Micron Technology's CEO Discusses Q2 2012 Results - Earnings Call Transcript - TheStreet

Micron Technology (MU)

Q2 2012 Earnings Call

March 22, 2012 4:30 pm ET

Executives

Kipp A. Bedard - Vice President of Investor Relations

D. Mark Durcan - Interim Chief Executive Officer and Director

Ronald C. Foster - Chief Financial Officer, Principal Accounting Officer and Vice President of Finance

Mark W. Adams - President

Unknown Executive -

Analysts

David M. Wong - Wells Fargo Securities, LLC, Research Division

Bobby Gujavarty - Deutsche Bank AG, Research Division

Monika Garg - Pacific Crest Securities, Inc., Research Division

Daniel L. Amir - Lazard Capital Markets LLC, Research Division

James Schneider - Goldman Sachs Group Inc., Research Division

Shawn R. Webster - Macquarie Research

Glen Yeung - Citigroup Inc, Research Division

Vijay R. Rakesh - Sterne Agee & Leach Inc., Research Division

Steven Chin - UBS Investment Bank, Research Division

Harlan Sur - JP Morgan Chase & Co, Research Division

Kevin Cassidy - Stifel, Nicolaus & Co., Inc., Research Division

Ryan Goodman - CLSA Asia-Pacific Markets, Research Division

Ada Menaker

Doug Freedman - RBC Capital Markets, LLC, Research Division

John Pitzer - Crédit Suisse AG, Research Division

Mark C. Newman - Sanford C. Bernstein & Co., LLC., Research Division

Christopher J. Muse - Barclays Capital, Research Division

Presentation

Operator

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Good afternoon. My name is Devon, and I'll be your conference facilitator today. At this time, I would welcome everyone to the Micron Technology Second Quarter 2012 Financial Release Conference Call. [Operator Instructions] Thank you. It is now my pleasure to turn the floor over to your host, Kipp Bedard. Sir, you may begin your conference.

Kipp A. Bedard

Thank you, and welcome, all, to Micron Technology's Second Quarter 2012 Financial Release Conference Call. On the call today is Mark Durcan, CEO and Director; Mark Adams, President; and Ron Foster, Chief Financial Officer and Vice President of Finance.

This conference call, including audio and slides, is also available on Micron's website at micron.com. If you have not had an opportunity to review the second quarter 2012 financial press release, again it is available on our website at micron.com.

Our call will be approximately 60 minutes in length. There will be an audio replay of this call accessed by dialing (404) 537-3406 with a confirmation code of 62533629. This replay will run through Wednesday, March 29, 2012, at 5:30 p.m. Mountain Time. A webcast replay will be available on the company's website until March 2013. We encourage you to monitor our website at micron.com throughout the quarter for the most current information on the company, including information on the various financial conferences that we will be attending.

Please note the following 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'll 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 in the Investor Relations section of Micron’s website.

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.

With that, I'd now like to turn the call over to Mr. Mark Durcan. Mark?

D. Mark Durcan

Thanks, Kipp. I'd like to begin my comments today with a few thoughts on restructuring of our joint development relationship and joint manufacturing relationship with Intel before commenting briefly on market conditions, and then looping back to highlight some of the technology and business unit accomplishments during this quarter.

So first of all, Micron's partnership with Intel on NAND Flash is, of course, a very important relationship for us as well as a significant piece of our business. As many of you are aware, we reached definitive agreements this quarter to restructure or rejuvenate that partnership. And as part of that process, we agreed to purchase Intel's share of the output from the jointly-owned NAND operations in both Manassas, Virginia, and IMFS Singapore.

The purchase capacity was roughly 30,000 wafers per month, and Micron will sell a portion of those wafers back to Intel under a for-profit take-or-pay supply agreement. The incremental profit, along with -- the incremental profit capacity, along with the completion of the initial ramp of the new fab in Singapore, will lead to structural margin improvement going forward.

The life of the remaining joint venture facility, which is in Lehigh, Utah, was extended to 2024. And the scope of our technology relationship was expanded to include certain memory technologies beyond the floating gate and NAND products we had historically been working on together. So I think in summary, both partners consider the relationship to date highly successful and were both very excited to be carrying this relationship on in the future.

On the technology development front, we had a strong quarter. We were excited to complete the construction of the new addition to our R&D cleanroom in Boise, Idaho, and begin installing tools there to support our leading-edge NAND, DRAM, NOR and phase-change memory nodes as well as a number of interesting, new emerging memory technologies. We made good progress on our next 2 NAND technology nodes in the development fab, and our -- as well as our 20-nanometer DRAM node. We also made progress scaling up to 300-millimeter substrates on our 45-nanometer NOR process and in developing a new 300-millimeter phase-change memory process. Moving forward, we look to deploy both of these new 300-millimeter NOR and phase-change processes in the manufacturing fabs over the next year.

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