>> Announcer: Live from San Francisco, it's theCUBE.
Covering Micron Insight 2019.
Brought to you by Micron.
>> Welcome back to San Francisco, everybody.
We're here at Pier 27
covering the Micron Insight 2019,
I'm Dave Vellante with my cohost David Floyer.
Sanjay Mehrotra is here,
he's the president and CEO of Micron.
Sanjay, great to see you again.
>> Good to see you too, good to be back.
>> So, I love the show, because you guys
are a highly technical company,
you can get down in the weeds
and talk about nanometers and cycles
and things like that, but we're here
talking about technology, how it's changing
people's lives, I mean, you see that
as your mission, so, tell us,
you're on, what's new in this event?
>> You know, new at this event
is so many new products that we announced today.
You know, you see Micron, I'd like to say that
Micron 41 year old, but it has a new heartbeat.
And you see that new heartbeat coming
through new innovations, new products,
we announced several new solid-state drive solutions,
breakthrough speeds, portable SSD,
we announced our Authenta security solution,
as well as demonstrated a test platform,
a platform for deep-learning algorithms
to be applied, enabling inference at edge.
So you see Micron continuing to focus
on driving high-value solutions,
engaging deeper with the ecosystem,
engaging with our customers to understand
what are the pain points of the future,
and bringing innovative technology solutions.
And of course, during the course
of last year, you know, while it was a year
where memory pricing went down substantially
because of some excess supply versus demand,
but Micron actually in that year
produced the second-best year in the history
of the company, and during the year,
we also had the second-best year
for free cash flow for the company.
>> Yeah, about $13 billion in only 12 months.
So I want to get into some of that,
but before I do,
our industry, and you know this well,
has marched to the cadence of Moore's Law
for decades and decades.
That has been the innovation engine,
it no longer is.
You talked about that on your panel today.
The innovation engine is now data,
applying machine intelligence and AI
and machine learning to that data,
scaling with Cloud, now the Edge comes in,
so a whole new innovation cocktail.
I wonder if you could comment on that
in terms of what it means for your business.
>> So, yes, in terms of innovation,
challenges you to a more slow scaling,
but also, the workloads that are there today
driving the AI of the future
require not the solutions of yesterday.
They require new, innovative architectures,
I like to call them "bespoke processors", right?
Like you have a new custom suit that fits
a particular individual, now,
a bespoke processor is there to actually meet
the needs of the specific workloads.
But what is important is that
as these new innovations,
new architectures, proliferate
through the ecosystem, memory and storage is key,
because the trends of AI, after all,
are about drawing deeper insight
and creating greater value from all the data
that billions of devices, the IoT devices
are creating around the world.
So, tremendous support should be
for memory and storage.
We are focused on bringing solutions
with DRAM, with Flash, that meet the needs
of our customers in terms of performance.
We announced today the highest clocking speed
for our Ballistix DRAM, you know,
a delight to the gamers.
But we also announced new SSDs
for enterprise application,
we announced a 3D XPoint, X-100,
solid-state drive, with the fastest
in the industry kind of performance,
so, these are the kind of things we are focused on.
Yes, technology is getting more complex,
in NAND, we went from 64 layers to 96 layers,
and next year going to 128 layers.
On DRAM's side, we are the first ones
to introduce the 1Z technology node
in the industry, and actually first ones
to start shipping already in production
in the industry.
This 1Z DRAM node has the smallest feature size.
So these are new, exciting things
that are happening at Micron.
>> I mean, Sanjay's right that you see
all these alternative processes going on,
you see companies, you know, tech companies,
building their own custom silicon, right?
>> So, yeah, so we're seeing these sort of
hybrid solutions being put together,
and seeing the rise of new players
competing, like ARM, for example,
now taking a more and more important part in that.
But I'd like to just ask one question
on 3D XPoint, that was an interesting one.
How are you going to get volume in that?
Is that going to be through working
with some of these other vendors?
Because Intel have just combined it
with their processors, essentially.
Are you looking at new ways that you can
use that at the lower end to get volume up?
>> Yeah, where's that fit in your overall strategy,
that'd be great to understand.
>> Certainly, as we said, in the memory hierarchy,
3D XPoint fits in very nicely between NAND
on one end and DRAM on the other end.
3D XPoint, as a persistent memory,
gives the benefit that it has capacities,
chip densities that can be higher than DRAM,
yet, it has performance that is close
to DRAM and much faster than NAND.
And it has the persistence,
the non-volatility that NAND has as well.
So you can imagine, with those
kind of attributes, it will have
exciting new opportunities in the future,
but these new technologies do take several years
before they become mainstream technologies.
This is still early innings for 3D XPoint technology.
We engage with the ecosystem partners,
with the customers, in terms of understanding
how this will fit in best
in terms of their data center applications.
This is what we have started working on,
this is where we announced the product,
and we will of course continue to evolve
the roadmap of 3D XPoint technology.
I just also want to touch upon what you said,
that yes, you do see that compute now,
is not being just done like yesterday,
with CPUs, yes you do have a variety
of solutions, CPUs, GPUs, TPUs, E6 and FPGAs,
and yes, some of the social media giants.
And those tech giants that are driving
innovation in various industry segments
including transportation, they have
their own silicon, to address
their deep-learning requirements.
And that creates new opportunity for us.
This is what we call putting silicon back
into Silicon Valley.
The silicon is driving the innovations today
that are coming out of Silicon Valley,
regardless of world end market segment,
and memory and storage is very much at the heart,
is at the center of those.
>> So, I want to re-talk about vertical integration.
One of my early business heroes was Al Shugart,
when I was a young pup at IDC.
He educated me on the importance
of vertical integration in his market,
which of course was spinning disk drives,
heads, media, et cetera, and that was
a game-changer for that emerging company
at that time, Seagate.
What's your philosophy on vertical integration
and how does it affect your business
and your customers?
>> So, vertical integration enables us
to bring value to our customer,
bring greater value to our customers.
We have a massive scale of manufacturing
that is built on a very comprehensive,
and actually, the world's most unique,
technology platform.
Now, taking this vertical integration
of the technology platform,
manufacturing scale of more than
six million wafers a year,
and extending it to controller
and form their expertise,
deep packaging expertise to bring
high bandwidth, DRAM memory solutions
for data center applications,
as well as solid-state drives,
and multi-chip managed NAND solutions
for smartphone and automotive applications.
These are just examples of how we are
leveraging our vertical integration,
extending it into controllers and firmware
and packaging and assembly capability,
to really bring a diverse and expanded
product portfolio to the market,
to address the market's needs,
from the Cloud to the Edge.
And now, we are extending
our vertical integration capabilities even deeper.
We have gone from silicon to solutions,
and now, also, silicon to solutions,
to system and software,
working with customers to understand,
what are the hardware and software intricacies
involved that can help bring out even more
power from the memory, as they look at driving
their deep-learning algorithms for training
as well as for influence, right?
So this is the vertical integration
built on the most unique platform of technologies.
Nobody else in the world has DRAM,
NAND, and 3D XPoint.
Now, building vertical integration on this
gives us tremendous differentiated opportunity
to bring value to our customers.
>> Control more value, more,
being able to leverage data.
I want to ask you about your business,
you mentioned a record,
number two free cash flow year for you guys,
two summers ago, I listened to you
at the Wall Street Analyst meetings,
and you were very much aware of the demand
and supply pending imbalance that was coming,
and you said at the time, "we're going to manage
through that much better than we have historically".
It reminds me of airlines, when you go,
when you fly now, there's no empty seats.
And you've done a masterful job,
the stock price has stayed up.
Now, granted, you've reduced share count.
But how have you done that?
What is the new discipline that has allowed you
to navigate through those icebergs?
>> So we are focused on accelerating
our technology development,
we are focused, on, for example,
the technology development exhibition
I mentioned earlier, being the first
to the market with 1Z DRAM,
which has the smallest feature size, right?
That ability to accelerate technology development
and deploy it in production,
to meet our customer's needs,
gives us the ability to manage
our cost-reduction ability as well.
So Micron has actually,
in terms of cost reductions,
on a year-over-year basis,
has led the industry both on the DRAM side
as well as the NAND side.
This has contributed to stronger
financial performance of the company,
during 2019, where prices came down
due to some excess supply in the industry,
and yet, Micron, due to its healthier cost position,
was able to produce better financial results as well.
Another very important element is
increasing the mix of high-value solutions.
Increasing the mix of SSDs and managed NAND
for mobile applications as well as bringing
more high-performance memory, DRAM memory,
to the benefit of our customers.
High-value solutions, cost positioning,
technology acceleration, these have been
the elements that will give us
a long lasting advantage in terms of continuing
to weather the potential ups and downs
in our industry.
And yes, we are proud of the fact
that unlike in the past, when an environment
like what we experienced in 2019,
with respect to price declines,
Micron would have had major challenges.
Micron actually delivered, as I said,
the second-best year in terms of revenues,
profits, as well as free cash flow.
And I want to highlight that we narrowed
the gap with our competitors.
We narrowed the gap with our competitors
in terms of EBITDA Margin, again, as a result
of a stronger, more diversified high-value product
portfolio and our cost-reduction capabilities.
>> Yeah, and you've also done a great job
communicating to Wall Street.
So, my last question, I know you got to go,
is, is around Tech for Good.
You know, Marc Benioff's been really
front-and-center on this, you said
that our job is to make lives better.
Of course, I still say your job
is to increase shareholder value as well,
woe is the CEO who misses four quarters
in a row but then points to Tech for Good.
At the same time, new workers, millennials
expect Tech for Good, how do you see those
fitting together, what's your philosophy there?
>> We are very passionate at Micron
that it is important for us
that we support the communities
that we work in, where our team members live in.
Yes, we want to drive for betterment
of humanity through bringing the benefit
of our technologies and products,
and of course, you see your lives change
with the benefit of more memory and storage,
whether it is in your smart home,
or your smart phone, or all of the benefits
that you are getting from advances in technology today.
But we also absolutely have
a social responsibility, going from customers
to communities, really making sure
that we are a good corporate citizen.
So, at Micron, philanthropy is important.
During this year, Micron foundation
is matching our team members' contributions,
and through that, through our team member
contributions as well as our match,
we have given $2.5 million to the communities.
During the course of the year, we have also
supported several new initiatives
related to STEM education as well as
basic human needs, again, in all the countries
and sites where Micron has team members.
And actually, Micron foundation
has given $11 million during our fiscal year 2019
for supporting various causes
toward basic human needs as well as
advancement of science, technology,
engineering, and math.
And most importantly, Micron team members
worldwide have contributed 165,000 hours
in community giving, volunteering activities.
And we are trying to continue to take
our engagement with the community
to the next level.
I consider it very, very important,
and our responsibility, that it's not only
about producing best business results,
but we need to help our communities
and people in need get to the next level
of betterment as well.
And as part of this, diversity and inclusion
and equality is a very, very important initiative
at the company as well,
and we are making tremendous progress
in that aspect as well.
>> That's a great story, Sanjay,
thanks so much, I know you're super busy,
you got a bunch of customers to see.
You're an awesome CEO and doing a great job,
really appreciate you taking the time
to come on theCUBE, thank you.
>> Thank you for being here with you today.
>> Dave: Thank you, our pleasure.
Fantastic.
All right, thank you for watching, everybody.
We'll be right back with our next guest,
live from Micron Insight 2019,
you're watching theCUBE.
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