Micron Technology, Inc. (MU) Earnings Call Transcript & Summary

Greetings, and thank you for attending JPMorgan's 49th Annual Technology Media and Communications Conference. My name is Harlan Sur. I'm the semiconductor and semiconductor capital equipment analyst here for the firm. Very pleased to have Sanjay Mehrotra, Micron's President and Chief Executive Officer, here with us today. We also have Dave Zinsner, Micron's Chief Financial Officer. I've asked Sanjay to kick us off with the team's view of the current and second half demand and supply environment, Micron's performance within the memory and storage markets this year, and then we'll go ahead and launch into the Q&A. And so gentlemen, thank you for joining us today. And Sanjay, let me go ahead and turn it over to you.

Thank you, Harlan, and thank you for having us here at the conference, and greetings to all our listeners. Before I start, let me just point out that during the course of the discussions here today, we'll be making certain forward-looking statements. Please refer to SEC filings, which we make from time to time regarding the risk factors associated with the business. So Harlan, I will start off giving some commentary on the current quarter as well as our outlook ahead for the rest of the year. In terms of the current quarter F Q3, we still have 10 days to go before the quarter completes. But I would tell you that the demand environment is extremely strong. And at this point, how we see the quarter landing at the close is we expect our revenue to be at or above the previous guidance that we had provided. The high end of the previous guidance was $7.3 billion. So we expect our revenue to be at or above the high end of the range that we had provided before. And accordingly, gross margin percentages on a non-GAAP basis as well as EPS will be strong for the quarter as well. Demand has been strong across all end markets virtually, and the pricing trends have been strong for both DRAM and NAND. As we had discussed before with respect to cost on the DRAM side, given the drought mitigation costs as well as some Taiwan dollar foreign exchange impact, we had indicated that sequential cost on the DRAM side would be higher during F Q3 versus F Q2. Of course, our 176-layer NAND and 1-alpha DRAM continue to make solid progress. Our 1-alpha DRAM will have an impact, as we have said before, in fiscal '22, but it's continuing to ramp up nicely and proceeding well in terms of customer qualifications as well. But its impact in terms of supply, growth as well as in terms of cost reduction capability will really come in, in fiscal year '22. So we expect for F Q4, our DRAM bids in terms of shipments would be relatively flat with respect to F Q3. And our inventory is lean. I mean, in DRAM, we have supply shortages. Inventory is running extremely lean. And of course, with that lean inventory in mind and looking at the timing of our 1-alpha DRAM production ramp, that's where I'm providing you some color related to F Q4 DRAM bit shipment expectation as well. But we are very pleased with Micron's solid execution across DRAM, across NAND, across our product portfolio with respect to getting products ready with these new technologies. Also, with respect to demand, demand, as I said, is strong from all end markets. Supply, particularly for DRAM is tight. And we see that supply tightness will continue for DRAM through calendar year '21 and into calendar year '22. NAND environment, as we had indicated before, is stabilizing. In fact, NAND environment is improving. We -- in F Q3, the upside overall in terms of the revenue trend versus our prior guidance that we set is driven by ASPs, both on the DRAM side as well as NAND side being better than the ASPs we had baked into the guidance that we had provided earlier. And NAND, of course, as we have always said, has price elasticity and those price elasticity trends are kicking in, in terms of average capacities continuing to grow strong as well as overall demand continuing to improve. However, we remain cautious with respect to NAND in terms of industry CapEx spend. While NAND is improving, as you know, we have remained cautious in terms of how we invest in CapEx. On the NAND industry, I believe that CapEx spend, we remain to -- we need to -- industry as a whole needs to remain cautious in terms of making sure that there's healthy demand and supply balance going forward. And I'll also tell you that, overall, the nonmemory component shortages that our customers are experiencing, that is actually resulting in even more unmatched demand. If these nonmemory component shortages were not there in the industry, we believe that our demand would be even higher. So we are excited about the opportunities. The growth trends are secular in nature. AI and 5G, driving growth in cloud, smartphones, and of course, PC. Demand is strong as well. Automotive is strong. So across all -- from data center all the way to consumer devices and everything in between, we are seeing overall healthy demand trends, and we are excited about Micron's execution and the opportunities ahead. And I will also point out that, of course, we remain concerned about the COVID spread in India, and we have a large team presence there, and we -- our team members' safety and well-being is top of our mind, and we remain -- really, our thoughts and prayers are with those in India. And we are concerned, of course, with the recent spread of COVID in other Asian countries as well, including Taiwan, Singapore and Malaysia. But I'll tell you that Micron was early in taking steps during the start of COVID last year, and we were among the very first to implement best-in-class safety protocols on site, and we have remained extremely disciplined in this regard throughout the period. So we will continue to adhere to the protocols. We'll continue to follow, of course, any government regulations regarding managing how many people can be on site, et cetera. But I'll tell you in the near term, we are not seeing impact of the COVID situation and increase in COVID cases in certain parts of Asia, including Malaysia. And we certainly hope that as vaccination improves across the globe, these situations will further improve as well. And our supply chain team remains very mindful, continuing to monitor the situation and respond fast to any changing dynamics. And the resiliency of our supply chain, I think, has proven successfully over the course of last year. And I believe it will play out to be our strength going forward as well.

Thanks for that, Sanjay. So just to reiterate, so revenues at or above the high end of the guidance range, gross margin EPS strong. Did you want to try to quantify that relative to the prior gross margin guidance range that you -- that the team have provided?

So Harlan, we are not updating the gross margin guidance here because 10 days are still left in the quarter. But again, the way we see the quarter shaping up is we see revenue at or above the high end of the range that we provided earlier in March for the quarter. And accordingly, obviously, given the pricing trends that you have seen in DRAM and NAND, we expect EPS and gross margins to be strong as well.

And it sounds like even on the cost side, you guys were executed quite well. I mean you said you had anticipated cost to potentially be up in DRAM due to the drought mitigation efforts, FX and some other things. And it sounds like that's how it played out. On the NAND side, you guys were anticipating to execute to some pretty good cost reductions, down low double digits kind of year-over-year declines. Roughly speaking, did the team kind of execute to that here during the May quarter?

Yes, that's right. I mean we are executing to our plan, as I mentioned earlier, in NAND as well as DRAM with respect to our 1-alpha node as well as with 176-layer NAND, our expectations, our execution is in line with what we have shared before. Hey, Dave, feel free to add in any comments at any time. We have Dave Zinsner here.

You handled it, yes. Thanks.

So in DRAM, it sounds like given the continued tightness, lead times are a bit better. You're getting a bit better visibility. You talked about continued tightness into the second half of this year and even into next year. Number one is, what are the second half demand drivers that you see for the Micron team in your DRAM business? And this has been a concern by investors, but what gives you the confidence on continued tightness and relatively strong DRAM fundamentals into 2022?

Yes. So let's just break it up by end markets. Let's look at data center and within data center, let's look at cloud as well as enterprise. So within cloud, F Q4 of last year was a strong quarter. It was a healthy 14-week quarter as well. And then we have seen that overall since then the cloud demand has continued to be healthy. Of course, there has been some digestion over the course of last couple of quarters with respect to demand and requirements from the cloud customers. But that digestion, by and large, is over. And what we see is that cloud demand in the second half of the year will continue to be strong as well. Overall, cloud is being driven by the secular trend of AI and new server applications, new CPUs that are driving more cores, more channels, greater DRAM attach as well as AI-driven workloads are really requiring more DRAM content as well. So cloud, even with digestion that occurred in the cloud industry over the last couple of quarters, has been healthy overall for the industry. And certainly, for Micron, particularly Micron with our high-quality products, we have done well with our cloud customers. And as we look ahead, we see for industry in terms of DRAM demand, cloud will continue to be strong, and second half of the calendar year will be stronger than the first half of the calendar year for cloud. And again, we believe it's a secular demand trend in cloud, and we are still overall enjoying growing demand for DRAM, given the workloads that cloud is driving that are requiring more and more memory as well as more and more storage as well. On the enterprise side, which throughout COVID has generally been weak, we are starting to see that enterprise is starting to recover as well. And we expect that as the vaccinations happen around the world and as global economies recover from the lockdowns and open up, we expect that enterprises -- the business will start coming back as well. So we see strength starting to build up on the enterprise side of the data center demand as well. And the considerations in terms of applications with more cores, more channels and servers enabling more memory DRAM memory attach rates are the same. Now moving on to smartphones. With respect to smartphone, of course, 5G is driving solid growth. 5G number of handsets being sold year-over-year is doubling in calendar year '21 versus calendar year 2020. Nearly 500 million smartphones to be sold in calendar year '21. So these -- and the content in the 5G smartphones continues to increase as well. So smartphone market, overall, in terms of units sold, double-digit growth and in terms of 5G phones, doubling of the 5G phones, all of this is driving solid smartphone demand as well. And of course, I know that Huawei -- with the change of Huawei, there were different mobile handset players that are jocking for share positions. And all of that is settling out over time. Honor has become a new player in the smartphone market. And of course, it's a customer of Micron's as well. And what's important to note is that even after some of these shares are settling down in the smartphone market and some of the expectations of demand that certain customers had in their attempt to manage the void that is being created by Huawei, which is certainly now being filled by Honor as well, some of those demand changes from certain customers might be changing. But overall, the smartphone market is very much in line with our prior expectations. So we see that smartphone total market continues to be solid, strong for us even though there may be a little bit of changes that may be happening between various customers, and we are very well engaged with the full ecosystem of customers in the smartphone market. So smartphone market, we see it as continuing to be solid through the rest of the year, again, being driven by 5G growth, driving more unit sales of 5G that have higher memory and storage content in them. We see, of course, in a long time, last year, double-digit growth in PCs and this year, too, expected to be solid growth in PCs. And of course, PC side has experiencing some nonmemory component shortages. And some of that can affect some of the total PC sales, but you're looking at nearly 1 million sales every day of PC. So PC unit sales, this is going to be another strong year, and Micron is well positioned with the PC ecosystem as well. And as I said before, automotive that everybody knows about, automotive demand has come back strong, and automotive with increasing autonomous kind of features in them, increasing infotainment and ADAS features, they require more memory content as well. So automotive continues to be a strong market as well. So overall, we look at the end market drivers to be healthy across the board virtually. And I'll point out that desktop PCs, these used to be, during the COVID times, as you would imagine, with all the work-from-home environment, desktop sales were down. But as economies are opening up, as people are coming back to the offices, and more used to the Zoom kind of environment, PCs in the workplace environment, desktops will need some refresh as well. And we believe that the desktop market, which tends to have higher content of memory and storage, will begin to increase in terms of demand vector for us as well. So across the board, we are seeing a nice buildup of secular demand trends for us for DRAM.

Then your commentary around sustainability into calendar year '22, like I said, we know that your lead times are potentially starting to increase amidst a very tight supply environment. Your customers are probably sharing a bit more of their forward forecast with you. But -- and I'm getting this question from investors, too, is what drives the team's confidence on sustainability of strong DRAM fundamentals into calendar year '22?

The sustainability of DRAM fundamentals is really, again, driven by all of these demand trends that we just talked about, right? I mean these are the demand trends that will continue to be strong. These -- I mean, COVID drove acceleration of all these demand trends. But as the economy is open, that momentum will continue into '22 time frame as well. And when we look at the industry demand/supply environment, I mean, remember that during 2020, CapEx in DRAM overall in the industry was cut back. I mean Micron itself had cut back its CapEx given the uncertainty that was there from the COVID. So the industry has been extremely disciplined with respect to CapEx investments last year as well as this year, and that's resulting in supply tightness in the backdrop of strong demand environment. And this will, we believe, continue the healthy environment going into '22 for the DRAM industry as well, the combination of both the demand and the supply dynamic.

Appreciate that, Sanjay. And then on the NAND side, obviously, as you mentioned, the team has been somewhat guarded on the NAND supply/demand dynamics coming into this year. But as you mentioned, you've seen better NAND supply/demand fundamentals more recently. Are you more confident on the sustainability of a better demand and supply profile through the second half of this year in NAND? Or do you still think that the industry needs to drive a further supply discipline?

So certainly, given the CapEx increases at the industry level that occurred in NAND last year and earlier part of this year as well, we do believe -- we remain cautiously optimistic with respect to industry CapEx, we do believe needs to be disciplined, and we continue to monitor. Certainly, on the side of Micron, we remain extremely disciplined as we implement our floating gate to replacement gate transition has ramped up our 176 layers NAND. We do think that attention to CapEx and attention to supply growth in the NAND industry is continued to be needed. However, as I said before, we are seeing stabilization improving NAND demand environment in the industry, and that's resulting in improved pricing environment for NAND versus the prior expectations that were baked into our guidance as well. And on the NAND side, one thing I would say is that as the semiconductor memory shortages that are pretty prevalent, one thing to watch for is controller shortages potentially that can actually impact some of the SSD supply in the industry as well as some of the managed NAND solution supply. So -- hello. Can you hear me?

Still on.

We can hear you.

Okay. Somehow it just went blank on my side for a while. I don't know what happened. So where I was at was that a controller supply, given the foundry supply challenges in the industry, just has to be monitored closely. It could result in further tightness with respect to SSD supply or with respect to the managed solution supply. And of course, Micron continues to monitor our own supply chain carefully in that regard to make sure that we are able to assure our supply of controllers. So I just wanted to point that out with respect to consolidation for the NAND industry as well.

So Harlan, one other thing I might add on this one is, we're not just relying on industry dynamics in terms of the profitability of NAND. We're driving content on the high-value side on NAND. Even within NAND, we're working on the mix within the high-value solutions. We'll be bringing out over the next couple of quarters, NVMe solutions into the data center space that more broadly address that area. And that generally has a better profitability profile. We're driving our content of QLC. That's an important element of our cost story. And as Sanjay already mentioned, 176-layer is a good node for us in terms of cost structure. That should help in terms of profitability. So yes, there's the industry dynamics. And of course, that's an important element of the profitability, but also, we are managing the things that are within our control to enhance that business and drive better ROIC.

I think that’s a great point, Dave, and in terms of things within our control, we have, as you have seen, brought out NVMe, SSDs in the client space. In fact 90% of what we ship today in client SSDs is NVMe. So solid execution continuing to build up on that front. And now as we are qualifying more customers with our NVMe enterprise, SSDs, that's now an opportunity for us to strengthen our market position in the coming quarters, and that's an important focus area for us. And of course, Micron has done very well with our managed NAND solutions, discrete as well as multichip packages, multichip packages, which have NAND and DRAM in them. And really, over the course of last couple of years, we have strengthened our share in the managed NAND solutions quite well. So this is that ongoing successful transformation of the new Micron in terms of driving the mix of the business towards higher-value solutions. And I must say not only NAND but remain focused on the DRAM side as well.

Perfect. I'm getting a question from clients on inventories. Can you just update us on inventories in the channel? In DRAM, there has been some concerns on server, data center DRAM, customer inventories as well as mobile inventories. We'd like to get your views on the current situation of inventory trends as you move through the second half of this year, primarily in the channels.

So while we never have perfect visibility to inventory from our -- that our customers are carrying. And of course, we continue to monitor those trends and work closely with our customers in trying to understand those trends. I would tell you that inventory at this point is not major concern of ours. We continue to monitor it. We believe that inventory in the channel with our customers is in good shape. As I explained earlier, on the cloud side, we believe that cloud customers have digested some of the purchases they had made earlier, and they are continuing to see increasing demand for memory driven by AI requirements. So we see growth in demand. We think inventory is in decent shape there. Similarly, on the smartphone side, while the changes may be happening from one customer to another that I referred to earlier with respect to potential share positioning by customers, but nothing major in terms of concerns over inventory on the smartphone side as well. What I would like to point out here is that COVID definitely has shown the world, particularly last few quarters, that supply availability is critically important in order for our customers to be able to meet their fast-changing demand requirements as well. So what used to be a just-in-time kind of mindset for inventory management by our customers, now realizing the importance, they may be making strategic changes. And we know that in certain cases, certain customers are making strategic changes as well with respect to inventory management. And really even looking at just in case, just in case, the certain disruptions happen in the supply chain, they need to be prepared with decent levels of inventory to handle their own demand requirements. So this is something that also in the customer ecosystem could be a change happening in terms of their strategic change in direction with respect to how they manage inventory. Certainly us, in our own supply chain, as we are managing in this environment of high demand and tightness across the semiconductor and technology supply chain, we, too, are making sure that we are multi-sourcing, for example, for our products, that we have the tendency built into our manufacturing footprint, that we have sufficient capacity of assembly and test operations to be able to address our requirements. So just like we are managing our supply chain with keen eye on making sure that we don't experience any shortages or disruptions, I believe customers too are having strategic changes in terms of how they are managing their inventory in the long haul. So again, in a nutshell, really no concerns with respect to overall inventory position in the market.

Great. And then just one last kind of near-term question, I'd like to move on to some of the more near and longer-term questions. But the question is that, on your outlook for Q4 on flattish sort of bit shipments quarter-over-quarter in DRAM, obviously, you've been drawing down inventories and you're shipping hand to mouth. Is that -- is the quarter-on-quarter, just to verify, is that a bit supply statement? Or is that a bit shipment statement? And given the ramp of 1-alpha and I think it's -- you guys are driving 40% more bits per wafer on 1-alpha. And as you guys ramp that, can we start to see a reacceleration of bit shipments maybe starting in your fiscal Q1 of 2022?

So yes, to reiterate with respect to F Q4, what I was referring to was bit shipments in F Q4 to be relatively flat versus our F Q3 bit shipments. That's what I was referring to because 1-alpha ramp in terms of its impact on bit shipments is still further ahead of us, that means it will have impact really later half of this calendar year and will be affected in our fiscal year '22. It will be the workhorse for driving our bit growth as well as cost reduction capability in fiscal year '22, starting from F Q1 '22 time frame with respect to 1-alpha node. And again, we are very proud of our 1-alpha node. We have delivered it as an industry-first node, and we have solid lead that we are enjoying in the industry with 1-alpha node. We believe it will serve us very well in our fiscal year '22 time frame.

Great. And then maybe more, stepping back now kind of thinking about it longer term, right? You and your peers have been very focused on improving through-cycle profitability. The Micron team has driven roughly, what, $9 billion in structural profitability between fiscal '16 and fiscal '19. This helped to drive 1,600, 1,700 basis points of improvement in EBITDA margins, kind of '19 trough versus the last trough in 2016. Beyond just your annualized cost per bit reduction targets, what are some of the other initiatives that the team is focusing on to drive more cost efficiencies across the business?

So Harlan, you're right to note that Micron has driven a major transformation in this time period from the last trough of 2016 to the -- I mean, the prior trough of 2016 to the last trough in 2020. And during this period, if you just do a comparison trough to trough, we have improved our revenue by 70%. Average gross margins, 40% through the cycle. EBITDA margins, 50% and 20% ROIC as well. So solid performance, as you noted, over the course of this last cycle here. And of course, this has been driven, first and foremost, by our focus on technology acceleration. Micron used to be behind in technology. And today, as we just discussed, that both in DRAM as well as NAND, we have had the industry first with our 1-alpha and 176-layer NAND nodes. And now, of course, we ramp these nodes into production with our overall strategy of making sure that our supply bit growth is -- supply bit growth CAGR is in line with our demand bit growth CAGR. So the disciplined approach in terms of ramping new technology nodes and managing our supply bit growth and really focusing on high-value solutions to deliver a revenue performance to really outperform the industry while maintaining our bit share in the industry, these are key elements of our strategy and key elements of our ability to execute successfully on the financials, including the cost aspects of it. On the cost side, in addition to leveraging the technology to drive costs well -- and by the way, going forward, now that we are leading the industry with technology transitions, we -- going forward, our technology transition cadence will be similar to the average pace of the industry as well. We have accelerated it in the past to get caught up. Now that we are in the forefront, we expect our technology node cadence to be similar to the rest of the industry as well. So aside from the gains through technology piece that have resulted in strengthened cost position and cost reduction capability for Micron, it is also about back-end assembly and test operations. And back-end assembly and test, it used to be in fiscal year 2018 that about 45% of assembly operations were done in-house. And going forward -- currently, we are at now more than 60% of that as being done in-house, and that provides obvious benefits, of course, of cost, but it also provides benefits of more efficient supply chain management and flexibility to be able to meet the customers' requirements. As we have discussed before, some of the CapEx that the company has gone into investments in assembly and test that do not add bits, but really contribute towards the cost reduction, greater flexibility in terms of meeting the customer requirements as well. So assembly and test has been an important area of driving cost efficiencies at the company as well. And really, we are doing a very good job there. I will also point out that Micron over the years had acquired various companies, particularly as we look on the DRAM side, and that had led to certain inefficiencies of operations. And over the course of last few years, we really have invested in making sure that these operations, each of these fabs is brought to best-in-class capabilities. And one of the key aspects in driving best-of-class efficiency of operations is having tool sets that are matching between the fabs. As you can imagine, these fabs were acquired through different sources, so they didn't have tool sets therefore matched very well. But now as we look ahead, 1Z and beyond, we see that 85% of our tool sets between the fabs, more than 85% are now matched. This positions us well in terms of efficiencies as well as driving future technology transitions in a cost-effective manner as well. And lastly, I would say that we, as a company, really have driven tremendous focus and discipline on all aspects of planning our products, defining our products, doing them right the first time, getting technology ramped successfully with good quality and yield, getting products qualified with our customers and overall supply chain planning that is well connected with customer end markets and our own technology status and production ramp status and their increased discipline and that increased solid culture of execution also provides higher-quality products, and that also provides timely execution that ultimately results actually in cost efficiencies as well.

One of the other vectors that I can see may be driving through-cycle profitability improvements is -- just better potentially match your supply output with your customers' demand profile, right, over longer periods of time. And we continue to hear from some of our other semiconductor companies about entering into longer-term supply agreements with large and strategic customers. Is the Micron team starting to do this or think about this? Is it going to be more DRAM? Is it going to be more NAND? What types of customers? What end markets are you may be potentially finding uptake of long-term supply agreements?

Yes. Good question and good comment there, Harlan. Certainly, strong demand environment, and our ability in our supply chain to be able to manage our supply and our inventory, all of that in line with the customer expectations, is what has resulted in such lean inventory position now in DRAM as well as solid improvements in our inventory position, as you noted, in our F Q1 to F Q2 results on the NAND side as well. And of course, over the course of last few years, we have driven closer relationships with customers and continue to strengthen our commitment to the customers, but in return, get stronger commitment from them as well. So the mix of our long-term agreements particularly that are focused on 1-year kind of supply agreements has increased over time. And this has been a strategic focus of the company, and we get the benefits of that in terms of closer relationship with customer and commitment from them in terms of supply as well. Of course, some other part of the business remains quarterly and monthly as well, but the mix that's increasing towards 1-year kind of longer-term agreements is increasing. And of course, in this kind of environment, our dialogue with the customers in terms of opportunities for new opportunities for supply agreements is increasing as well. Nothing specific to report at this point, but these are things that we, of course, continue to work with customers to drive ultimately a long-term win-win kind of relationships with them.

Just about out of time, but I wanted to ask one more question, Sanjay. Yesterday, you hosted some U.S. government officials at your Manassas, Virginia plant. As we know, that as a part of President Biden's proposed infrastructure spending bill, the amount of support for domestic semiconductor manufacturing and R&D spending was up from $35 billion to $37 billion under the CHIPS Act proposal to over $50 billion, of which half or more, we think, is going to be used to subsidize U.S. domestic manufacturing programs. How important are these subsidy dollars as it relates to the team's ability to add manufacturing capabilities to the Manassas fab and maintain your leadership position in the critical auto and embedded memory segment of the market?

So first of all, let me say that we were proud to host the Secretary of Commerce, Gina Raimondo, as well as Virginia Democrats Senator, Mark Warner and Texas Republican Senator, John Cornyn to our Manassas site yesterday, reflects the importance of semiconductor that the U.S. government is placing and the recognition that semiconductors are backbone of the economies today. And certainly reflects the importance of memory and Micron within the U.S. semiconductor industry and technology ecosystem. And we are really very encouraged and applaud the efforts of the U.S. government in terms of strengthening innovation, R&D, and semiconductor manufacturing agenda here in the U.S. It is important in order for U.S. semiconductor industry to be long-term competitive with global competitors. There are incentives so that industry can invest more in innovation and manufacturing is important for us. As far as Micron, we, of course, have a widespread global footprint. We welcome the opportunities to evaluate for future capacity in the U.S., and we would like to see that the CHIPS Act funding gets over the finish line for the semiconductor industry. And of course, we will evaluate opportunities in the quarters and the years ahead in terms of how we develop our manufacturing footprint. Important considerations for us, remember, always will be that we want our supply bit growth to be in line with the demand bit growth. So government incentives across the world where we have operations, of course, are always taken into consideration as we plan our manufacturing footprint for the years ahead, and government incentives, of course, help us manage our CapEx on the manufacturing side and help us manage our R&D, OpEx as well. And we evaluate those carefully. Our goal with all those in mind always is that supply growth -- bit growth must be in line with the industry demand expectations. It's not that just because the government incentives will outgrow the industry demand in terms of supply. So we'll remain extremely disciplined, yet excited about the opportunities ahead given the recognition and the commitment of the governments towards supporting the semiconductor industry. And I think Micron, as one of the leading players in the global semiconductor industry is well positioned to be able to capture in a prudent fashion the benefits of these kind of investments going forward. So nothing specific to really report on that at this point, but we'll continue to monitor. I think at this point, it is important that the funding for the chipset gets across the finish line here.

All right. Sanjay, Dave, thank you very much. I want to -- thanks for participating today. Look forward to continued strong results for the Micron team for the rest of this year. So thank you very much for your participation.

Thank you, Harlan, and thank you to everybody for the support of Micron.

Absolutely. Thank you.

Take care.