2017 Micron Analyst Conference

Transcription

1 2017 Micron Analyst Conference 2017 Micron Technology, Inc. All rights reserved. Information, products, and/or specifications are subject to change without notice. All information is provided on an AS IS basis without warranties of any kind. Statements regarding products, including regarding their features, availability, functionality, or compatibility, are provided for informational purposes only and do not modify the warranty, if any, applicable to any product. Drawings may not be to scale. Micron, the Micron logo, and all other Micron trademarks are the property of Micron Technology, Inc. All other trademarks are the property of their respective owners.

2 Safe Harbor Statement During the course of this meeting, we may make projections or other forward-looking statements regarding future events or the future financial performance of the Company and the industry. We wish to caution you that such statements are predictions and that actual events or results may differ materially. We refer you to the documents the Company files on a consolidated basis from time to time with the Securities and Exchange Commission, specifically the Company s most recent Form 10-K and Form 10-Q. These documents contain and identify important factors that could cause the actual results for the Company on a consolidated basis to differ materially from those contained in our projections or forward-looking statements. These certain factors can be found at Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. We are under no duty to update any of the forward-looking statements after the date of the presentation to conform these statements to actual results. 2

3 Overview & Strategy Mark Durcan, CEO #MicronAC2017

4 The New Data Economy

5 Data Proliferation Real-Time Analytics Economic Advantage

6 Micron s Technologies Are Essential Data Availability Near Storage Bandwidth & Power

7 Memory Storage Processor

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9 Growth and Diversification of Demand Memory Market Bit Demand Forecast DRAM Industry Bit Mix NAND B GB EU DRAM B Gb EU 100% Auto & Embedded NAND CAGR: ~45% % 0% NAND Industry Bit Mix Server & Networking Mobile PC & Graphics 300 DRAM CAGR: ~20% % 50% SSD Mobile USB/Cards % Consumer & Other 0 Source: Micron and industry analysts Diversification of demand creates market opportunities 9

10 Growth and Diversification of Demand Memory Market Bit Demand Forecast DRAM Industry Bit Mix NAND B GB EU NAND CAGR: ~45% DRAM B Gb EU % 50% 0% NAND Industry Bit Mix Developing Segments Existing Segments Source: Micron and industry analysts DRAM CAGR: ~20% % 50% 0% Developing Segments Existing Segments New data economy market segments will drive future demand 10

11 Industry Supply Outlook DRAM Industry Supply Growth 50% 40% Technology-driven growth slows due to scaling limits with wafer additions likely only replacing lost throughput - total supply growth remains in the 15-20% range NAND Industry Supply Growth 100% 80% 3D increases bits/wafer at the expense of throughput total supply growth in the 35-45% range 30% 60% 20% 40% 10% 20% 0% 0% -10% % Capacity Technology Throughput Supply Growth Capacity Technology Throughput Supply Growth DRAM technology-driven supply growth has been slowing, with trend expected to continue NAND supply growth is stable with headwinds to supply from 3D conversions continuing through 2018 Source: Micron and industry analysts 11

12 Long-Term Memory Industry Trends $100 $100 $75 $75 $50 $50 Memory Revenue ($B) -23% -18% Memory projected to grow 2.5x non-memory semi Peak to Trough Decline: -57% -49% $25 $25 DRAM $0 $ NAND Source: Micron and industry analysts 12

13 Delivered on FY16 Operating Priorities P DRAM Memory 20nm DRAM ramp, >50% of DRAM fab bit output by FQ3-16 1Xnm DRAM manufacturing enablement P P Non-Volatile Memory Technology and Product Enablement 3D Gen 1 ramp and Gen 2 manufacturing enablement Total 3D >50% of NAND fab bit output by Fall D XPoint market enablement Controller and sub-system capabilities Advanced packaging Emerging memory 13

14 FY17 Operating Priorities DRAM Memory Ramp 1Xnm Develop 1Ynm Non-Volatile Memory Technology and Product Enablement Ramp TLC and 3D Gen 2 Develop 3D Gen 3 Develop QLC to market requirements 3D XPoint memory early market adoption Develop comprehensive 1Xnm DRAM portfolio Expand 3D/TLC enabled product portfolio Emerging memory development 14

15 Compute & Networking Embedded Storage Mobile Technology and Product Enablement

16 Technology for the New Data Economy Scott DeBoer, VP Technology Development

17 Technology Updates Strong 2016 Performance DRAM Development Model Enabling Success NAND Technology Leadership Emerging Memory Developments

18 Significant 2016 Progress DRAM Successful 20nm transition Yield execution strength Steady progress on 1Xnm DRAM NAND 32 Tier NAND with CuA* drives significant cost reduction and performance enhancements vs planar 64 Tier NAND deployment progress * CMOS under Array DRAM Cost per Gb Improvement >25% >20% 25nm 20nm 1Xnm TLC NAND Cost per GB Improvement 128 Gb 384 Gb >30% 16nm Planar 32 Tier 3D >30% 256 Gb 64 Tier 3D 18

19 DRAM Development Model Benefits Alternating development model enabled at 20nm and below 1Xnm technology now deployed in Japan and Taiwan 1Ynm and 1Znm concurrently under development (USA and Japan) Substantial reduction in time between nodes relative to previous Micron results Technology Development USA Japan Taiwan Fab 16 Taiwan Fab 11 Japan Fab 15 19

20 Accelerating DRAM Technology Technology deployment improves competitive position Meaningful 1Xnm output by FY17 end Enables critical high-density mobile and compute applications Transition 1Ynm to manufacturing in 2H17 1Xnm Yield Map (Blue is Good Die) 1Ynm DRAM Cross-section 20

21 3D NAND Node Transitions Mature yield on 32 Tier TLC Meaningful 64 Tier output by FY17 end Gen 3 manufacturing introduction in 2H17 QLC deployment aligned to market requirements CuA density advantage across all generations GB per Wafer >40% NAND GB Probed >100% >80% 2D 3D 64 Tier Yield Map (Blue is Good Die) 16 nm 32 Tier 64 Tier 3D Gen 3 FY 2015 FY 2016 FY 2017 FY

22 3D NAND Innovation 64 Tier 3D NAND Structure World s Smallest 256Gbit Die Metal 64 Active Tiers ~4.3 Gb/mm 2 (>25% more die per wafer relative to competitor s 64 Tier 3D NAND) 59 mm 2 CMOS Circuits CMOS under Array 22

23 New Memory Technology Leadership First generation 3D XPoint running in manufacturing Only commercially ready, high density new memory technology High capacity, low latency supporting storage and memory applications Next two generations in development New high performance memories under development 3D XPoint Die 23

24 Performance (Speed) Current Memory Characteristics and Future Trends New Memory DRAM STT MRAM 3D XPoint TM ReRAM NAND Cost/Bit 24

25 Developing Technology for the New Data Economy Competitive DRAM Position 3D NAND Strength New Memory Leadership Package Technology Focus R&D Cleanroom Expansion Near Complete 25

26 Business Unit Update CNBU EBU SBU MBU

27 Compute & Networking Business Unit Tom Eby, Vice President #MicronAC2017

28 Compute & Networking Business Unit MARKET TRENDS Graphics Cloud Enterprise Networking Client Highest Bandwidth High Density, Persistence Highest Density, Persistence High-Bandwidth, Low-Latency Low Power, Small Form Factor Virtual/augmented reality (VR/AR) driving growth Tipping point of Fortune 500 cloudbased deployments Growing demand for in-memory database apps 4X 5X peak internet traffic growth by 2020 Business driven growth of Ultrathin segment Emergence of gaming as a mass spectator sport Growing diversity of cloud services and solutions Performance advances from persistent memory 5G rollout enables broader suite of IoT solutions VR/AR and high definition (4K) graphics Source: Cisco Visual Networking Index, Micron and industry analysts 28

29 Compute & Networking Business Unit DRAM DEMAND DRIVERS Segment Bit CAGR 2017 TAM Memory Drivers Graphics ~35% $2.5B Cloud ~40% $5.5B Enterprise ~30% $5.6B GDDR5 is volume solution; GDDR5X for highest performance GDDR6 in development as next generation graphics solution Persistent memory (NVDIMM) accelerating database & other applications More diverse workloads driving need for higher performance memory 32GB DDR4 RDIMM is mainstream solution In-memory database driving demand for highest density DIMMs (128GB) Networking ~30% $1.5B Client ~10% $8.5B Note: Graphics TAM and CAGR is only GDDR Note: $TAM is estimated 2017 & CAGR is DRAM bit growth RLDRAM for low latency and HMC for highest bandwidth GDDR5 for high performance, high-volume applications 4GB/8GB DDR4 SO-DIMM is mainstream solution Ultrathin segment driving demand for LPDDR Source: Micron and industry analysts 29

30 PC Graphics & Game Console Growth PC Graphics PC-based systems offer the most immersive VR experience Emergence of PC gaming in China and India Gaming is a $100B industry; ~500M esports fans are forecast by 2020 Game Consoles Increasing console refresh rate due to VR and higher density content More affordable console-based VR expanding the user base Greater than 150% VR CAGR through 2020 Memory playing a critical role in extending performance for next-generation graphics: increased bandwidth and density 6,000 Millions of 1Gbe 0 6,000 Other GDDR5 GDDR5X/ Millions of 1Gbe 0 Other GDDR5X/6 GDDR Source: Micron and industry analysts 30

31 Bandwidth 10X Drives High ` Performance Apps 5X 1X Today 2020 GDDR5X/6 GDDR5 DDR3/4/5 31 Source: Micron and industry analysts

32 Leveraging Expertise for Emerging Applications GRAPHICS LEADERSHIP POSITIONS MICRON FOR SUCCESS Networking High Performance Computing Application Routing & Switching Machine Learning & Analytics Benefits Fewer Devices & Lower TCO Higher Bandwidth Current Implementation 5Gb/s 8Gb/s Future Outlook 10Gb/s 10Gb/s+ Micron Position #1 networking memory supplier High reliability, long-term support Strong enabler relations in GPU space Access to OEMs and cloud users 32

33 Why Micron Wins GRAPHICS PERFORMANCE LEADER Development Expertise 10+ years GDDR5 design experience Applying GDDR5X learning to GDDR6 Ecosystem Partnerships Co-define technologies (GDDR5X, GDDR6) with SoC and OEM partners Co-validate products with SoC and OEM partners High Quality Solutions In-house test capabilities Extensive system level capability Applying networking & HPC expertise to GDDR Leading Edge Products Highest performance product with GDDR5X 1Xnm GDDR5 coming later this year 33

34 Embedded Business Unit Jeff Bader, Vice President #MicronAC2017

35 Embedded Business Unit MARKET TRENDS Automotive Industrial Consumer/Connected Home Users expect connectivity ADAS adoption & autonomous vehicles Configurable virtual cockpit Industrial IoT/Industrie 4.0 Edge node intelligence with real-time analytics IoT security framework Continued 4K/UHD uptake AI driving smarter homes OTT/IP STB video streaming VR/AR user experience Ubiquitous Connectivity, Artificial Intelligence and Cyber-Security 35

36 Embedded Business Unit DEMAND DRIVERS Segment Bit CAGR 2017 TAM Memory Drivers Automotive DRAM: ~35% NAND: ~30% $2.2B 2x increase of in-vehicle displays with virtual cockpit 3D navigation maps and black box driving 3-4x storage 4-5x increase in sensor data and AI/machine learning Industrial DRAM: ~30% NAND: ~40% $2.3B Big-data/AI/machine learning increasing processing and storage IoT end points, edge nodes, IP cameras driving NVM growth Ubiquitous connectivity increasing M2M module memory Consumer/ Connected Home DRAM: ~25% NAND: ~25% $5.4B 4K/UHD increasing STB storage, DTV DRAM & NVM Smart home/wearables growth increasing mobile NVM+DRAM AI/natural language assistants integration Source: Micron and industry analysts Note: $TAM is estimated 2017 & CAGR is bit growth 36

37 Automotive Memory Growth BLACK BOX CONNECTIVITY SENSORS INFOTAINMENT Increasing Memory footprint per application Penetration rate across OEM product lines (luxury to entry) ADAS CPU Source: Micron and industry analysts POWERTRAIN ECUs CLUSTER $80.00 $70.00 $60.00 $50.00 $40.00 $30.00 $20.00 $10.00 $- ADAS & Autonomous Infotainment & Connectivity Power Train & Other

38 The Drive to Autonomous Safety 1.3M lives globally 94% human error Efficiencies hours time lost 30% congestion 5-10% fuel economy NVM: GB DRAM: 2-4GB ADAS: L1/L2 Adaptive cruise control Lane keeping Parking assist Infotainment/Cluster Configurable displays Telematics & connectivity 3D navigational maps NVM: 64GB-1TB DRAM: 18-24GB Autonomous Driving: L4/L5 Full sense, decide and act AI & machine learning Infotainment/Cluster Real-time HD Maps Display & resolution increase Source: Micron, industry analysts and government/industry publications 38

39 Why Micron Wins MAINTAINING OUR #1 POSITION AS A PROVEN AND TRUSTED PARTNER Commitment 25+ years Quality driven Product longevity Collaboration Global customer labs OEM, Tier1 and SoC relationships Consortium alignment Trusted Advisor Customer first Memory pure-play Application expertise Broadest portfolio Innovation Leading-edge technology Delivering performance with reliable solutions Security 39

40 Storage Business Unit Darren Thomas, Vice President #MicronAC2017

41 Storage Business Unit MARKET TRENDS Client for Consumer Client for Business Cloud Enterprise Traditional Enterprise Fast follower to client applications Aftermarket extension of existing PC platforms Interested in enhanced security for mobile workforce Smaller laptop designs, driving need for sleeker SSD formfactors Performance consistency demanded for modern workloads Power and capacity improving data center TCO Focused on performance, security and reliability Data moving closer to compute 41

42 Storage Business Unit DEMAND DRIVERS Segment Bit CAGR 2017 TAM Workloads Driving Storage Demand Client for Consumer ~40% $3.6B Extending the life of older PCs and new data intensive applications Client for Business Cloud Enterprise Traditional Enterprise ~55% $5.2B ~60% $5.2B ~60% $3.6B Sleeker form factors, extended battery life and durability are key requirements for OEM Social media, mobile and IoT drive need for differentiated storage portfolio compared to traditional enterprise architecture design Greater use of virtualization and software-defined architectures, requiring a performance-oriented data center infrastructure Source: Micron and industry analysts Note: $TAM is estimated 2017 & CAGR is NAND bit growth 42

43 Seeding the Cloud Total cloud IT infrastructure spending up 18% in 2017, reaching $44.2B * Spinning media cannot handle random IO at scale of multi-tenant environments Customers are demanding & Micron delivers: Superior performance: 99% better QoS vs HDD Best-in-class capacity: up to 8 TBs, 4X compared to HDDs Outstanding cost profile: 66% lower TCO vs HDD * Source: IDC

44 Why Micron Wins WORKLOAD MATCHED PORTFOLIO SOLVING END-CUSTOMER IT CHALLENGES NAND Technology Leadership Largest capacity 3D NAND 50% higher capacity Enables 8TB 2.5 form factor Storage market-tuned media designs Comprehensive Portfolio Cross-market, workload focused Products cross into adjacent markets Industry-leading security features (FIPS, TCGe, AES-256 bit) SSD Optimization Flexible architecture Capacity spans 240GB 8TB Tunable capacities Customer alignment Simplified offerings Quicker time-to-qual Differentiated Ecosystem Engagement Customer workload tested System tuned Partner solution development Proven reference architectures 44

45 Mobile Business Unit Mike Rayfield, Vice President #MicronAC2017

46 Smartphone Technology Drivers MARKET TRENDS AR/VR Drives Memory Bandwidth & Density Need for immersive experience: Multiple camera system and low latency 3D rendering Higher GPU and display requirements Increased Density Drives Market LPDRAM: Flagship/highend OEMs are positioning 6GB+ memory NAND: Driven by market leader s adoption of 256GB, Android follows Mobile Services Drives Power Efficiency Solution tailored to applications LPDDR4x brings 20% power consumption efficiency compared with LPDDR3 46

47 Mobile Business Unit DEMAND DRIVERS Segment Bit CAGR 2017 TAM Market Dynamics Flagship DRAM: ~25% NAND: ~45% $14.9B Deep relationships with select OEMs Flagship market drives innovation High-end DRAM: ~30% NAND: ~50% $9.5B High growth, high features Discrete and MCP solutions: excellent fit for MBU s broadening portfolio Mid-tier DRAM: ~35% NAND: ~50% $4.3B Strong bit growth opportunity Aligns well with MBU s MCP portfolio Low-end DRAM: ~45% NAND: ~60% $2.3B Mass market with highest unit growth potential Opportunities in emerging regions Source: Micron and industry analysts Note: $TAM is estimated 2017 & CAGR is bit growth Total: DRAM $14.8B, NAND $16.2B 47

48 Content Explosion Leads to Storage Growth MOBILE STORAGE DENSITY IN 8 DIE/PKG (GB)* Planar Mobile NAND 3D Mobile NAND VR/4K Video: ~4.7GB HD, professional and user generated content 1024 Video: ~50MB Picture: ~3MB Today s social media User generated content *Assumption: Uncompressed 8 bit image/30 second video file and Optimized 8 NAND die per package Source: Micron, industry analysts and toolstudioio

49 xmcp (Multi-Chip Packaging) Market Outlook Segment Example SKUs xmcp TAM Current SoM (%) Market Dynamics High-end $6.0B <5% High growth, high features Excellent fit for MBU s broadening portfolio Leverage with LPDRAM Mid-tier $4.3B <10% Strong bit growth opportunity Aligns well with MBU s MCP portfolio Leverage with LPDRAM Low-end $2.3B <10% Mass market with highest unit growth potential Opportunities in emerging regions Source: Micron and industry analysts 49

50 Growing the xmcp Segment xmcp BRINGS UNIQUE PROPOSITION Target Mid and High-End Segment OEMs xmcp Value Proposition Sub-System in Package- 3DNAND+LPDRAM+FW+Controller Ease of procurement Ease of system design (PCB/Routing) Enables simple adoption of next generation memory/storage OPPO R9S plus VIVO X9 50

51 Why Micron Wins A FOCUS ON HETEROGENEOUS SOLUTIONS Complete Portfolio Broad portfolio to ensure full coverage of SKUs in xmcp and Discrete (128 and 256GB). Leverage leadership in LPDRAM Solution catered towards heterogeneous architecture Leadership in 3D CMOS under Array (industryleading die size) Mobile specific NAND offering Top-to-bottom density offering Ecosystem Collaboration Co-define future memory interfaces (LPDDR5, UFS, NVMe) and packaging Co-validate new products with SoC supplier and OEMs Supply Chain Synergies In market labs for support Partner as opposed to competitor to our customers 51

52 Financial & Operational Updates Ernie Maddock, CFO #MicronAC2017

53 Agenda Key Initiatives and Operational Updates Capital Management

54 Continued Bit Growth and Cost Reductions Bit Growth DRAM NAND DRAM NAND DRAM NAND FY 2016 FY2017 FY 2018 (FY17 vs. FY15) 1 New! (FY18 vs. FY16) 1 Bit Shipments Two Year CAGR P P DRAM 20-30% 30-40% NAND 30-40% 45-55% Average Cost per Bit Two Year CAGR P P DRAM 15-25% 15-25% NAND 20-30% 20-30% NAND figures based on Trade NAND (excludes Intel portion of IM Flash) 1 Two year CAGR comparing total annual FY18/17 to FY16/15 Source: Micron 54

55 Ongoing Operational Enhancements Segment and Product Portfolio Management NAND Segmentation New Product Introductions Ongoing Product Portfolio Review Manufacturing Fab Optimization Assembly and Backend Improvements Expected Yearly P&L Improvement at Full Run Rate: ~$500M

56 Expected Impact to Long-run Working Capital: ~$400M Working Capital Expectations Inventory Reductions Supply Chain Process Improvements Manufacturing Cycle Time Improvements

57 Capital Management

58 Improved Free Cash Flow Opportunities Operational Efficiency Revised Free Cash Flow Previous Trough Free Cash Flow Technology Deployment Scale Enabling Improved FCF in Business Conditions Similar to 2H15/1H16 Increased deployment of leading edge DRAM and 3D NAND Benefits of scale from Inotera acquisition and Singapore expansion Continued focus on operational efficiencies and working capital 58

59 Current FY17 Free Cash Flow Outlook Business environment supports free cash flow generation >$1.5B in FY % of FY17 free cash flow targeted for debt reduction Pursuing additional balance sheet opportunities as appropriate

60 Capital Management Framework LONG-TERM TARGETS P Return on Assets > Cost of Capital LTM WACC ~10% Value Creation Value Creation Strong Balance Strong Balance Sheet Sheet P Target Minimum Cash Balance LTM SG&A + R&D + Current Debt PCAPEX / Sales Target ~30% of Sales Efficient Free Efficient Cash Free Flow Cash Model Flow Model Access to Low-Cost Access to Low-Cost Capital Capital P Target Leverage Ratio GAAP Debt to EBITDA 1.0x-2.0x (market condition dependent) 60

61 FY17 Investment Plans NET MICRON CAPEX OF $4.8-$5.2B DRAM Memory 40-50% of FY17 CAPEX Complete 20nm 1Xnm ramp Non-Volatile Memory 30-40% of FY17 CAPEX Technology and Product Enablement 15-25% of FY17 CAPEX Complete 3D Gen 1 Ramp 3D Gen 2 3D XPoint early market adoption Future technology node transitions Advanced packaging Emerging memory 61

62 Takeaways Continuing to execute on technology migrations and operational enhancements Micron positioned for improved FCF over a variety of market conditions while supporting normalized CAPEX spend Targeting to reduce leverage with FY17 free cash flow

63 Summary Mark Durcan, CEO #MicronAC2017

64 Summary Micron technologies essential to the new data economy Delivered on 2016 and strong progress on 2017 operating priorities Differentiated customer engagement supports success Innovative technology and products meet evolving market requirements Strengthening financial opportunities

65 Q&A

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