Verizon at JPMorgan Conference: Strategic Focus and Growth Plans

On Wednesday, 14 May 2025, Verizon Communications Inc. (NYSE:VZ) participated in the 53rd Annual JPMorgan Global Technology, Media and Communications Conference. The company discussed its strategic priorities, including product launches, capital allocation, and the pending acquisition of Frontier. Verizon is focused on expanding service revenue, EBITDA, and cash flow, while also addressing challenges like elevated postpaid churn.

Key Takeaways

• Verizon aims to grow service revenue, EBITDA, and cash flow with a segmented wireless strategy.
• The company is preparing for the acquisition of Frontier and plans significant Fios expansion.
• Verizon confirmed its full-year EBITDA and free cash flow guidance.
• Micron Technology highlighted strong demand for DRAM and NAND, with pricing trends stabilizing.
• Tariffs and trade dynamics are influencing Micron’s market strategy.

Financial Results

• Verizon’s Q1 2024 performance showed a 2.7% increase in service revenue, a 4% rise in EBITDA, and a 37% boost in cash flow.
• The company experienced double-digit growth in consumer gross adds.
• Despite elevated postpaid churn, Verizon expects normalization in the second half of 2025.

Operational Updates

• Verizon is advancing its segmented growth strategy in wireless, focusing on multiple brands.
• The company is accelerating its Fios expansion, aiming to reach 650,000 new locations annually.
• Fixed Wireless Access (FWA) performance remains strong, although short-term net adds may decline due to C-band deployment.
• Verizon is enhancing its private 5G networks, seeing increased demand across various industries.

Future Outlook

• Verizon plans to continue investing in its business, grow its dividend, and pay down debt.
• The company targets 8 to 9 million fixed wireless broadband customers by 2028.
• Verizon’s leverage target is set at 2.25x net secured debt to EBITDA.

Micron Technology Highlights

• Micron reported healthy demand for DRAM and NAND, with pricing trends showing signs of stabilization.
• The company is reorganizing its business units to focus on market segments like high-end computing and automotive.
• Micron’s HBM3E 12-high product is ramping up well, with expectations to dominate demand in the latter half of the year.
• The company is expanding its US manufacturing footprint amid strong customer interest.

Q&A Highlights

• Analysts questioned the impact of tariffs on Micron’s demand and pricing strategies.
• Micron emphasized the importance of its discussions with customers regarding the transition to HBM4.

Readers can refer to the full transcript for more detailed insights into Verizon and Micron Technology’s strategies and market dynamics.

Full transcript - 53rd Annual JPMorgan Global Technology, Media and Communications Conference:

Sebastiano Petty, JPMorgan Analyst, JPMorgan: Good morning, everyone. I’m Sebastiano Petty, and I cover the telecom, cable and satellite space for JPMorgan. I want to welcome Hans Vesberg, Chairman and CEO of Verizon. Hans, thanks for joining us today.

Hans Vesberg, Chairman and CEO, Verizon: Thank you so much for having me. And why don’t I start with the safe harbor? I’m definitely going to say something future looking, so just take a look at the safe harbor and you know what to do. That was the public statement.

Sebastiano Petty, JPMorgan Analyst, JPMorgan: That was a good one.

Hans Vesberg, Chairman and CEO, Verizon: That was a good one, yes. Thank you.

Sebastiano Petty, JPMorgan Analyst, JPMorgan: So now we’ve the important this important stuff is out of the way there. Hans, there’s a lot going on at Verizon these days in terms of the pending Frontier acquisition, evolving product solutions in the wireless, broadband, consumer and business and the brand refresh. So where are you spending most of your time these days? What are your biggest near term priorities as you position Verizon for the next decade plus?

Hans Vesberg, Chairman and CEO, Verizon: So right now, I guess I spend the majority of my time on product and solutions that we’re launching and seeing that they are right to be designed and have the right pull through. Secondly, work a lot with the capital allocation priorities as we’re preparing for our next step when it comes to capital allocation. We will probably come back to that. And thirdly, of course, we are preparing for the pending acquisition of Frontier. I think that’s where I spend the majority of my time because all of them are important for our future, important for our continued growth on revenue and EBITDA and cash flow expansion.

So that’s where I spend majority of my time, together with my team, of course.

Sebastiano Petty, JPMorgan Analyst, JPMorgan: Great. And in early April, you announced the third phase of the Verizon Consumer Group transformation, which is the three year price lock. So a couple of things to touch on there. First, how does the Verizon guarantee value proposition stand out in the marketplace?

Hans Vesberg, Chairman and CEO, Verizon: Yes. So for some of you that remember, now we talk about consumer wireless postpaid first. We came out there in ’twenty three and started to do a lot of research with our consumers. Basically came out with a lot around flexibility, but also control over the bill and getting more value. That was sort of the three themes we saw.

We came out with my plan, which some of you know is a very modular way of selling consumer wireless. Basically, you pick whatever wireless plan you want for connectivity. Then we have all our perks that you can add all streaming services on wireless exclusive to us. And then you have all the adjacent services from insurance to credit card, the latest high yield savings account with Openbank, all that is sort of what we call the consumer offering framework. And we saw a really good tick up, and I think it’s the fastest growing consumer postpaid product we ever had.

My plan, over 50% of our customers in a very short time have my plan. The next step was sort of what we announced in April was two things. One was the three year price lock on my plan in my home. My home is for broadband very similar to my plan. And then we also had any phone trading guarantee for new and existing customers.

And that was sort of a next evolution of where we are in Consumer Wireless. And we have to say when we came out on the first quarter, we said that we had basically double digit gross adds, and that was April 22. I can continue to say that we have a very good gross adds growth, double digit continues. At the same time, you might remember what I said after the first quarter, our churn on postpaid was elevated mainly because our lost price ups was a little bit higher than expected. And as I said after the first quarter as well, we believe that churn will normalize in the second half of twenty twenty five.

But good traction on the program and the new offerings, which I’m pleased to see. So that’s postpaid wireless performance. But all in all, in a market where the majority of The U. S. Population has a mobile phone, it becomes very important with the right offering and the right service and the right brand together with the best network.

I think that’s how we compete. And I think we’re competing better than ever.

Sebastiano Petty, JPMorgan Analyst, JPMorgan: Got it. And then I guess maybe thinking about why the price lock, why is this the right strategy as you think about the competitive backdrop in think

Hans Vesberg, Chairman and CEO, Verizon: the backdrop was a coincidence that we also, of course, had a little bit of consumer sentiment declining because we had been planning for that for quite a while. So no, it was a good time because we have for a while on consumer postpaid been doing some price increases. As we went into five gs ultra wideband, we saw the performance in our investments. And so we had done some price increases in several places. Together also, we’re trying to get some customers off some old plans because that’s efficiency for both the customer and us.

So it was a good moment to get there. And as said, now we’re 50% on my plan that has a price lock. We still have 50% that doesn’t have it. We also have all our perks that we can continue to grow. We have all the adjacent services.

So we feel that we still have a good way to continue to grow our business, our service revenue on postpaid wireless. Then when we come to prepaid, come to the business side, then we come to broadband, more areas where we have great opportunities to continue to grow and been proving the last couple of quarters that we’re really performing well in those as well. Great.

Sebastiano Petty, JPMorgan Analyst, JPMorgan: All right. So sticking with wireless for a moment here. While there’s been a lot of focus on gross adds and switching, you did talk about the double digit growth in consumer in April continuing. Tony touched upon the performance continued to be strong at the time of the earnings call. Churn has been more elevated than we expected coming into the year.

Part of that’s market driven, but you also said somewhat idiosyncratic as it pertains to the price increase. So I guess help us think about even before the three year price lock launch, gross add momentum had been improving within the business. I guess you had talked about stores, promos, some of that momentum, and then now the price lock perhaps somewhat more additive. So how do we think about the BAU go to market strategy and I guess blocking and tackling in addition?

Hans Vesberg, Chairman and CEO, Verizon: No. I think that on the wireless side, we work very much with segmented growth. We have some eight, nine different brands in order to address the full market on wireless. As you saw, our prepaid brands are doing really well. First quarter was just very, very good.

First time we were really in the green on growth on prepaid. And again, it’s we have a portfolio and a strategy right now that appeals to any segment of the market when it comes to wireless offering, all the way from Lifeline, which is the government subsidized plans to, of course, the ultra premium Verizon plans. And that is the go to market. I mean our new brands like Total Wireless, where we open almost three new doors a day, is, of course, performing well, addressing a segment where you’re seeing between postpaid and high prepaid. So I think we have segmented up all the brands.

We have defined the brand and the segments in a good way, and that we now see it performing well. We have also changed our incentive structures for our distribution. We have done a lot of changes, and that’s why we see the performance improving a lot. And then we add now also the opportunity of convergence happening across the distribution with fixed wireless access and Fios. And nowadays, for of the twenty five years, basically we have also Fios in the stores because for twenty four years twenty four point five years, Fios was sort of separated.

Nowadays, in our ILEC, we can offer both Fios and wireless in the store, which helps a lot with the convergence. And as we said when we reported the first quarter, where we continue to take market share on broadband, the vast majority of all the new broadband customers we had almost 340,000 in the quarter, new broadband customers the vast majority was converged customers. They had wireless or they bought wireless at the same time. So we see this is working. And the great news for us is that we have owners economics on wireless and broadband.

We have owners economics on the wireless, on our fixed wireless access and our Fios. We own the whole network. We own all the fiber. So that’s going to be a competitive advantage in a market where the majority of the customers, business or consumer have mobility and broadband services. And if you can offer the convergence and a good experience on that, that’s going to be the key.

Because ultimately, our focus is to continue to grow our service revenue. I mean this is one of the best subscription based service businesses in the world, I would say. And that’s what our focus is. If we can grow the service revenue, it’s going to fall down to the bottom line. And you see the leverage in the first quarter with a 4% EBITDA growth and a very strong cash flow.

I think it was up 37%. I have many numbers now, but I think that was correct. So you see the leverage coming when the growth is coming. We had 2.7% growth on service revenue in the first quarter. So I think everything comes together in the strategy that we have and the sentiment in the market.

Then we need to execute. There’s a lot of competition out there. Everyone wants to beat us. But I think we’re standing stronger and taller than we have done in a long, long time. And the team is doing tremendous work.

Sebastiano Petty, JPMorgan Analyst, JPMorgan: Great. I think just in closing

Hans Vesberg, Chairman and CEO, Verizon: I went over a couple of things there for you, I’m, yeah, helped you.

Sebastiano Petty, JPMorgan Analyst, JPMorgan: Yeah. Thank you. Yeah. Checking a lot of boxes here on my sheet. So as we think about I think that we came we discussed this yesterday, but I think expectations for churn to get back to BAU levels.

Second half, yes. Yes. And then I think just over time as well, I think Sampath has said, trying to be return to be a leader in the industry in terms of churn. But I guess how do you balance that against the focus you just touched upon in terms of service revenue? Because the three year price lock, while you do have MyPlans selling in some of these good guys from benefit, you do also this industry has relied on price.

How do you balance those two? I guess what gives you the confidence in churn improving in the back half and into next year against your maybe pricing strategy taking rate on legacy plans or what have you?

Hans Vesberg, Chairman and CEO, Verizon: So there are so many levers there included. And we are in very different momentum in different businesses. I mean in consumer, we have, in the last couple of years, basically grow our service revenue with prices, the majority. And volumes has been a smaller portion. Now we’re trying to rebalance that.

On the business side, that’s been basically the opposite. We have constantly added new customers in our business segment over, I don’t know, six, seven quarters, even longer. First quarter was a little bit weaker, but that was a very clear reason for that. We can come back to that. And they have done less of price increases.

On prepaid, we basically have not done any price increases. They were only volume. So you need to balance out what is happening. And something I think need to be important for investors to understand, when you have a segmented growth that we have all the way on the wireless side for consumer, all the way from lifeline to the ultra premium Verizon, they are segmented also what you give to the customers. So the profitability can be very similar on all these.

I mean a prepaid customer is fantastic. They pay in advance and they have some limitation how much they can use. So I think when I think about it, I think about every customer, every connection should be profitable for us. And they should be accretive. And if they’re that, doesn’t matter to me if they’re prepaid or if they’re postpaid or if it’s SMB, etcetera.

The market is very focused on postpaid, enormously focused on that. But for me, my measurement and my team’s measurement is service revenue growth, EBITDA and cash flow expansion. And then net adds on Consumer Wireless is just one indicator along hundreds of indicators that need to manage. But it’s only three that we’re 100% focused and the whole team and the thousands of people at Verizon are incentivized on. And that’s the service revenue growth and then EBITDA and cash flow expansion.

Sebastiano Petty, JPMorgan Analyst, JPMorgan: So adding it all up, we touched on gross add activity in the second quarter, Tanira, your outlook on churn. But you do have guidance

Hans Vesberg, Chairman and CEO, Verizon: Yes, have a guidance.

Sebastiano Petty, JPMorgan Analyst, JPMorgan: Yes, 2025 postpaid consumer postpaid phones ahead of 2024 level. But I guess

Hans Vesberg, Chairman and CEO, Verizon: The guidance is that we’re going to do better, yes.

Sebastiano Petty, JPMorgan Analyst, JPMorgan: Yes, yes. And so I guess

Hans Vesberg, Chairman and CEO, Verizon: I’m not sure that is a strong one, but we’re going to do better, I promise you.

Sebastiano Petty, JPMorgan Analyst, JPMorgan: Okay. Well, there you go.

Unidentified speaker: Let me check the box there.

Sebastiano Petty, JPMorgan Analyst, JPMorgan: I guess just so but higher gross adds, higher churn, but you’re still confidence in getting them. Got it. Okay. Now skipping to broadband, you have accelerated the fiber build pace in Fios to 650,000. Expectation is that level in 2025 and you’re running ahead of plan, I think you touched on the 1Q Why not go even faster?

Is it a function of just lower returns in the Fios footprint versus what you think you can unlock in Frontier?

Hans Vesberg, Chairman and CEO, Verizon: I think on the Fios, we have been running for quite a while on 400,000, four hundred and 50 thousand open for sale every year. Now we’re increased that to 650,000 this year. I think we are disciplined with our capital. We want to see the return on investment on fiber because the fiber return on investment is quite long time given the cost of deploying fiber. What has happened in the last couple of years that first of all, we are more efficient to deploy fiber.

So that means we have reduced the cost. Secondly, we can do more with less. And then the equipment is coming down and the technology is improving. So that’s why we have good return even increasing the $650 OFS. If we would see more opportunities in our ILEC to grow our Fios and with good returns, we will continue or increase for sure.

So it’s a little bit of the machine ramping up. But clearly, the product is great. Our churn is very low on Fios. I used to say when I have churn on Fios somebody is moving to another neighborhood and they need to disconnect. That’s how great the product is.

And so that’s where we are on that. And so we will continue to see the opportunity on Fios. But clearly, the cost economics of deploying Fios is improving. Even though because if you go from Tier one market to Tier two market, of course, it’s more expensive to go to a house in Tier two or Tier three because of the distance etcetera. So it’s going to be more costly.

As the improvements are coming on cost at the same time, then we can start penetrating further out in our ILEC.

Sebastiano Petty, JPMorgan Analyst, JPMorgan: As you think about those cost improvements and if the returns do make sense,

Harlan Sur, Semiconductor Analyst, JPMorgan: pro form a

Sebastiano Petty, JPMorgan Analyst, JPMorgan: for Frontier, would you be willing to accelerate the build even if it means taking leverage higher or using your balance sheet to get

Hans Vesberg, Chairman and CEO, Verizon: there? That’s a good question. I’ve been a little bit stubborn on this one, not commenting much. I go back to what I said when we announced the Frontier acquisition, which we, by the way, I think is fantastic. But we are in the regulatory process for approval.

We’re going to do plus plus remember plus 1,000,000 of OFS a year for sure. But I want to combine everything before I come out to the market, knowing how much I’m to do, what is the capital allocation, what are the revenues we are planning for it and how we’re going to report it. I want to have that in how we’re going to operate. I want that in one package. And that package I will come out with when I’m closer or have better visibility of when this is going to be closed and we’re to have Frontier with us.

So stay tuned, but plus one, not one. It’s plus one. It’s very important with a plus before. So we will come back with that. But clearly, where we’re going to see opportunities, we capture them.

And I always remind people or investors when we acquire the C band spectrum, of course, when you get an asset, you want to monetize it as soon as possible. But it also comes with some responsibilities for guys like me that is just not deploying capital without seeing opportunities increasing for us. So that’s why I want to see all that coming together in one.

Sebastiano Petty, JPMorgan Analyst, JPMorgan: Okay. So 1,000,000 Plus. All right. And so yes, you did also kind of touch on we also did kind of touch on again last night with the MDU launch, your live the MDU FWA launch. So you’re live in 15 markets today and expected to roll that out over the year in both the consumer business segments.

I mean, how meaningful of a contributor could this be, Hans? You know, coupled with the expanded C band coverage, greater emphasis on converged bundles, could we see a reacceleration in total FWA ads as we maybe enter as we go into next year?

Hans Vesberg, Chairman and CEO, Verizon: Yes. So the answer is yes. So our FWA performance has been extraordinary. I mean we have been together with Fios, we have been between 750,000 net adds every quarter now for a long, long time. Meaning we’re taking market share like a lot in the market right now on broadband.

I said already in the third quarter last year that we’re going to have a little bit lower net adds on fixed wireless access because the C band that we’re deploying right now, the mid band spectrum, the priority is mobility. And now that goes to Tier two markets and Tier three markets. That means, of course, there are less there’s a lower volume of open for sale on fixed wireless access when you get there. So it’s more technical than anything else. So we’re going to see a little bit lower.

And that’s we had 339,000 net adds in the quarter. But the things that is now going to be different. First of all, we’re going to continue with the C band deployment. C

All that together, of course, is going to give us an even greater opportunity on broadband and convergence going forward. And then, of course, adding to that frontier when it comes, that’s a very important thing. So fixed wireless access still fantastic NPS. Customer just loves it, how easy it is.

We’re improving the device. We’re improving the qualification. We’re doing a lot still. Churn is higher than Fios because it’s a new product, but we constantly are improving it. So it’s an important product in the portfolio and high well, as I said in the first quarter, very high convergence on fixed wireless access and wireless.

And the main,

Sebastiano Petty, JPMorgan Analyst, JPMorgan: obviously, area of debate, I guess, within the ecosystem is just usage on FWA and taxing the network. Can you remind us what’s the more recent stats I think you guys have put out on

Hans Vesberg, Chairman and CEO, Verizon: So we give out the connection report consumer connection report, something like that. Yes, I don’t remember the name. Every six months. The last one we came out, we talked about broadband growth. The broadband growth in the network is some 6% right now.

A user of Fios or fiber versus user of fixed wireless access, they use equally much. There’s no different. They are the same type of customers. They just have a different view on what type of solution they want to have, which historically people or I’m not sure people, but some believe that fixed wireless access was for people not using broadband. That’s not right.

They use equally much as anybody else. And they have equally many screens. They have equally much computers and gaming at the same time as a Fios user. So that’s so when you see the growth. And of course, the growth what we see in front of us in broadband is we don’t see any super spike again as when you saw some of the gamings, etcetera.

The only thing that can really rock it if we’re going to see some new emerging virtual realities that’s going to take a lot of broadband capacity. We haven’t seen it yet. So that’s how we see on the performance and the growth on the capacity in the network. Remember, we built the one fiber in 2017 to 2022, where basically we have our metro rings across the country taking care of all the capacity needs with our own fiber, which was an important investment we did because that means we have all these economics on all the data traffic going over our network.

Sebastiano Petty, JPMorgan Analyst, JPMorgan: Great segue there to one of my favorite topics, private networks. On the 1Q call that you noted that the private network business continued to scale. I think you talked about a dozen deals were signed in the first quarter. I guess how would you describe the demand from private networks today maybe versus last year when we were on this stage?

Hans Vesberg, Chairman and CEO, Verizon: Way better. I mean we have had for two, three years an increasing funnel of private networks, Also seeing more and more use cases, more industries using private five gs networks all the way from for capacity reasons, security and privacy reasons and low latency reasons. And they’re different in the retail industry than the financial sector compared to manufacturing. All of them have different reasons for it. But as soon as you get in a private five gs network, then usually the CIO or the head of IT of the company starts seeing a lot of new opportunities how to use it.

They are fairly small. The first private five gs networks that you sell is like a WiFi network. But over time, they are growing. And usually, start with one big warehouse. And if it works there, they take it to all warehouses.

And we are in that scaling right now. And then historically, we have had now we’ve some technicality here, but we have had a broken out core network in order to manage it with the five gs standalone, which is the next generation core network, which we basically have for 6070% of our network today, then you can actually do a slice of the network as a private five gs network. Way quicker, more efficient for our customers. It takes instead of weeks to set it up, it can be down to days. So that’s a big difference.

Of course, need the radio elements inside the private network wherever it’s going to be. But so I see that combined with the next generation of Gen AI, where Gen AI sort of today are large language modules being developed in large data centers with an enormous capacity, which of course requires a lot of fiber, etcetera, which we can supply and we talked about that in our AI Connect. But in the next step, I think that many together with me believes that a lot of the gen AI applications that’s going to be enterprise driven, they’re going to sit at the edge of the network because of transport cost, security and privacy. Many companies like Verizon, you want to have it on prem. Whatever you have, you want it on prem.

That could be a third party, but still it’s going to be our data centers. So I think this hangs together the whole way from private fiber network and edge computing. And some of you know that we were very early on, on mobile edge compute. Maybe too early, and I take that responsibility. But I’d rather be too early on something than being too late.

Now we’re sitting in a really good position on monetizing that investment and our assets we have there. And all that hangs together for me. And as we launch AI Connect in the first quarter, we have very much higher activity with our customers and deals at the moment. They are still small and it takes time to do a configurable network for Gen AI or even doing lit up fiber and things like that. But the activity is very high and revenue this is going to be good for our business group because then we get more revenues on the fixed cost base that they have.

Sebastiano Petty, JPMorgan Analyst, JPMorgan: And you’re seeing lit and dark fiber healthy demand in both?

Hans Vesberg, Chairman and CEO, Verizon: Yeah. Good.

Sebastiano Petty, JPMorgan Analyst, JPMorgan: So great set. I mean, the network is the founding of everything you guys offer. Right? I think it’s very core, very important to you. And you are deploying C band 80% to 90% of the planned site this year.

You’re also rolling out five gs advanced features. So I guess just maybe update us on the network road map and how you’re thinking about the capabilities that additional C band capacity, five gs advanced, what opportunities could this potentially unlock for in the coming years?

Hans Vesberg, Chairman and CEO, Verizon: So the C band what we have seen so far when we deploy C band, we have lower churn in those markets. And we have also higher premium mix from our customers. Historically, we started with the Tier one cities because that’s where we get the C band from the beginning. Now we’re in Tier two and going to Tier three markets. We are aiming for 80% to 90% coverage of C band this year.

That means that whoever can calculate that somewhere in 2026, we’re to be 100% done with the C band, which has been an effort and we are ahead of plan with that. So that’s very important. And from a principal point of view, when we do capital allocation of our radio budget, mobility is the number one priority. So meaning that number one for us right now is you see that we get 100% coverage with our C band. And the secondary priority is then we get fixed wireless access opportunities.

We are not at this moment doing certain radio capabilities only for fixed wireless access. That is secondary priority for us. I always get the question when can it be a first priority? Yes, it can be, But not before we have concluded the C band mobility deployment. After that, we’re to see what’s best success based radio capacity investments where they are.

I mean, is it to fill up gaps we have? Or will it be to have more mobility capacity? Or will it be actually to bring in more fixed wireless access customers? And as you might know, we have a target now to 8,000,000 to 9,000,000 fixed wireless broadband customers 2028. So and that includes only us priority mobility and having fixed wireless access as secondary business case.

Sebastiano Petty, JPMorgan Analyst, JPMorgan: So as we’re thinking about so after you get past the 8,000,000 to $9,000,000 if and once you get there, not if you get there. Once you get there, so there could be some success base, but do you think that the from an FWA long term roadmap, do you think that the FWA that core base is still sustainable long term? Or do you see usage or anything like that, they might find a fixed broadband solution?

Hans Vesberg, Chairman and CEO, Verizon: All is built to be sustainable customers. I mean that’s how we designed our network that these customers that we have we expect that they’re going to stay on fixed wireless access. And our capacity is built for that going forward as well. So yes, and clearly, it’s working. The strategy is working.

As I said, the fixed wireless access customer is using equally much capacity as any fiber user. So it’s no different. So we know what they’re using. And we can do forward planning on capacity, which we’re doing five to ten years constantly. And then, of course, involving also efficiency in technology.

Mean, thinking about five gs advanced features. All of them are improving how we can bring more bits to our network more efficiently and bring the totality to a better place.

Sebastiano Petty, JPMorgan Analyst, JPMorgan: Great. And so as we’re wrapping up here and so Verizon reported its highest ever EBITDA in the first quarter of twenty twenty five, up 4% year over year. Also reiterated all your 2025 financial guidance despite declines in consumer confidence. We talked about some pressures in the federal government as well as a fluid business environment. Obviously, a lot changes week to week.

But at the same time, you are leaning in on volume growth, we spent the majority of the conversation discussing here this morning. So I guess help us think about what underpins your confidence in achieving the full year EBITDA and free cash flow guidance. What are the top and bottom line levers to get there? Business EBITDA margins quite strong as And you have some other programs via the voluntary separation program, HCL Tech.

Hans Vesberg, Chairman and CEO, Verizon: Yeah. So we confirmed our guidance when we came out for the first quarter. And I think it’s important to reiterate, we had our best EBITDA quarter ever in the history of twenty five years of Verizon. We made $12,600,000,000 in the first quarter in EBITDA. So the guys are doing a great job getting leverage of the growth we have.

We have been taking out costs throughout the years. And of course, last year we had yet another year when our voluntary separation program was quite big. And also partly our changes in the wireline business where we took out a lot of cost, and that is now proof of it. And then we’re growing 2.7% in the first quarter. So all in all, that is helping us.

And if I look to the rest of the year, we see a good opportunity to continue the growth within the guidance. And then we have more cost out. I would say, when it comes to cost out, we do a lot of generative AI. We have brought very little to the bottom line. We have actually used it to sell more or being more efficient in front of our customers or maybe to some extent more efficient allocating capital.

There’s going to be time also when we start bringing that to bottom line, especially in Customer Care and other areas. So I feel confident on what we’re doing with the cost base and the revenues. And then of course that gives us a free cash flow from operation that is very strong. Last year, it was almost €40,000,000,000 30 9 point something. And then, of course, we have a capital allocation on that, and we will continue to invest in our business.

The midpoint of our capital expenditures this year is $18,000,000,000 We also continue to be very clear with our Board that we want to put them in a position to grow our dividend. We have been growing our dividend for eighteen consecutive years. Last year, that was $11,200,000,000 in dividend. And then we’re paying down debt. And we paid down more than $10,000,000,000 I think $11,000,000,000 debt last year and $1,500,000,000 this quarter.

That’s how we do capital allocation in the best interest of our investors and shareholders. And then when we come to our leverage target, 2.25, we are 2.33x right now of net secured debt to EBITDA. We will have the optionality of buybacks. We just need to remember when we buy Frontier, we take over $11,000,000,000 of debt, which means that we’re going to go up a quarter of notch of leverage. So we need to work that through.

But given the great cash flow generation we have in this subscription based business, I feel very confident that we’ll get there. And we will have a good conversation with the Board when we get there.

Sebastiano Petty, JPMorgan Analyst, JPMorgan: Great. I think that’s a great place to leave it. Hans, thank you so much for joining us today. It’s great to see you.

Hans Vesberg, Chairman and CEO, Verizon: Thank you.

Harlan Sur, Semiconductor Analyst, JPMorgan: Okay. Why don’t we go ahead and get started. Welcome to the second day of JPMorgan’s fifty third Annual Technology, Media and Communications Conference. My name is Harlan Sur. I’m the Semiconductor and Semiconductor Capital Equipment Analyst for the firm.

Very pleased to have the team from Micron Technology here with us. We’ve got Manish Bhatia, Executive Vice President of Global Operations and Sameer Patodia, Senior Director of Investor Relations here with us as well. Samir, we’ll kick it off with Safe Harbor and then we’ll go ahead and kick off the Q and A. Gentlemen, thank you for joining us this morning.

Sameer Patodia, Senior Director of Investor Relations, Micron Technology: Yes. Thanks, Harlan. So we’ll start with the Safe Harbor. We’ll be making some forward looking statements today. Those statements have risks and uncertainties associated with them, so we refer you to the risk factors disclosed in our public filings.

Harlan Sur, Semiconductor Analyst, JPMorgan: Great. Again, thank you for joining us this morning. I’ll kick it off. You’re nearing the end the team is nearing the end of the year May. Coming into the quarter, you had anticipated quarter on quarter bit shipment growth in both DRAM and NAND as excess inventories in the more consumer oriented smartphone PC markets had been cleared, calling for record revenues.

On the gross margin front, the team guided gross margins to decline slightly, 140 basis points to about 36.5% on a higher mix of consumer oriented volumes, obviously, NAND underutilization and lower calendar Q1 pricing trends, which I think have recently turned, obviously offset by strong execution on the HBM front. Since then, DRAM pricing has been strong, both DDR4, DDR5 contract pricing and spot pricing have both been strong. NAND pricing declines have started to stabilize. And so good trends overall over your May. And so much so that at the March, the Micron team did issue a letter to customers indicating your intentions to increase pricing as the team was seeing an increase in unforecasted demand, right, across various of your business segments.

So relative to your guidance in March, I mean, certainly seems like pricing has come in better, but wanted to get your views on how the May has played out so far. All right.

Unidentified speaker: I need to do any? All right, great. Thanks, Harlan. And thank you for hosting us here at the conference and for all those kind of market trend highlights since our last call. I’d say that the you’re right on the trends.

I think we’ve seen healthy demand for both DRAM and NAND. And a lot of it the dynamics have played out much as we had discussed them, not just in the last quarter, but even going back further to some of the trends in terms of strength in data center as well as what we had said before would be a springtime resumption and strength in the consumer markets due to inventories having to having come down over the sort of calendar Q1. We’re not updating guidance at this time. But I will say that the quarter is progressing well. And we are driving price inflection as we had said we would.

And so that’s playing out that’s evolving well. And as we see the trends in the quarter continuing, we are going to be continuing to make our plans for the second half of the year.

Harlan Sur, Semiconductor Analyst, JPMorgan: On the pricing inflection trends, is that more a statement around DRAM because we have seen a strong upward trajectory of DRAM, but does that include NAND as well?

Unidentified speaker: Yes. So we had talked about actions that we had taken back during the December call and actions we were taking from that point on. We’ve continued with some of those supply actions and others in the industry have done similar.

Harlan Sur, Semiconductor Analyst, JPMorgan: That’s right.

Unidentified speaker: And so that has helped with the trajectory of NAND pricing. Perfect.

Harlan Sur, Semiconductor Analyst, JPMorgan: And then I think on the earnings call, you had given us a little bit of a sneak peek into fiscal Q4, right? And off of the and think the view there was that in fiscal Q4, your August, you would see slight improvements in your gross margins with the better pricing trends here in the May, pricing inflection certainly seems like both DRAM and NAND pricing remain on sort of this positive sort of trajectory, at least as we look least as we look kind of near the midterm on a forward basis. Again, you had previously anticipated fiscal Q4 gross margins up slightly, but would seem that the gross margin trajectory in Q4 could be could improve at maybe a slightly better trajectory than what you had laid out in March. I’m not sure if that’s a fair assessment or not.

Unidentified speaker: We’re not providing forward looking guidance in terms of margin outlook. But we’ll say that part of our comments around FQ3 as well as FQ4 around the mix of the business and that pickup in consumer oriented business that we expected for FQ3 and that increase in mix does tend to be lower on the margin side versus say some of our higher end data center products. And so that increase in mix in consumer was kind of the key driver for FQ3 and we’ll kind of provide more commentary relative to forward looking margin structure overall as well as the mix that we expect as we go through the next fiscal quarter and into the second Perfect.

Harlan Sur, Semiconductor Analyst, JPMorgan: We’ll have a lot more discussions around some of your end market segments. But obviously, lot of here a lot of us here in the room are extremely focused on the dynamic of accelerated compute and AI. The Micron team we know has been designed into NVIDIA’s next generation GB 300, which will be starting to ramp in second half of the year. Concomitantly with that, right, the Micron team did start production of your HBM 3E12 high just recently. Maybe you could just give us an update on the ramp, the yield, is it tracking towards expectations?

Yes.

Unidentified speaker: Yes. No, we’re very pleased with where we are with HBM. We know our eight high has been in production for over a year now, has formed a really solid foundation for us. And we started production on 12 high earlier this year. And the progress there has been good.

In fact, we are seeing the we had said before that we expect that the 12i to be the majority of the demand in the second half. Think we can now say that we see the crossover between 12 high and eight high in terms of volume shipments happening in our fiscal Q4. So that’s that trajectory is ramping well. And in terms of yield progress, the learning rate on yield for 12 high is really faster than we had on eight high. So along with that ramp that the ramp up in 12 high as it crosses over in fiscal Q4, I’d say that we’re expecting that we’ll see the 12 high yields to be able to kind of reach that knee in the maturity by the end of CQ3.

So kind of going hand in hand with the ramp. So we’re very pleased with where we are in terms of the progress on the 12.5 production ramp in terms of the process stability as well as the yield improvement.

Harlan Sur, Semiconductor Analyst, JPMorgan: I’m going to go back to kind of the near to mid term environment because in addition to the strong pricing inflection that we’ve seen so far here up through your May, much has changed, especially on the tariff and trade and geopolitical front, right? And as you mentioned, AI and accelerated compute demand trends remain strong, strong cloud, hyperscaler, CapEx spending trends, even in the non AI markets, right, smartphone, PC, general purpose server, memory demand trends have been relatively good. As you guys had predicted two quarters ago, right, demand combined with the discipline of the industry has driven excess inventories down and that’s part of the strength that you guys are seeing. But I think with respect to tariffs and trade, the big question is how much of the strength in near term demand and therefore strong DRAM pricing increases and stabilization in NAND ASPs are due to tariff related pull ins, right? I know one of your large memory competitors recently called out preemptive tariff related demand pull in into the June.

How is the Micron team interpreting the current positive demand and pricing environment, cyclical improvements that you called out back at earnings versus tariff related

Unidentified speaker: So I think the key point there with regard to the demand trends, I mentioned before that we’re seeing healthy demand and it’s playing out much as we talked about with the data center continuing to be strong and with consumer end markets having worked through inventory and we’re seeing that pick up in this May. And so there could be for certain customers some pull ins, but I would say that the bigger trend is that are the ones that we had laid out and forecasted back in our December call playing out largely as we expected.

Harlan Sur, Semiconductor Analyst, JPMorgan: The other side of the potential tariff related dynamics, again a view by a few of your competitors during their earnings call was that these pull ins are potentially pulling from demand in second half of this calendar year and therefore could potentially drive a weaker bit shipment profile. Additionally, end market trends in second half, PC, smartphone, general purpose server forecasts have been are being trimmed, right, by the big Wall Street firms, including our firm. We cut recently cut our smartphone forecast, our PC forecast and our server forecast, a little bit less seasonal, right, in the second half of this year because of tariff and trade related uncertainty. If I recall in the last tariff and trade war back in 2018, ’20 ’19, the semi industry and the memory industry did enter into a downturn coincidentally or not right after the final large round of tariffs that were put in place in August of that year. Are you seeing any indications by your customers that they’re starting to plan for a sub seasonal maybe slightly weaker environment in the second half of this year?

Unidentified speaker: I think we’ve talked about some of the macro and tariff uncertainty and trends and obviously everyone’s having to react to that. But I think the commentary from many of customers, even public commentary, certainly the cloud service providers commentary over recent horizon is for them to continue with their capital spending plans to be able to build out in the data center and continue to invest in their AI solutions businesses. Right. And I think that’s one area that’s reassuring for us with regard to the future data center because so much of our portfolio and so much of our focus is on that area and driving more strength there. On the consumer side, there are just there are a number of different product launches that are still happening.

I think that we’re seeing customers who are really have a new wave of offerings to be able to have, think smartphones and PCs that have native AI capabilities designed in versus maybe over the last year there were platforms that weren’t designed with AI agents in mind and they were trying to be able to add some capabilities. But frankly, reset in terms of the hardware platforms, the amount of memory, the capabilities and the processors, all of that is still I think ahead. So I think that there are still strong demand trends ahead. I think in terms of tariffs, obviously there’s been a lot of different signals and it’s been difficult for everyone, all of you, all of us, everyone trying to part us, waking up every day reading news. I think encouraged by the direction of travel over the last couple of weeks in terms of de escalation on the tariff front.

As far as it impacts the macro economy broadly, of course, as you well, I should say, of course, the semiconductor specific products including DRAM products and NAND products were exempted from the reciprocal and baseline tariffs before and those are part of a Section two thirty two review. So we’ll have to see how that plays out.

Harlan Sur, Semiconductor Analyst, JPMorgan: Post tariff announcements, there was some news around the Micron team reaching out to their U. S. Customers on the potential for passing through tariff related price increases. But on April 12, the President did exempt SSDs, memory modules, chips from tariffs. So I assume that the team has not had to increase prices to your U.

S. Based customers. Number one, is that an accurate statement? And then the second question is what percentage of your overall revenues is for shipments of SSDs and module form factors across The U. S.

Border?

Unidentified speaker: Yes. So we have commented a little bit on the overall pricing trends. You’re right that and I mentioned just a minute ago that the products have been exempted. So there haven’t been tariffs levied at least on our DRAM or our NAND products that are coming into The U. S.

So we’re just keenly watching this 02:32 review to understand what the implications will be. In terms of percent of products that really varies quarter to quarter depending on where our customers’ supply chains are located and how much we provide to them in their in which region where they’re going to be either building out their data centers or where they’re going to be assembling their final products. And we’re focused on understanding the two thirty two review and also trying we actually provided some comments to the commerce departments for that review. Those will be eventually be public.

Harlan Sur, Semiconductor Analyst, JPMorgan: And

Unidentified speaker: we’re trying to make sure that the policy is constructive relative to the administration’s priority to be able to build U. S. Semiconductor manufacturing. And so we’ve been our comments will provide kind of a roadmap of what we think are key ways that this can be enabled or accelerated and not somehow slowing down that semiconductor specific tariffs don’t somehow slow down that initiative.

Harlan Sur, Semiconductor Analyst, JPMorgan: Yes. And maybe as a follow-up to that, the U. S. Administration’s goal has been to fast track a return of manufacturing back into The U. S, right.

And the good news is that the Micron team is well into the $15,000,000,000 expansion of your Boise Idaho fab, right. And can you give us an update here? The original plan was to bring Boise online in 2027. Where are you in this build out? Are you potentially accelerating maybe your plans here?

And have you seen a step up in potential customer commitments right to Micron longer term because of your U. S. Bit supply capability? Yes. So we are in construction in Idaho.

We have three projects really that we’ve S. One is in Idaho

Unidentified speaker: co located with our research and development facility there. So we’ll get the benefits of time to market of our newest technologies as well as some synergies between R and D equipment and manufacturing equipment and R and D engineers and manufacturing engineers. In terms of and then we have a project, a large scale project in New York that’s currently in And then we have another project that we are still discussing with the Commerce Department around modernizing our facility in Virginia, which has been for supporting automotive and aerospace and kind of long life cycle opportunities there. We have had frankly really good response from multiple different customers who are interested in understanding how they can leverage our or be part of our U. S.

Manufacturing supply. And there are multiple reasons for that. Think one of them is the fact that the energy in The U. S. Has the potential to be able to have more green energy here.

So that’s been one of the reasons that people are interested. And then there’s others I think just because of the overall push to be able to have more U. S.-based supply chain even for themselves. Many of our customers, as you know, have announced larger U. S.

Supply chain footprints in the future. And so I think they want to kind of see how they can how we can play into those plans.

Harlan Sur, Semiconductor Analyst, JPMorgan: Before I I’m going to start talking about products markets and overall end market dynamics. But before that, I wanted to open it up to the audience to see if there are any questions out there. If you do have a question, please raise your hand and we’ll try to get a mic over to you as quickly as possible. Any questions from the audience? Okay.

So let’s talk about AI and accelerated compute. Obviously, a big driver of the business, the mix on the accelerated computing data center side for Micron has richened significantly over the past few years. In addition to tariff and trade related dynamics, there has been recent concerns around the potential for AI compute demand normalization, maybe some compute digestion. Although, we have seen we haven’t seen any pullbacks from cloud and hyperscalers on their cloud CapEx spending intentions. And so have you seen any signs indications of a pullback in accelerated compute demand?

In other words, has your HBM TAM outlook, right, greater than $35,000,000,000 for this year changed at all? Yes. So we provided

Unidentified speaker: HPM TAM update during our last earnings call. We typically provide those on those calls. I’d say there’s a lot of moving parts there with regard changes even as late as yesterday on the AI diffusion and how that AI diffusion pullback is going to impact demand. There’s a lot of different moving parts. So we are not going to provide an update at this time, but I will come back to the comment you made, I made earlier that we are seeing robust demand for our HPM product and we’re seeing robust demand for our high end or high capacity DRAM modules as well as expanding demand for our low power solutions for data center.

And we’re encouraged by the capital spending plans of virtually every cloud service provider as well as new entrants into cloud service providers that are trying to build out. I think that’s also goodness for creating multiple vectors of demand and even multiple different architectures. I think the fact that there are going to be different workloads and different applications focus areas for different cloud service providers as they’re coming up, that just gives us an opportunity to go in and leverage the strong capabilities we have across our portfolio. We believe we have the best customers consistently tell us we have the best HBM product, 30% lower power than our competitors for actually even better performance than them. And we have we’re the only ones really shipping low power DRAM into data center applications right now as well.

So across the board I think that heterogeneous set of workloads for data center across expanding number of cloud customers that just plays to our strengths.

Harlan Sur, Semiconductor Analyst, JPMorgan: If I rewind back one year ago, you gave us the update on your HBM3E12 high ramp. If I rewind back a year ago during your June earnings call, you did say at that time that you were sold out on your HBM supply through calendar twenty twenty five and that the majority of that committed supply was locked in from a pricing perspective. One year later, where are you on negotiations for calendar twenty six HBM supply and pricing discussions? I mean, the team’s supply outlook for next year maybe almost fully committed? Yes.

Unidentified speaker: So we’re in discussions right now on 2026, which again is earlier than we are for other products and traditionally. Mean, certainly commands longer lead time in terms of discussion given the criticality it plays into our customers’ roadmaps. And I think the discussions with our customers center around the mix of HPM3E, 12 high, when their platforms are going be ready for HBM4, how our HBM4 will ramp. Mean we think we’re going to have again a leadership product in HBM4, we expect to, and be able to ramp at the very leading edge of our customers’ platform ramps. And so those discussions are ongoing, but we feel very good about where they are as well as really the feedback from our customers has been terrific in terms of how we’ve been able to ramp our HBM3E really.

This time last year was essentially the very beginning. We started production last March, having not had a product in HBM3, had a very little coming from very little learning based, little scale. Where we are today, our customers have been very, very pleased and that gives them the confidence to be able to count on us for their future ramps. We feel very good about our future roadmap.

Harlan Sur, Semiconductor Analyst, JPMorgan: Yes, it’s been a great trajectory, right? You guys did over $1,000,000,000 in HBM revenues last quarter and on track to exit this year based on our estimates at double that rate, right, at roughly about a $2,000,000,000 per quarter annualized run rate. So very, very strong ramp and execution by the team.

Unidentified speaker: Let’s Yes, actually said that both HBM as well as those other categories of high capacity DIMMs and LP. Yes. When you think about each of these, they’ll each be multi billion dollar businesses for in fiscal twenty twenty six.

Harlan Sur, Semiconductor Analyst, JPMorgan: Let’s switch over to data center SSD. We’re seeing, as you mentioned, numerous AI GPU, but also a lot of XPU programs coming into place, right? All these ASIC programs that are going to start to ramp into what we think is a strong second half of the year, right, which would be good for your DRAM memory products, but should be good for your storage solutions as well. And I always tend to remind people that your data center SSD share has gone from 5% to 7% in 2022, ’10 to 12% in 2023 and you exited last year at 15%, right? I think either number two or number three global market share in enterprise SSD.

So strong share gain performance over the past three years. You’ve got your next generation 9,950 PCIe Gen five SSDs out there. What are we going to see your next gen G9 based data center SSDs come to the market? And more importantly, does the team still expect continued share gains in enterprise SSD going forward?

Unidentified speaker: Yes. So you’re right. Thank you for that Harlan. And you always call out our data center SSD execution. I remember even here last year and we’ve been very focused on that.

We think that over the last couple of years, our vertically integrated platforms having our own self designed ASICs so that to go along with the leadership we have in memory and the capabilities that we’ve developed in terms of integrating that together in manufacturing has really played well. And I think our customers also really appreciate the single point to be able to build out their data centers. So for example, being one of the first to be qualified SSDs on the Grace Blackwell platform, right.

Harlan Sur, Semiconductor Analyst, JPMorgan: So I

Unidentified speaker: think as we see the overall data centers getting built out the story has been about DRAM but you’re right to point out that NAND definitely has a role to play and will be expanding. And we are looking to continue to increase from that record level of demand and share that we saw at the end of calendar year 2024.

Harlan Sur, Semiconductor Analyst, JPMorgan: On the last earnings call, you had the team had anticipated data center SSD bits starting to reaccelerate over the coming months with a bit more visibility versus the March earnings call. Would you expect maybe that data center SSD reacceleration to start maybe in the August, your fiscal Q4?

Unidentified speaker: I think we’ll probably give some more color on that later. But I think certainly the actions that we and the rest of the industry took in NAND late last year and into the first half of this year. That should help with overall balance and that should help with inventory clearing across the channel and that will help with healthy provide a healthier environment for all NAND products, including data center SSDs.

Harlan Sur, Semiconductor Analyst, JPMorgan: Maybe you can just give us an update. The team is doing a lot of technology upgrades. You gave us the update on the HBM3E12 high ramp. Your team is starting to ramp your next gen one gamma DRAM EUV based technology. As I just mentioned, you’re starting to ramp your Gen nine NAND technology.

Can you just give us an update on these new technology ramps, yield, cost downs and just more importantly, just overall ramp execution? Yes, I

Unidentified speaker: think both are going very, very well. I think our Gen nine we announced earlier and have progressed well on that one. We’re managing the ramp of that Gen nine in line with demand, right. So we’re trying to make sure that we’re bringing capacity online responsibly, but at the same time feeling really good about where it positions us relative to competition and the capabilities in terms of the NAND device performance we think are best in the industry for that Gen nine. So that’ll help us obviously in high performance applications like data center SSDs.

One gamma we’re very proud of. We just announced that qualification and the initiation of production ramp on our last call and that’s going very well. It is our first EUV node and that’s gone exceptionally well. We actually had I think a very good strategy between our technology development team and our manufacturing teams. We did a lot of pre work to be able to first of all get a more mature EUV tool than maybe some of our competitors started with.

That tool has performed well. And then we used that tool on some of our older nodes, including one alpha and one beta, to be able to ensure that all the different elements of the exposure process and improving the manufacturability of that process would be well wrung out before we got to one gamma. So now as we’re ramping one gamma, we’re focused on normal yield learning and we feel pretty good about where we are with that. And we think it’s going to be I think we’ve talked about that being 30% bit density gain, which we think gives us multiple generations, one alpha, actually one Z, one alpha, one beta, one gamma, we think we’ve been first to market now for different generations and feeling really good about where that positions us for the future.

Harlan Sur, Semiconductor Analyst, JPMorgan: You talk about the 30% power reduction relative to your competitors, 30% better power performance on HBM. And think it has been a big differentiator for the Micron team. As you move to One Gamma, can you give us a sense, are you anticipating a similar, not only power consumption savings, but better performance dynamics on One Gamma? And maybe where does that intersection point come? One Gamma, you’ve got your HBM roadmap here, you’ve got One Gamma, where do you think One Gamma lines up on your HBM roadmap?

Yeah.

Unidentified speaker: We haven’t provided details on which nodes are going to be for our future HBM. Yeah, we’ll do that a little bit later. But definitely feel very good about I think a year ago I mentioned to you that we felt really good about our one beta as the foundation for HBM, And our implementation of high K metal gate, our implementation of various other things in process combined with some of the decisions we made in design and in packaging together to be able to deliver really the best HBM product on the market. A year later, if anything, I think we’re even more pleased as we see competitive offerings now trying to work out at different platforms and trying to get qualified at different customers, we feel great about where that is. And I think that just bodes well for all that learning and all that of integrating our high performance product went into the one gamma node and the fine tuning that we’ll have there across our portfolio.

Harlan Sur, Semiconductor Analyst, JPMorgan: China domestic, let’s talk a little bit about the competition. China domestic memory suppliers, we estimate account for about 6%, seven % of total industry DRAM bit supply, mid high single digits percentage of total industry NAND bit supply. In DRAM, I mean your China competitors have been more focused on legacy DDR4 applications primarily to serve the domestic markets, but they are reportedly making some inroads on DDR5. I mean, do you see them at all in the market?

Unidentified speaker: D5 is really a significantly more complex product. We’re on our fourth generation there and we’ve seen the performance requirements continue to step up. And we’re also using LP5 as well now into those high performance applications. So we’re very focused on that on being able to tune our roadmap for that. We do see that the domestic Chinese competitors are becoming players in the market and we do take their presence into account as we make our plans and we do have that their supply model as part of our long term supply demand balance in the industry as we think about it.

But we are really believe that we as we focus on the very highest end applications, the ones that are most demanding in terms of performance, in terms of reliability, in terms of quality and interoperability, the ones that are frankly most difficult for qualifications that provide the maximum value to our customers, those are the ones that we’re focused on.

Harlan Sur, Semiconductor Analyst, JPMorgan: Lots of questions that we get from investors as it relates to the largest memory supplier out there, Samsung, and what happens to HBM supply and demand dynamics when they finally do get qualified on HBM 3e12 high rate. What’s your sense on how the pricing power dynamics may or may not change when they become the third large and qualified supplier of mainstream HBM?

Unidentified speaker: Well, I think what’s important to note about HBM is that the qualification process is longer with just about everyone than it is for standard DRAM products. That’s really not just a function of how complex the product is, but it’s also a function of the cycle time, right? Because you’re not just talking about in a standard DRAM product, putting it on a board and then running a qual, you’re talking about having to go through a long chip on wafer on substrate or COOS process and then often integrate it into a system and then you are able to do the reliability testing.

Harlan Sur, Semiconductor Analyst, JPMorgan: Or maybe even in some cases a full blown RAC skill

Unidentified speaker: solution, RAC system. So that cycle time to do a qualification is substantially longer than standard products. Now couple that with the fact that virtually every one of our customers has announced wanting to accelerate the cadence between ramps of new platforms. So instead of, say, eighteen to twenty four months on new server platforms or PC or smartphone platforms, we’re talking about every 12, they want to come out with a new they’re challenging us, right? Last year was HPM 3e8 high, this year 12 high, next year HPM4, right?

So when you have a shortened cadence and a longer time, it’s going to be just difficult for many providers to be qualified on same platform. So there could be different platforms that different competitors are qualified on. But we think that that shortening of the cadence sort of benefits those who are leading.

Harlan Sur, Semiconductor Analyst, JPMorgan: Got it. I want to talk about something. Back in mid April, the team announced that it was reorganizing its business units to a more market segment focused base structure, right? Four business units, more transparency on your data center focus. Walk us through the rationale and what you will be disclosing on a quarterly basis starting with your fiscal Q4 results.

Unidentified speaker: Sure. Thanks. I think this is really an evolution of the way that our end markets are organizing. And so we wanted to organize the same way. And the high end computing markets were becoming our huge opportunity.

We’ve talked about the long term HBM by itself by 02/1930 being a $100,000,000,000 market opportunity, right? So that’s as big as all of DRAM last year. So we felt like it was good timing to be able to organize around the fact that that high end computing market, HBM, high capacity DRAM modules as well as low power into some of these high end applications or supercomputing AI supercomputing applications. We wanted to have really good focus on that. We then have another segment that’s focused on core data center, which is more enterprise server class.

And then we have a we combine the client applications into one smartphones and PCs and then we have our automotive and embedded business. So we think that we’re organizing to be able to have better market focus, provide maybe more transparency into each of these areas. We will be providing by each of those segments revenue, gross margin and operating margin for those four segments going forward. And I that should give us give everyone better insight into how we’re managing the business, what the opportunities are and how we’re allocating capital between them to be able to really maximize our opportunities.

Harlan Sur, Semiconductor Analyst, JPMorgan: Yes. Manish, Samir, thanks for the great participation today. Always appreciate the support. Yes. Thank you.

Unidentified speaker: Thanks, Harlan. Appreciate it.

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