for alleged violations of the Securities Exchange Act of 1934. The complaint alleges defendants made materially false or misleading statements during a putative class period from September 18, 2024 to December 18, 2024, regarding the demand for Micron's products, particularly NAND and consumer-oriented products. The complaint seeks unspecified compensatory damages, attorneys' fees and costs.
Shareholder Derivative Matters
On February 20, 2025, a shareholder derivative complaint was filed by a purported shareholder against certain individual directors and officers of Micron, allegedly on behalf of and for the benefit of Micron, in the U.S. District Court for the District of Idaho. On February 21, 2025, a similar related derivative complaint was filed by another purported shareholder in the same court against certain individual directors and officers of Micron. The complaints allege violations of the Securities Exchange Act of 1934, breach of fiduciary duty, unjust enrichment, insider trading, abuse of control, and waste of corporate assets. The complaints are based on substantially the same allegedly false or misleading statements asserted in the securities class action matter. The complaints seek various unspecified damages allegedly suffered by Micron, restitution, attorneys' fees and costs and other relief, including reforms and improvements to our corporate governance and internal procedures.
Antitrust Matters
On May 15, 2018, the Chinese State Administration for Market Regulation (“SAMR”) notified Micron that it was investigating potential collusion and other anticompetitive conduct by DRAM suppliers in China. On May 31, 2018, SAMR made unannounced visits to our sales offices in Beijing, Shanghai, and Shenzhen to seek certain information as part of its investigation. We are cooperating with SAMR in its investigation.
19 | 2025 Q2 10-Q
Other Matters
In the normal course of business, we are a party to a variety of agreements pursuant to which we may be obligated to indemnify another party. It is not possible to predict the maximum potential amount of future payments under these types of agreements due to the conditional nature of our obligations and the unique facts and circumstances involved in each particular agreement. Historically, our payments under these types of agreements have not had a material adverse effect on our business, results of operations, or financial condition.
Contingency Assessment
We are unable to predict the outcome of any of the matters noted above and cannot make a reasonable estimate of the potential loss or range of possible losses. A determination that our products or manufacturing processes infringe the intellectual property rights of others or entering into a license agreement covering such intellectual property could result in significant liability and/or require us to make material changes to our products and/or manufacturing processes. Any of the foregoing, as well as the resolution of any other legal matter noted above, could have a material adverse effect on our business, results of operations, or financial condition.
Equity
Common Stock Repurchases
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, restrictions applicable under our CHIPS Act direct funding agreements, and our ongoing determination of the best use of available cash. See “Item 1. Financial Statements – Notes to Consolidated Financial Statements – CHIPS Act Funding Agreements.” No shares were repurchased in the first six months of 2025. Through February 27, 2025, we had repurchased an aggregate of $7.19 billion under the authorization. Amounts repurchased are included in treasury stock.
Dividends
We declared and paid dividends of $0.115 per share in the first and second quarters of 2025. On March 20, 2025, our Board of Directors declared a quarterly dividend of $0.115 per share, payable in cash on April 15, 2025, to shareholders of record as of the close of business on March 31, 2025.
20
Accumulated Other Comprehensive Income (Loss)
Changes in accumulated other comprehensive income (loss) by component for the six months ended February 27, 2025 were as follows:
| Gains (Losses) on Derivative Instruments | Unrealized Gains (Losses) on Investments | Pension Liability Adjustments | Cumulative Foreign Currency Translation Adjustment | Total | |||||||||||||
| As of August 29, 2024 | $ | (162) | $ | (8) | $ | 39 | $ | (3) | $ | (134) | |||||||
| Other comprehensive income (loss) before reclassifications | (127) | 1 | — | — | (126) | ||||||||||||
| Amount reclassified out of accumulated other comprehensive income (loss) | 74 | — | (2) | — | 72 | ||||||||||||
| Tax effects | (3) | (1) | 1 | — | (3) | ||||||||||||
| Other comprehensive income (loss) | (56) | — | (1) | — | (57) | ||||||||||||
| As of February 27, 2025 | $ | (218) | $ | (8) | $ | 38 | $ | (3) | $ | (191) |
Fair Value Measurements
The estimated fair values and carrying values of our outstanding debt instruments were as follows:
| As of February 27, 2025 | As of August 29, 2024 | ||||||||||||||||
| Fair Value | Carrying Value | Fair Value | Carrying Value | ||||||||||||||
| Notes payable and term loans | $ | 11,413 | $ | 11,541 | $ | 11,316 | $ | 11,343 |
The fair values of our debt instruments were estimated based on Level 2 inputs, including the trading price of our notes when available, discounted cash flows, and interest rates based on similar debt issued by parties with credit ratings similar to ours.
21 | 2025 Q2 10-Q
Derivative Instruments
| Notional or Contractual Amount | Fair Value**(1)** of | ||||||||||
| Assets**(2)** | Liabilities**(3)** | ||||||||||
| As of February 27, 2025 | |||||||||||
| Derivative instruments with hedge accounting designation | |||||||||||
| Cash flow currency hedges | $ | 3,937 | $ | 11 | $ | (91) | |||||
| Cash flow commodity hedges | 465 | 12 | (14) | ||||||||
| Fair value currency hedges | 2,457 | 18 | — | ||||||||
| Fair value interest rate hedges | 900 | — | (53) | ||||||||
| Derivative instruments without hedge accounting designation | |||||||||||
| Non-designated currency hedges | 2,887 | 28 | (5) | ||||||||
| $ | 69 | $ | (163) | ||||||||
| As of August 29, 2024 | |||||||||||
| Derivative instruments with hedge accounting designation | |||||||||||
| Cash flow currency hedges | $ | 3,724 | $ | 57 | $ | (71) | |||||
| Cash flow commodity hedges | 471 | 20 | (7) | ||||||||
| Fair value currency hedges | 2,511 | — | (41) | ||||||||
| Fair value interest rate hedges | 900 | — | (60) | ||||||||
| Derivative instruments without hedge accounting designation | |||||||||||
| Non-designated currency hedges | 2,393 | 18 | (3) | ||||||||
| $ | 95 | $ | (182) |
*(1)*Forward and swap contracts are measured at fair value based on market-based observable inputs including market spot and forward rates, interest rates, and credit-risk spreads (Level 2).
*(2)*Included in receivables and other noncurrent assets.
*(3)*Included in accounts payable and accrued expenses and other noncurrent liabilities.
Derivative Instruments with Hedge Accounting Designation
Cash Flow Hedges**:** We utilize forward and swap contracts that generally mature within two years designated as cash flow hedges to minimize our exposure to changes in currency exchange rates or commodity prices for certain capital expenditures and manufacturing costs.
The effects of cash flow hedging activities were as follows:
| Quarter Ended | Six months ended | ||||||||||||||||
| February 27, 2025 | February 29, 2024 | February 27, 2025 | February 29, 2024 | ||||||||||||||
| Gain (loss) from cash flow hedges in accumulated other comprehensive income (loss) | $ | 17 | $ | (45) | $ | (116) | $ | (43) | |||||||||
| Gain (loss) excluded from effectiveness testing in cost of goods sold | (27) | (34) | (56) | (70) | |||||||||||||
| Gain (loss) reclassified from accumulated other comprehensive income (loss) to earnings, primarily to cost of goods sold | (34) | (56) | (74) | (100) |
As of February 27, 2025, we expect to reclassify $102 million of pre-tax losses related to cash flow hedges from accumulated other comprehensive income (loss) into earnings in the next 12 months.
22
Fair Value Hedges**:** We utilize currency forward contracts that generally mature within one year designated as fair value hedges to minimize our exposure to changes in currency exchange rates for non-U.S.-dollar-denominated cash and investments in debt securities. The fair value of our hedged cash and investments in debt securities was $2.43 billion as of February 27, 2025. The changes in the fair values of derivatives designated as fair value hedges and the offsetting changes in the underlying fair values of the hedged items are both recognized in earnings.
We recognized gains of $49 million and $145 million for the second quarter and first six months of 2025, respectively, for changes in the fair values of our fair value currency hedges and offsetting losses of $42 million and $139 million for the second quarter and first six months of 2025, respectively, for changes in the underlying fair values of the hedged items in other non-operating income (expense). The effects of the fair value currency hedges and the hedged items were not significant for the other periods presented.
We also utilize fixed-to-floating interest rate swaps designated as fair value hedges to minimize certain exposures to changes in the fair value of fixed-rate debt that result from fluctuations in benchmark interest rates. The effects of fair value hedges on our consolidated statements of operations, recognized in interest expense, were not significant for the periods presented.
Derivative Instruments without Hedge Accounting Designation
Currency Derivatives**:** We generally utilize a rolling hedge strategy with currency forward contracts that mature within three months to hedge our exposures of monetary assets and liabilities from changes in currency exchange rates. At the end of each reporting period, monetary assets and liabilities denominated in currencies other than the U.S. dollar are remeasured into U.S. dollars and the associated outstanding forward contracts are marked to market. Realized and unrealized gains and losses on derivative instruments without hedge accounting designation as well as the changes in the underlying monetary assets and liabilities from changes in currency exchange rates are included in other non-operating income (expense), net.
We recognized losses of $12 million and $68 million for derivative instruments without hedge accounting designation for the second quarter and first six months of 2025, respectively. The amounts recognized in our consolidated statements of operations for the other periods presented were not significant. We do not use derivative instruments for speculative purposes.
Equity Compensation Plans
As of February 27, 2025, 57 million shares of our common stock were available for future awards under our equity compensation plans, including 9 million shares approved for issuance under our employee stock purchase plan (“ESPP”).
Restricted Stock and Restricted Stock Units (“Restricted Stock Awards”)
Restricted Stock Awards activity is summarized as follows:
| Six months ended | February 27, 2025 | February 29, 2024 | ||||||
| Restricted stock award shares granted | 10 | 12 | ||||||
| Weighted-average grant-date fair value per share | $ | 100.65 | $ | 67.78 |
Employee Stock Purchase Plan (“ESPP”)
For each six-month ESPP offering period that ended in the second quarter of 2025 and 2024, employees purchased 2 million in each period at a share price of $78.63 and $60.68, respectively.
23 | 2025 Q2 10-Q
Stock-based Compensation Expense
Stock-based compensation expense recognized in our statements of operations is presented below. Stock-based compensation expense of $118 million and $99 million was capitalized and remained in inventory as of February 27, 2025 and August 29, 2024, respectively.
| Quarter Ended | Six months ended | ||||||||||||||||
| February 27, 2025 | February 29, 2024 | February 27, 2025 | February 29, 2024 | ||||||||||||||
| Stock-based compensation expense by caption | |||||||||||||||||
| Cost of goods sold | $ | 89 | $ | 80 | $ | 179 | $ | 147 | |||||||||
| Research and development | 88 | 77 | 165 | 145 | |||||||||||||
| Selling, general, and administrative | 56 | 52 | 106 | 99 | |||||||||||||
| $ | 233 | $ | 209 | $ | 450 | $ | 391 | ||||||||||
| Stock-based compensation expense by type of award | |||||||||||||||||
| Restricted stock awards | $ | 212 | $ | 191 | $ | 404 | $ | 354 | |||||||||
| ESPP | 21 | 18 | 46 | 37 | |||||||||||||
| $ | 233 | $ | 209 | $ | 450 | $ | 391 |
As of February 27, 2025, $1.96 billion of total unrecognized compensation costs for unvested awards, before the effect of any future forfeitures, was expected to be recognized through the second quarter of 2029, resulting in a weighted-average period of 1.3 years.
24
Revenue and Customer Contract Liabilities
Revenue by Technology
| Quarter Ended | Six months ended | ||||||||||||||||
| February 27, 2025 | February 29, 2024 | February 27, 2025 | February 29, 2024 | ||||||||||||||
| DRAM | $ | 6,123 | $ | 4,158 | $ | 12,523 | $ | 7,585 | |||||||||
| NAND | 1,855 | 1,567 | 4,096 | 2,797 | |||||||||||||
| Other (primarily NOR) | 75 | 99 | 143 | 168 | |||||||||||||
| $ | 8,053 | $ | 5,824 | $ | 16,762 | $ | 10,550 |
See “Item 1. Financial Statements – Notes to Consolidated Financial Statements – Segment and Other Information” for disclosure of disaggregated revenue by market segment.
Revenue is primarily recognized at a point in time when control of the promised goods is transferred to our customers in an amount that reflects the consideration we expect to be entitled to in exchange for those goods. Substantially all contracts with our customers are short-term in duration at fixed, negotiated prices with payment generally due shortly after delivery. From time to time, we have contracts with initial terms that include performance obligations that extend beyond one year. As of February 27, 2025, our future performance obligations beyond one year were $142 million, which included customer prepayments and other contract liabilities.
As of February 27, 2025 and August 29, 2024, customer prepayments made to secure product supply in future periods and other contract liabilities were $555 million and $907 million, respectively, of which $413 million and $766 million were reported in other current liabilities, respectively. The remainder of the customer prepayments and other contract liabilities were in other noncurrent liabilities. Revenue recognized during the first six months of 2025 from the beginning balance as of August 29, 2024 included $365 million from shipments against customer prepayments and other contract liabilities.
As of February 27, 2025 and August 29, 2024, other current liabilities included $756 million and $718 million, respectively, for estimates of consideration payable to customers including estimates for pricing adjustments and returns.
Other Operating (Income) Expense, Net
| Quarter ended | Six months ended | ||||||||||||||||
| February 27, 2025 | February 29, 2024 | February 27, 2025 | February 29, 2024 | ||||||||||||||
| Patent cross-license agreement gain | — | (200) | — | (200) | |||||||||||||
| Other | 7 | (24) | 5 | (39) | |||||||||||||
| $ | 7 | $ | (224) | $ | 5 | $ | (239) |
25 | 2025 Q2 10-Q
Income Taxes
Our income tax (provision) benefit consisted of the following:
| Quarter Ended | Six months ended | ||||||||||||||||
| February 27, 2025 | February 29, 2024 | February 27, 2025 | February 29, 2024 | ||||||||||||||
| Income (loss) before taxes | $ | 1,758 | $ | 170 | 3,910 | (985) | |||||||||||
| Income tax (provision) benefit | (177) | 622 | (460) | 549 | |||||||||||||
| Effective tax rate | 10.1 | % | (365.9) | % | 11.8 | % | 55.7 | % |
For 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. Beginning in the second quarter of 2024, we were able to estimate a more reliable annual effective tax rate and 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 of $622 million recognized in the second quarter of 2024.
The change in our effective tax rate for the second quarter of 2025 as compared to the second quarter of 2024 was primarily due to changes in profitability and the aforementioned calculation of our tax expense in the second quarter of 2024. The change in our effective tax rate for the first six months of 2025 as compared to the first six months of 2024 was primarily due to changes in profitability.
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. The effect of tax incentive arrangements reduced our tax provision by $171 million (benefiting our diluted earnings per share by $0.15) and $383 million (benefiting our diluted earnings per share by $0.34) for the second quarter and first six months of 2025, respectively. As a result of the low level of profitability and geographic mix of income, the benefit from tax incentive arrangements was not material for the second quarter and first six months of 2024.
Earnings Per Share
| Quarter Ended | Six months ended | ||||||||||||||||
| February 27, 2025 | February 29, 2024 | February 27, 2025 | February 29, 2024 | ||||||||||||||
| Net income (loss) – Basic and Diluted | $ | 1,583 | $ | 793 | $ | 3,453 | $ | (441) | |||||||||
| Weighted-average common shares outstanding – Basic | 1,115 | 1,104 | 1,113 | 1,102 | |||||||||||||
| Dilutive effect of equity compensation plans | 8 | 10 | 10 | — | |||||||||||||
| Weighted-average common shares outstanding – Diluted | 1,123 | 1,114 | 1,123 | 1,102 | |||||||||||||
| Earnings (loss) per share | |||||||||||||||||
| Basic | $ | 1.42 | $ | 0.72 | $ | 3.10 | $ | (0.40) | |||||||||
| Diluted | 1.41 | 0.71 | 3.08 | (0.40) |
Antidilutive potential common shares excluded from the computation of diluted earnings per share, that could dilute basic earnings per share in the future, were 9 million and 6 million for the second quarter and first six months of 2025, respectively, and were 4 million and 33 million for the second quarter and first six months of 2024, respectively.
26
Segment and Other Information
Segment information reported herein is consistent with how it is reviewed and evaluated by our chief operating decision maker. We have the following four business units, which are our reportable segments:
Compute and Networking Business Unit (“CNBU”)****: Includes memory products and solutions sold into the data center, PC, graphics, and networking markets.
Storage Business Unit (“SBU”)****: Includes SSDs and component-level storage solutions sold into the data center, PC, and consumer markets.
Mobile Business Unit (“MBU”)****: Includes memory and storage products sold into the smartphone and other mobile-device markets.
Embedded Business Unit (“EBU”)****: Includes memory and storage products and solutions sold into the intelligent edge through the automotive, industrial, and consumer embedded markets.
Certain operating expenses directly associated with the activities of a specific segment are charged to that segment. Other indirect operating income and expenses are generally allocated to segments based on their respective percentage of cost of goods sold or forecasted wafer production. We do not identify or report internally our assets (other than goodwill) or capital expenditures by segment, nor do we allocate gains and losses from equity method investments, interest, other non-operating income or expense items, or taxes to segments.
| Quarter Ended | Six months ended | ||||||||||||||||
| February 27, 2025 | February 29, 2024 | February 27, 2025 | February 29, 2024 | ||||||||||||||
| Revenue | |||||||||||||||||
| CNBU | $ | 4,564 | $ | 2,185 | $ | 8,959 | $ | 3,922 | |||||||||
| SBU | 1,392 | 905 | 3,123 | 1,558 | |||||||||||||
| MBU | 1,068 | 1,598 | 2,595 | 2,891 | |||||||||||||
| EBU | 1,025 | 1,111 | 2,077 | 2,148 | |||||||||||||
| All Other | 4 | 25 | 8 | 31 | |||||||||||||
| Total revenue | $ | 8,053 | $ | 5,824 | $ | 16,762 | $ | 10,550 | |||||||||
| Operating income (loss) | |||||||||||||||||
| CNBU | $ | 1,919 | $ | 28 | $ | 3,630 | $ | (369) | |||||||||
| SBU | 24 | (217) | 371 | (707) | |||||||||||||
| MBU | 60 | (9) | 387 | (696) | |||||||||||||
| EBU | 3 | (1) | 14 | 9 | |||||||||||||
| All Other | 1 | 21 | (1) | 25 | |||||||||||||
| 2,007 | (178) | 4,401 | (1,738) | ||||||||||||||
| Unallocated | |||||||||||||||||
| Stock-based compensation | (233) | (209) | (450) | (391) | |||||||||||||
| Lower costs from sale of inventory written down in prior periods | — | 382 | — | 987 | |||||||||||||
| Patent cross-license agreement gain | — | 200 | — | 200 | |||||||||||||
| Other | (1) | (4) | (4) | 5 | |||||||||||||
| (234) | 369 | (454) | 801 | ||||||||||||||
| Total operating income (loss) | $ | 1,773 | $ | 191 | $ | 3,947 | $ | (937) |
27 | 2025 Q2 10-Q
Certain Concentrations
Revenue by market segment as a percent of total revenue, rounded to the nearest 5%, is presented in the table below:
| Six months ended | February 27, 2025 | February 29, 2024 | ||||||
| Data center and networking | 55 | % | 25 | % | ||||
| Mobile | 15 | % | 25 | % | ||||
| PC, graphics, and other | 15 | % | 30 | % | ||||
| Intelligent edge – automotive, industrial, and consumer embedded | 10 | % | 20 | % |
Percentages of total revenue may not total 100% due to rounding.
Revenue from one customer was 15% (primarily included in the CNBU segment) of total revenue for the first six months of 2025. Revenue from one customer was 11% (primarily included in the MBU, EBU and CNBU segments) of total revenue for the first six months of 2024.
CHIPS Act Funding Agreements
On December 9, 2024, we entered into direct funding agreements with the U.S. Department of Commerce for up to $6.1 billion in direct funding pursuant to the CHIPS Act for a planned fab in Boise, Idaho and two planned fabs in Clay, New York.
Funding will be based on the achievement of construction, tool installation, and wafer production milestones. We retain discretion with respect to capacity and production volume ramp of each project. The agreements contain representations, warranties, and covenants that relate to compliance with requirements for awards provided for in the CHIPS Act. In addition, the agreements include certain events of default and related rights and remedies, including clawbacks related to the failure to complete a project by an agreed upon completion date, violation of CHIPS Act restrictions on certain activities involving foreign countries and entities of concern, and impermissible use or disposition of a project.
We are permitted to make customary and ordinary course recurring dividends (and reasonable ordinary course increases thereof) consistent with our past practice. There are restrictions on our payment of special and one-time dividends during the five-year period following the award date of December 9, 2024. Share repurchases are permitted during the first two years of such five-year period up to amounts specified in the funding agreements to help offset the dilutive effects of employee stock compensation or as otherwise permitted by the U.S. Department of Commerce. Share repurchases are not restricted during the final three years of such five-year period if certain financial and other conditions are satisfied.
We may be required to pay upside sharing amounts for a period of up to ten years following the first year in which the cumulative cash flow from a project is positive, if cumulative cash flows from the project exceed a threshold level that is at a significant premium to the baseline projection. The upside sharing amount would equal a modest sharing percentage of the excess cash flows above the threshold level, but not to exceed 75% of award disbursements for a project, after considering any clawbacks or other repayments.
On December 9, 2024, we also signed a non-binding preliminary memorandum of terms for up to $275 million in direct funding for our fab in Manassas, Virginia.
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