MICRON TECHNOLOGY INC

Results of Operations

Consolidated Results

Total Revenue: Total revenue for the third quarter and first nine months of 2024 was impacted by the factors described in the section titled “Industry Conditions” above. These conditions drove significant quarterly declines in average selling prices throughout 2023 and a subsequent recovery of average selling prices in the first three quarters of 2024.

Total revenue for the third quarter of 2024 increased 17% as compared to the second quarter of 2024 due to increases in sales of both DRAM and NAND products.

•Sales of DRAM products in the third quarter of 2024 increased 13% as compared to the second quarter of 2024 primarily due to increases in average selling prices by approximately 20%, partially offset by a mid-single-digit percent range decrease in bit shipments.

•Sales of NAND products in the third quarter of 2024 increased 32% as compared to the second quarter of 2024 primarily due to an approximate 20% increase in average selling prices and a high-single-digit percent range increase in bit shipments.

Total revenue for the third quarter of 2024 increased 82% as compared to the third quarter of 2023 due to increases in sales of both DRAM and NAND products.

•Sales of DRAM products in the third quarter of 2024 increased 76% as compared to the third quarter of 2023 primarily due to a mid-30% range increase in both average selling prices and bit shipments.

•Sales of NAND products in the third quarter of 2024 increased 104% as compared to the third quarter of 2023 primarily due to a low-60% range increase in average selling prices and a high-20% range increase in bit shipments.

Total revenue for the first nine months of 2024 increased 51% as compared to the first nine months of 2023 due to increases in both DRAM and NAND sales.

•Sales of DRAM products in the first nine months of 2024 increased 49% as compared to the first nine months of 2023 primarily due to a mid-50% range increase in bit shipments, partially offset by a low-single-digit percentage range decline in average selling prices.

•Sales of NAND products in the first nine months of 2024 increased 62% as compared to the first nine months of 2023 primarily due to a low-50% range increase in bit shipments and a high-single-digit percentage range increase in average selling prices.

Consolidated Gross Margin: Our consolidated gross margin has been impacted by the factors described in the section titled “Industry Conditions” above and inventory write-downs in 2023 as detailed in the table below. Our consolidated gross margin percentage improved to 27% for the third quarter of 2024 from 19% for the second quarter of 2024, as a result of improvements in margins for both DRAM and NAND products, primarily due to increases in average selling prices and NAND manufacturing cost reductions, partially offset by a reduction in the benefits from the sale of inventories previously written down to their net realizable value. Our consolidated gross margin percentage improved to 27% for the third quarter of 2024 from negative 18% for the third quarter of 2023 primarily due to increases in average selling prices, manufacturing cost reductions, the effects of charges to write down inventories to their NRV in 2023, and the sale of previously written down inventories. Our consolidated gross margin percentage improved to 17% for the first nine months of 2024 from negative 9% for the first nine months of 2023 primarily due to manufacturing cost reductions, the effects of charges to write down inventories to their NRV in 2023, and the sale of previously written down inventories.

Inventory NRV write-downs: Our consolidated gross margin was impacted by charges in the second and third quarters of 2023 to write inventories down to their estimated NRV as a result of declines in average selling prices for both DRAM and NAND. As charges to write down inventories are recorded in advance of when inventories are sold, costs of goods sold in subsequent periods are lower than they otherwise would be. The impact of inventory NRV write-downs for each period reflects (1) inventory write-downs in that period, offset by (2) lower costs in that period on the sale of inventory written down in prior periods. The impacts of inventory NRV write-downs are summarized below:

Revenue by Business Unit

Percentages of total revenue may not total 100% due to rounding.

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Changes in revenue for each business unit for the third quarter of 2024 as compared to the second quarter of 2024 were as follows:

•CNBU revenue increased 18% primarily due to increases in DRAM average selling prices driven by strong growth in the data center market.

•MBU revenue decreased 1% reflecting decreases in bit shipments, partially offset by increases in average selling prices for both mobile DRAM and NAND.

•EBU revenue increased 16% primarily due to increases in DRAM average selling prices and bit shipments driven by strong demand in automotive markets.

•SBU revenue increased 50% primarily due to increases in NAND average selling prices and bit shipments driven by strong demand in data center markets.

Changes in revenue for each business unit for the third quarter and first nine months of 2024 as compared to the corresponding periods of 2023 were as follows:

•CNBU revenue increased 85% and 44%, respectively, driven by increases in bit shipments. CNBU DRAM average selling prices increased for the third quarter of 2024 as compared to the third quarter of 2023 and decreased slightly for the first nine months of 2024 as compared to the first nine months of 2023.

•MBU revenue increased 94% and 85%, respectively, primarily due to increases in average selling prices and bit shipments for both mobile DRAM and NAND.

•EBU revenue increased 42% and 24%, respectively, primarily due to increases in bit shipments, partially offset by declines in average selling prices.

•SBU revenue increased 116% and 60%, respectively, primarily due to increases in average selling prices and bit shipments.

Operating Income (Loss) by Business Unit

Percentages reflect operating income (loss) as a percentage of revenue for each business unit.

For the third quarter of 2024 as compared to the second quarter of 2024, operating income (loss) improved for all segments primarily due to increases in average selling prices as a result of improving conditions across most markets.

For the third quarter of 2024 as compared to the third quarter of 2023, CNBU, MBU, and SBU operating income (loss) improved primarily due to increases in average selling prices, manufacturing cost reductions, and increases in bit sales as a result of improving conditions across most markets in 2024. SBU and CNBU experienced higher R&D expenses for the third quarter of 2024 as compared to the third quarter of 2023. For EBU, operating income (loss) for the third quarter of 2024 also improved from the third quarter of 2023 primarily due to increases in bits sold and manufacturing cost reductions, partially offset by lower average selling prices.

For the first nine months of 2024 as compared to the first nine months of 2023, operating income (loss) improved for CNBU, MBU, and SBU primarily due to manufacturing cost reductions, increases in bit sales, and increases in MBU and SBU average selling prices as a result of improving conditions across most markets in 2024. SBU and CNBU experienced higher R&D expenses for the first nine months of 2024 as compared to the first nine months of 2023. For EBU, operating income (loss) for the first nine months of 2024 deteriorated from the first nine months of 2023 primarily due to lower average selling prices, partially offset by manufacturing cost reduction and increases in bit shipments.

Operating Expenses and Other

Research and Development: R&D expenses vary primarily with the number of development and pre-qualification wafers processed, the cost of advanced equipment dedicated to new product and process development, and personnel costs. Because of the lead times necessary to manufacture our products, we typically begin to process wafers before completion of performance and reliability testing. Development of a product is deemed complete when it is qualified through internal reviews and tests for performance and reliability. R&D expenses can vary significantly depending on the timing of product qualification.

R&D expenses for the third quarter of 2024 increased 2% as compared to the second quarter of 2024 primarily due to an increase in employee compensation and subcontractor expense. R&D expenses for the third quarter of 2024 increased 12% as compared to the third quarter of 2023 primarily due to an increase in employee compensation and subcontractor expense, partially offset by an increase in government incentives. R&D expenses for the first nine months of 2024 increased 6% as compared to the first nine months of 2023 primarily due to an increase in employee compensation, partially offset by an increase in government incentives.

Selling, General, and Administrative: SG&A expenses for the third quarter of 2024 increased 4% as compared to the second quarter of 2024 primarily due to an increase in employee compensation. SG&A expenses for the third quarter and first nine months of 2024 increased 33% and 19%, respectively, as compared to the corresponding periods of 2023, primarily due to an increase in employee compensation and legal fees.

Restructure and Asset Impairments: See “Item 1. Financial Statements – Notes to Consolidated Financial Statements – Restructure and Asset Impairments.”

Other Operating (Income) Expense, Net: See “Item 1. Financial Statements – Notes to Consolidated Financial Statements – Other Operating (Income) Expense, Net.”

Interest (Income) Expense, Net: Interest income (expense) for the third quarter of 2024 compared to the second quarter of 2024 was unchanged. Interest income (expense) deteriorated for the third quarter and first nine months of 2024 as compared to the corresponding periods of 2023 primarily due to increases in interest expense as a result of higher debt balances and interest rates, partially offset by increases in interest income due to higher interest rates on our cash and investments.

Income Taxes: Our income tax (provision) benefit consisted of the following:

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In 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. With our improved fiscal 2024 outlook, we were able to estimate a more reliable annual effective tax rate and have reverted to a global annual effective tax rate method for all jurisdictions beginning in the second quarter of 2024.

The change in our effective tax rate for the third quarter of 2024 as compared to the second quarter of 2024 was primarily due to the change in tax rate methodology applied in the second quarter of 2024. The changes in our effective tax rate for the third quarter and first nine months of 2024 as compared to the corresponding periods of 2023 were primarily due to changes in profitability and discrete items primarily related to tax return filings.

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. As a result of the low level of profitability and the geographical mix of income, the benefit from tax incentive arrangements was not material for the periods presented.

Various tax reforms are being considered in multiple jurisdictions that, if enacted, contain provisions that could materially impact our tax expense. We continue to monitor the potential impact of these various tax reform proposals to our overall global effective tax rate and financial statements.

Other: Further information can be found in “Item 1. Financial Statements – Notes to Consolidated Financial Statements – Equity Plans”.