MICRON TECHNOLOGY INC

Results of Operations

Consolidated Results

Total Revenue: Total revenue for the second quarter of 2025 and first six months of 2025 was impacted by the factors described in the section titled “Industry Conditions” above.

Total revenue for the second quarter of 2025 decreased 8% as compared to the first quarter of 2025 primarily due to decreases in sales of both DRAM and NAND products.

•Sales of DRAM products decreased 4% primarily due to a high-single-digit percent range decrease in bit shipments, partially offset by a mid-single-digit percent range increase in average selling prices driven by an increased mix of HBM and other data center products.

•Sales of NAND products decreased 17% primarily due to a high-teens percent range decrease in average selling prices due to industry conditions and a mix shift to consumer-oriented products, partially offset by modestly higher bit shipments.

Total revenue for the second quarter of 2025 increased 38% as compared to the second quarter of 2024 primarily due to increases in sales of both DRAM and NAND products.

•Sales of DRAM products increased 47% primarily due to a mid-50% range increase in average selling prices, partially offset by decreases in bit shipments in the mid-single-digit percent range.

•Sales of NAND products increased 18% primarily due to a mid-teens percent range increase in bit shipments and a low-single-digit percent range increase in average selling prices.

Total revenue for the first six months of 2025 increased 59% as compared to the first six months of 2024 due to increases in both DRAM and NAND sales.

•Sales of DRAM products increased 65% primarily due to a mid-60% range increase in average selling prices.

•Sales of NAND products increased 46% primarily due to a low-30% range increase in average selling prices and an approximate 10% increase in bit shipments.

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Consolidated Gross Margin: Our consolidated gross margin has been impacted by the factors described in the section titled “Industry Conditions” above. Our consolidated gross margin percentage decreased to 37% for the second quarter of 2025 from 38% for the first quarter of 2025, primarily due to a decrease in margins for NAND products, partially offset by an improvement in margins for DRAM products. NAND margins declined primarily due to decreases in average selling prices and a mix shift to consumer-oriented products. DRAM margins improved primarily due to an increased mix of HBM and other data center products. Our consolidated gross margin percentage improved to 37% for the second quarter of 2025 from 19% for the second quarter of 2024 and improved to 38% for the first six months of 2025 from 10% for the first six months of 2024. Improvements in our consolidated gross margins for the second quarter and first six months of 2025 as compared to corresponding periods of 2024, were primarily due to increases in average selling prices for both DRAM and NAND, manufacturing cost reductions for NAND, and an increased mix in sales to high-margin cloud products, particularly HBM. Our consolidated gross margin for the second quarter and first six months of 2024 reflected $382 million and $987 million, respectively, of benefit due to lower costs from the sale of inventories written down to their net realizable value in 2023.

Revenue by Business Unit

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

Changes in revenue for each business unit for the second quarter of 2025 as compared to the first quarter of 2025 were as follows:

•CNBU revenue increased 4% primarily due to higher sales of HBM products, which increased more than 50%.

•SBU revenue decreased 20% primarily due to lower storage investments by data center customers after several quarters of very strong growth, and overall NAND industry pricing declines.

•MBU revenue decreased 30% primarily due to decreases in bit shipments, as mobile customers managed inventories lower, and declines in average selling prices for both mobile DRAM and NAND.

•EBU revenue decreased 3% primarily due to decreases in automotive sales as customers managed inventories lower.

Changes in revenue for each business unit for the second quarter and the first six months of 2025 as compared to the corresponding periods of 2024 were as follows:

•CNBU revenue increased 109% and 128%, respectively, primarily due to increases in average selling prices and bit shipments driven by improved demand, particularly in cloud server markets, including HBM.

•SBU revenue increased 54% and 100%, respectively, primarily due to increases in bit shipments and average selling prices for NAND.

•MBU revenue decreased 33% and 10%, respectively, primarily due to decreases in bit shipments partially offset by increases in DRAM average selling prices.

•EBU revenue decreased 8% and 3%, respectively, primarily due to decreases in DRAM bit shipments and declines in average selling prices for NAND, partially offset by increases in NAND bit shipments.

Operating Income (Loss) by Business Unit

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

Changes in operating income or loss for each business unit for the second quarter of 2025 as compared to the first quarter of 2025 were as follows:

•CNBU operating income increased primarily due to increases in high-value HBM products.

•SBU operating income decreased primarily due to declines in average selling prices.

•MBU operating income decreased primarily due to lower bit shipments and declines in average selling prices.

•EBU operating income decreased primarily due to declines in average selling prices and lower DRAM bit shipments, partially offset by higher NAND bit shipments and manufacturing cost reductions.

Changes in operating income or loss for each business unit for the second quarter and the first six months of 2025 as compared to the corresponding periods of 2024 were as follows:

•CNBU operating income (loss) improved primarily due to increases in average selling prices and high-value HBM products.

•SBU operating income (loss) improved primarily due to increases in average selling prices and manufacturing cost reductions.

•MBU operating income (loss) improved primarily due to increases in DRAM average selling prices and manufacturing cost reductions.

•EBU operating income (loss) was relatively unchanged.

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 second quarter of 2025 were relatively unchanged as compared to the first quarter of 2025. R&D expenses for the second quarter and first six months of 2025 increased 8% and 6%, respectively, as compared to the corresponding periods of 2024 primarily due to an increase in employee compensation and subcontractor expense, partially offset by lower volumes of development and prequalification wafers.

Selling, General, and Administrative: SG&A expenses for the second quarter of 2025 were relatively unchanged as compared to the first quarter of 2025. SG&A expenses for the second quarter and first six months of 2025 increased 2% and 6%, respectively, as compared to the corresponding periods of 2024 primarily due to an increase in employee compensation.

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

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

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. Beginning in the second quarter of 2024, we were able to estimate a more reliable annual effective tax rate and reverted to a global annual effective tax rate method for all jurisdictions. Applying this updated rate to our year-to-date earnings resulted in the tax benefit of $622 million recognized in the second quarter of 2024.

The change in our effective tax rate for the second quarter of 2025 as compared to the second quarter of 2024 was primarily due to changes in profitability and the aforementioned calculation of our tax expense in the second quarter of 2024. The change in our effective tax rate for the first six months of 2025 as compared to the first six months of 2024 was primarily due to changes in profitability. The change in our effective tax rate for the second quarter of 2025 as compared to the first quarter of 2025 was primarily due discrete items 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. The effect of tax incentive arrangements reduced our tax provision by $171 million (benefiting our diluted earnings per share by $0.15) for the second quarter of 2025, $212 million (benefiting our diluted earnings per share by $0.19) for the first quarter of 2025, and $383 million (benefiting our diluted earnings per share by $0.34) for the first six months of 2025, respectively. As a result of the low level of profitability and geographic mix of income, the benefit from tax incentive arrangements was not material for the periods presented for 2024.

Further changes in the tax laws of foreign jurisdictions could arise as a result of the base erosion and profit shifting project, including Pillar Two Model Rules (“Pillar Two”), undertaken by the Organisation for Economic Co-operation and Development (“OECD”). Nearly all European Union member states have enacted the Pillar Two legislation, which will be effective for us in 2025. We do not expect these enacted laws to materially impact our effective tax rate for 2025. On November 27, 2024, Singapore enacted legislation to implement Pillar Two, which will apply to us starting in 2026. While we are still evaluating the impacts, we expect our effective tax rate for 2026 to be in the high-teens percentage range. We also continue to monitor for additional guidance and legislative changes to Pillar Two in the jurisdictions where we operate.

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 related to our operating expenses and other can be found in “Item 1. Financial Statements – Notes to Consolidated Financial Statements – Equity Compensation Plans”: