Micron Technology, Inc. (NASDAQ: MU) Q3 2025 Earnings | 06/26/2025 | Inside Ticker

Micron Technology, Inc. held its fiscal third-quarter 2025 financial conference call, announcing record revenue and strong financial performance that exceeded guidance. The company highlighted significant growth in data center revenue, driven by AI, and outlined ambitious investment plans and product roadmaps.

Fiscal Q3 2025 Financial Highlights

Record Revenue: $9.3 billion, up 15% sequentially and 37% year-over-year.
DRAM Revenue: $7.1 billion (76% of total), up 15% sequentially and 51% year-over-year, driven by nearly 50% sequential growth in HBM revenue.
NAND Revenue: $2.2 billion (23% of total), up 16% sequentially and 4% year-over-year.
Gross Margin: 39%, up 110 basis points sequentially, exceeding guidance due to better-than-expected DRAM and NAND pricing.
Operating Income: $2.5 billion, resulting in a 26.8% operating margin.
Non-GAAP Diluted EPS: $1.91, above the high end of guidance, reflecting 22% sequential growth and over 200% year-over-year growth.
Free Cash Flow: Over $1.9 billion, the highest in over six years.
Cash and Investments: Record $12.2 billion at quarter-end.
Inventory: Down $280 million sequentially to $8.7 billion (139 days), driven by strong bit shipment growth.

Business Segment Performance

Compute and Networking (CNBU): Record revenue of $5.1 billion, up 11% sequentially, primarily driven by HBM and high-capacity/low-power server DRAM.
Storage (SBU): $1.5 billion, up 4% sequentially, led by consumer-oriented revenue. Micron became the number two brand in data center SSDs by market share in calendar Q1.
Mobile (MBU): $1.6 billion, up 45% sequentially, due to reduced customer inventories and strong DRAM content demand.
Embedded (EBU): $1.2 billion, up 20% sequentially, supported by industrial and consumer embedded markets.

Strategic Initiatives & Technology Advancements

Business Unit Reorganization: Completed in June, focusing on key market segments to capitalize on AI growth opportunities.
1Gamma DRAM Technology: Yield ramping ahead of schedule, with first qualification samples of 1Gamma-based LP5 DRAM shipped. Offers 30% bit density improvement, >20% lower power, and up to 15% higher performance than 1Beta.
NAND Technology: Achieved record high mix of QLC bits; started qualifications for high-performance SSD products based on G9 2TB QLC NAND.
U.S. Investments: Announced plans for $200 billion investment in the U.S. over 20+ years, including $150 billion in manufacturing and $50 billion in R&D. This includes a second leading-edge memory fab in Boise, Idaho (ID2), expansion/modernization of the Manassas, Virginia fab, and advanced packaging capabilities.
- ID1 (Idaho Fab): First NAND wafer output expected in the second half of calendar 2027.
- ID2 (Second Idaho Fab): Production to begin before the first New York fab, benefiting from economies of scale.
- New York Fab: Ground preparation to begin later this year.
HBM Progress:
- HBM3E 12Y: Yield and volume ramp progressing extremely well, expecting shipment crossover in FQ4.
- Market Share: Expects to reach HBM shares similar to overall DRAM shares by sometime in the second half of calendar 2025 (earlier than previous estimates).
- HBM Customers: Now shipping HBM in high volume to four customers (GPU and ASIC platforms).
- HBM4: Samples delivered to multiple customers, volume production expected in calendar 2026. HBM4 offers >60% higher performance and 20% lower power consumption than HBM3E 12-high, with a trade ratio greater than 3.
LPDRAM for Servers: Maintains sole-source position, with high-capacity DIMMs and LPDRAM server products generating billions in revenue, reflecting a five-fold growth year-over-year.
PC Market: Expects low single-digit unit growth in CY25, driven by AI PCs and Windows 11 upgrades. Micron achieved record client SSD market share in calendar Q1.
Mobile Market: Expects low single-digit smartphone unit growth in CY25, with AI driving DRAM content (e.g., 12GB+ compared to 8GB average). Began shipping qualification samples of industry's first 1Gamma-based LP5X memory.
Automotive, Industrial, Consumer: Seeing growth resumption, driven by ADAS, AI-enabled in-vehicle infotainment, and factory automation.
D4/LP4 End-of-Life (EOL): Micron issued EOL notices for high-volume segments (mobile, client, data center, consumer) several months ago, with final shipments in 2-3 quarters. Supply to longevity customers (automotive, industrial, defense, networking) will continue for several years. Expect increasing shortages for D4 and potentially LP4.

Market Outlook

Customer Inventory: Healthy overall, with only modest tariff-related pull-ins.
Demand Environment: Constructive for the remainder of calendar year 2025, driven by AI.
CY25 Industry Bit Demand Growth: High teens for DRAM, low double-digits for NAND.
Micron's Bit Supply Growth: Expected to be below industry bit demand growth for non-HBM DRAM and NAND.
Medium-Term Demand Growth: Mid-teens percentage for both DRAM and NAND.
NAND Capacity: Structurally lower by 10% by end of fiscal 2025 compared to end of fiscal 2024.

Fiscal Q4 2025 Outlook

Revenue: $10.7 billion, plus or minus $300 million (record).
Gross Margin: 42%, plus or minus 100 basis points.
Operating Expenses: Approximately $1.2 billion, plus or minus $20 million (due to R&D investments).
Tax Rate: Around 13%.
EPS: $2.50 per share, plus or minus $0.15.
Inventory Targets: Expects to exit fiscal 2025 with tight DRAM inventories, significantly reduced NAND inventories, and overall DIO near target levels.
New Reporting Structure: Starting in fiscal Q4, Micron will report revenue, gross margin, and operating margin metrics across its new market segment-focused business units.