Market Environment and Business Forecast for Memory

Market Environment and Business Forecast for Memory

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Description: Covers the market environment and includes statistics on US home foreclosures, US bankruptcy filings, unemployment rate, US GDP growth rate. Provides data on memory pricing for both DRAM and NAND, and market capital year to date change. Outlines the financial positions and performance of the major memory competitors.

Micron’s 34nm Flash, Electronics equipment revenue growth by market, and pioneering process technology advancements. .

 
Author: Steve Appleton, Chairman & CEO; Ron Foster, Vice President of Finance & CFO; Mark Durcan, President  (Fellow) | Visits: 1551 | Page Views: 1574
Domain:  High Tech Category: Business Subcategory: Forecasts & Analysis 
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Contents:
2008 Annual Meeting of Shareholders

December 2008

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�2008 Micron Technology, Inc.

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2

Safe Harbor
During the course of this meeting, we may make projections or other forwardlooking 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 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 at http://www.micron.com/certainfactors. 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.

December 2008

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�2008 Micron Technology, Inc.

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3

Market Environment
Steve Appleton
Chairman & CEO

December 2008

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�2008 Micron Technology, Inc.

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4

December 2008

|

Company Confidential

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�2008 Micron Technology, Inc.

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December 2008

100,000

150,000

200,000

250,000

300,000

350,000

50,000

0

Source: RealtyTrack

|

Oct-06

Nov-06
Dec-06 Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07

�2008 Micron Technology, Inc. | 6

Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Apr-08

US Home Foreclosures

May-08
Jun-08 Jul-08 Aug-08 Sep-08 Oct-08

10000

12000

2000

4000

6000

8000

0

December 2008 Source: www.uscourts.gov |

Mar-06 Apr-06 May-06 Jun-06 Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06 Jan-07 Feb-07

�2008 Micron Technology, Inc. | 7

Mar-07 Apr-07 May-07

Jun-07
Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Apr-08

US Bankruptcy Filings

May-08
Jun-08

US Bank Failures
25

20

15

10

5

0

2003
Source: FDIC December 2008 |

2004

2005

2006

2007

2008*
* Through November 2008

�2008 Micron Technology, Inc.

|

8

US Unemployment Rates
8%

7%

6%

5%

4%

3%

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
2008 and 2009 Forecast
Source: BLS (Bureau of Labor Statistics) December 2008 | �2008 Micron Technology, Inc. | 9

US GDP Growth Rate
4.0% 3.5% 3.0%

2.5%
2.0% 1.5% 1.0%

0.5%
0.0% -0.5% 2003 2004 2005
Adjusted for Inflation

2006

2007

2008

2009

2008 and 2009 Forecast
Sources: BEA (Bureau of Economic Analysis) and FOMC December 2008 | �2008 Micron Technology, Inc. | 10

Memory Pricing
DRAM & NAND Spot Market ASPs 6-Month Decline
1 Gb 128Mx8 667MHz DDR2 10% 0% -10% -20% -30% -40% -50% -60% -70% -80% Jun-08
Source: DRAM eXchange - as of 12/5/08 December 2008 | �2008 Micron Technology, Inc. | 11

NAND 1GB 1024Mx8 (MLC)

Jul-08

Aug-08

Sep-08

Oct-08

Nov-08

Memory Pricing
DRAM & NAND Spot Market ASPs 2-Year Decline
1 Gb 128Mx8 667MHz DDR2 20% NAND 1GB 1024Mx8 (MLC)

0%

-20%

-40%

-60%

-80%

-100%

Source: DRAM eXchange - as of 12/5/08 December 2008 | �2008 Micron Technology, Inc. | 12

Market Cap YTD Change
Micron vs. Major Global Customers
Dell HP Sun Micro Nokia Motorola Micron Apple Circuit City

40% 20% 0% -20% -40% -60% -80%

-100%
Jan-08
Sources: Capital IQ Market Cap through December 5, 2008 December 2008 | �2008 Micron Technology, Inc. | 14

Feb-08

Mar-08

Apr-08

May-08

Jun-08

Jul-08

Aug-08

Sep-08

Oct-08

Nov-08

Dec-08

Market Cap YTD Change
Micron vs. Major Global Customers
Micron
40% 20%

Customers

0%
-20% -40%

-60%
-80% -100%
Jan-08
Sources: Capital IQ Market Cap through December 5, 2008 December 2008 | �2008 Micron Technology, Inc. | 15

Feb-08

Mar-08

Apr-08

May-08

Jun-08

Jul-08

Aug-08

Sep-08

Oct-08

Nov-08

Dec-08

Customers � Dell, HP, Sun Micro, Nokia, Motorola, Apple, Circuit City

Financial Performance
Ron Foster
Vice President of Finance & CFO

December 2008

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�2008 Micron Technology, Inc.

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17

Income Statement
Q4-08
Net Sales Gross Profit GM % R&D R&D % SG&A SG&A % Other Op (Income) / Expense Operating Income Net Income Diluted EPS $ $ 1,449 (65) - 4.5 % 167 11.5 % 107 7.4 % (1) (338) (344) ($0.45) $

FY-08
5,841 (55) - 0.9 % 680 11.6% 455 7.8 % 405 (1,595) $ (1,619) ($2.10) $ $

FY-07
5,688 1,078 19.0 % 805 14.2 % 610 10.7 % (57) (280) (320) ($0.42)

December 2008

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�2008 Micron Technology, Inc.

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18

Balance Sheet
Q4-08
Cash & Investments Receivables Inventory $ 1,362 1,032 1,291 $

Q4-07
2,616 994 1,532

Total Current Assets
PP&E Equity Method Investments Total Assets Payables, Accruals, Deferreds Current Portion of Debt Total Current Liabilities

3,779
8,811 84 $ 13,430 $ 1,323 275 1,598

5,234
8,279 $ 14,818 $ 1,603 423 2,026

Long Term Debt
Total Liabilities Minority Interest Shareholder's Equity Total Liabilities and Equity
December 2008 | �2008 Micron Technology, Inc. | 19

2,451
4,387 2,865 6,178 $ 13,430

1,987
4,459 2,607 7,752 $ 14,818

(Most Recently Reported Quarter)
0% -10%

Gross Margins

-20%
Gross Margin -30% -40% -50% -60% -70% Micron FQ 4Q08 Elpida CQ 3Q08 Hynix CQ 3Q08 Inotera CQ Nanya CQ ProMOS CQ Qimonda Powerchip 3Q08 3Q08 3Q08 CQ 3Q08* CQ 3Q08

Micron based on Fiscal Year - others based on Calendar Year * Qimonda based on Cowen estimates Sources: Company Data, Finance Strategy Group December 2008 | �2008 Micron Technology, Inc. | 20

(Most Recently Reported Quarter)
$1,600 $1,400 $1,200 Millions of US$ $1,000 $800 $600 $400 $200 $0
Micron FQ 4Q08 Elpida CQ 3Q08 Hynix CQ Qimonda CQ Powerchip 3Q08 3Q08* CQ 3Q08 Inotera CQ ProMOS CQ 3Q08 3Q08 Nanya CQ 3Q08

Gross Cash Position

Micron based on Fiscal Year - others based on Calendar Year * Qimonda based on Cowen estimates Source: Company Data, Finance Strategy Group December 2008 | �2008 Micron Technology, Inc. | 21

Peer Leverage Comparisons
Total Debt Leverage
Elpida Winbond Hynix

Net Debt Leverage
(10.0)
Elpida Winbond Hynix Inotera Micron

Debt / Capital
0%
Nanya Elpida ProMos Inotera Powerchip Hynix

5.0
27.5

10.0 15.0 20.0

-

10.0

20.0

50%

100%

DRAM

Inotera Micron Samsung Nanya Powerchip ProMos Qimonda NM NM NM NM NM

Samsung Nanya Powerchip ProMos Qimonda NM NM NM NM

Winbond Micron Qimonda Samsung NM

NAND

Toshiba SanDisk NM
Total Debt / CY 2008 EBITDA

Toshiba SanDisk

Toshiba

NM
Net Debt / CY 2008 EBITDA

SanDisk
Total Debt / (Total Debt + Total S/H Equity)

Sources; Goldman Sachs, CY08E EBITDA projections per IBES median estimates; company filings. Market statistics as of 05-Dec-2008.
December 2008 | �2008 Micron Technology, Inc. | 22

Cash Flow From Operations
(Most Recently Reported Quarter)
$300 $200 $100 $$(100) $(200) $(300) $(400) $(500)

Millions of US$

Elpida CQ 3Q08

Micron FQ Inotera CQ ProMOS CQ Hynix CQ 4Q08 3Q08 3Q08 3Q08

Powerchip Qimonda CQ 3Q08 CQ 3Q08*

Nanya CQ 3Q08

Micron based on Fiscal Year - others based on Calendar Year * Qimonda based on Cowen estimates Source: Company Data, Finance Strategy Group December 2008 | �2008 Micron Technology, Inc. | 23

Cash Flow From Operations
(FY 2008)
Market
$350 $300 $250 $200 Millions of US$ $150 $100 94

Micron

276

282

217

243

$50
$0 -$50 -$100 -$150 FQ 1Q08 FQ 2Q08 (74) (117) FQ 3Q08 FQ 4Q08
Market: Elpida, Hynix, Qimonda, Nanya, Powerchip, ProMOS, Winbond Represented by a simple average of competitors respective operating cash flows

(33)

Micron based on Fiscal Year - others based on closest calendar quarter * Qimonda based on Cowen estimates Source: Company Data, Finance Strategy Group December 2008 | �2008 Micron Technology, Inc. | 24

Positioned for Success
Mark Durcan
President & COO

December 2008

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�2008 Micron Technology, Inc.

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26

Company Restructuring

December 2008

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�2008 Micron Technology, Inc.

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27

Cumulative R&D and SG&A Savings
Millions

$800
Today

$700 $600 $500 $400 $300 $200 $100 $0 3Q-07 4Q-07 1Q-08 2Q-08 3Q-08 4Q-08 1Q-09 2Q-09 3Q-09 4Q-09

Cum SG&A Savings
December 2008 | �2008 Micron Technology, Inc. | 28

Cum R&D Savings

Cumulative Fab & Backend Savings
Millions

$6,000

$5,000

Today

$4,000

$3,000

$2,000

$1,000

$0 3Q-07 4Q-07 1Q-08 2Q-08 3Q-08 4Q-08 1Q-09 2Q-09 3Q-09 4Q-09 Cum Fab Cost Savings
December 2008 | �2008 Micron Technology, Inc. | 29

Cum Backend Savings

Growing Scale

All trademarks are the property of their respective companies December 2008 | �2008 Micron Technology, Inc. | 31

Driving 300mm Scale for Global Markets
Utah Virginia Taiwan

Singapore

TECH Singapore
December 2008 |

Virginia
|

IMFT Utah
32

IMFS Singapore

Inotera

�2008 Micron Technology, Inc.

Positioned for Future Growth
(300mm equivalents � wafer starts per week)

100,000

Today

80,000
Inotera

IMFT

40,000

MTV

(200mm)

20,000

TECH (200mm) MIT MJP BOISE

TECH (300mm)

0 FY 07

December 2008

|

�2008 Micron Technology, Inc.

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33

(300mm)

60,000

FY 10

Positioned for Future Growth
(300mm equivalents � wafer starts per week)
MeiYa

100,000

Today

IMFS

80,000
Inotera

IMFT

40,000

MTV

(200mm)

20,000

TECH (200mm) MIT MJP BOISE

TECH (300mm)

0 FY 07

December 2008

|

�2008 Micron Technology, Inc.

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34

(300mm)

60,000

FY 10

Pioneering Process Technology Advancements
Micron vs. ITRS Roadmap
200

Resolution (nm)

100

Logic DRAM NAND

80
60

40

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Semiconductor International, 1/1/2007 December 2008 | �2008 Micron Technology, Inc. | 36

Pioneering Process Technology Advancements
Micron vs. ITRS Roadmap
200

Resolution (nm)

100

Logic DRAM NAND

80
60

40

Micron 32Gb NAND
(34nm)

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Semiconductor International, 1/1/2007 December 2008 | �2008 Micron Technology, Inc. | 37

Micron's 34nm Flash
Scaled Cell Sizes

56nm
@ 3-bits/cell =4181nm2/bit
Competitor A '08

43nm
@ 2-bits/cell =3698nm2/bit
Competitor A & B '09

34nm
@ 2-bits/cell =2312nm2/bit
Micron `09

December 2008

|

�2008 Micron Technology, Inc.

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38

World Leading Process Technology
2004 | 90nm

2005 | 72nm 2006 | 50nm
2007 | 34nm 2008 | 2Xnm

NAND Flash Cross-Sections
December 2008 | �2008 Micron Technology, Inc. | 39

Product Technology Innovation
68nm 1Gb DRAM
Log Cell Size

50nm 1Gb DRAM 34nm 32Gb NAND
Today

DRAM

NAND

December 2008

|

�2008 Micron Technology, Inc.

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40

Steve Appleton
Chairman & CEO

December 2008

|

�2008 Micron Technology, Inc.

|

42

December 2008

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�2008 Micron Technology, Inc.

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43

Market Segments
Camera Phones Digital SLR

Security

Point & Shoot Digital Still Cameras

Scanning Digital Video

PC and Notebook Cameras
TV

Medical Monitors
December 2008 | �2008 Micron Technology, Inc. | 44

Automotive Gaming

Where to Find Aptina Sensors
Applications for 2008 Shipments (Units)

Cell Phones

PC / Notebook Computers Digital Still Cameras
Camcorders Automobiles Surveillance Cameras Handheld Scanners Other

December 2008

|

�2008 Micron Technology, Inc.

|

45

FY 2008 Micron Revenues
by Market
Networking Computing
100% 90% 80%

Server

Mobile

Consumer

AIMM

70%
60% 50% 40% 30% 20% 10% 0% DRAM
Sources: MPG Marketing, Finance Strategy Group December 2008 | �2008 Micron Technology, Inc. | 47

NAND

IMAGING

Total

Electronics Equipment Revenue Growth
by Market
Computing
20%

Server

Networking

Mobile

Consumer

Total

15%

10%

5%

0%

-5%

-10% 2004
Source: Gartner December 2008 |

2005
|

2006
48

2007

2008

2009

�2008 Micron Technology, Inc.

Strategic Initiatives

Innovation
Technology Leadership

Execution
Technology & Product Development

Technology Partnerships
Customer Knowledge

Customer Satisfaction Operations Excellence

December 2008

|

�2008 Micron Technology, Inc.

|

49

Q&A

December 2008

|

�2008 Micron Technology, Inc.

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50

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