North America Equity Research

01 July 2021

Overweight
Micron Technology MU, MU US
Price (30 Jun 21): $84.98
Solid Guide With Tight DRAM/NAND Supply Into
Price Target (Dec-21): $140.00
2022; Strong Demand Across ALL End-Markets;
Reit OW
Micron reported strong F3Q21 (May quarter) revenue/EPS in line with prior Semiconductors & Semiconductor
commentary driven by better DRAM and NAND pricing amid a strong and broad- Capital Equipment / IT Hardware
based demand environment. F4Q21 (August quarter) guidance was above Harlan Sur AC
consensus that reflects continued strong pricing that is driving solid sequential (1-415) 315-6700
harlan.sur@jpmorgan.com
revenue growth (10% Q/Q at the midpoint). Demand continues to be strong and
Bloomberg JPMA SUR <GO>
broad-based and the team has increased its 2021 DRAM/NAND bit demand
Bill Peterson
growth outlook. In line with our earnings preview, Micron continues to expect
(1-415) 315-6766
supply to remain tight in both DRAM and NAND through CY21 and into CY22. bill.peterson@jpmchase.com
In terms of Micron’s manufacturing ramps and cost performance, Micron is Peter K Peng
ramping its 1α DRAM and 176L NAND, which we expect to drive outsized cost (1-415) 315-8327
reductions in FY22 on a like-for-like basis. However, Micron is anticipating some peter.k.peng@jpmchase.com
cost headwinds from product mix (e.g. DDR5 in DRAM and SSDs in NAND) and J.P. Morgan Securities LLC
investments in the supply chain (COVID mitigation costs) that will likely result in
overall DRAM cost-downs being near the lower end of their long-term cost-down Key Changes (FYE Aug)
range (mid- to high-single-digits % cost-down per year) in FY22, which should Prev Cur
Adj. EPS - 21E ($) 5.87 5.94
prove to be conservative as the team has executed well on prior technology node
cost-per-bit reductions, and a large part of the cost increases are coming from a Quarterly Forecasts (FYE Aug)
mix shift into higher value added (i.e. higher ASP) products, which are positive for Adj. EPS ($)
GMs. Nevertheless, considering solid cost downs overall and our expectation of 2020A 2021E 2022E
continued strong pricing trends, we anticipate Micron driving strong gross margin Q1 0.48 0.78A 2.85
expansion over the next several quarters and into next year. Longer term, the team Q2 0.45 0.98A 2.94
Q3 0.82 1.88A 3.18
is planning to insert EUV in DRAM in the 2024 timeframe resulting in higher Q4 1.08 2.30 3.46
capex spending in FY21 and likely over the next few years. In conjunction with FY 2.84 5.94 12.43
the quarterly results, Micron announced the sale of its Lehi Fab to Texas
Style Exposure
Instruments for $1.5B in economic value ($900M for the sale of the fab to Texas
Instruments and $600M in value of select tools that will be retained). Based on our
expectation that Micron and its competitors will remain disciplined in adding
supply, we remain positive on the fundamental outlook into next year. We
increase our FY21 estimates and maintain our above-consensus FY22 earnings
estimate and remain OW the stock on a strong supply/demand outlook into CY22.
We continue to see significant upside in shares from current levels.

 Strong May quarter results on robust DRAM and NAND pricing

environment. F3Q21 revenue of $7.42B (up 19% Q/Q, up 36% Y/Y) was
above the high-end of original guidance and vs. consensus/JPMe of
$7.21B/$7.40B on strong DRAM and NAND pricing. DRAM and NAND
revenues increased 23% Q/Q and 10% Q/Q, respectively. GM of 42.9% was
above consensus/JPMe (42.0%) on strong pricing trends. OPM came in at
31.9%, resulting in EPS of $1.88 (vs. consensus/JPMe of $1.72/$1.76).

Sources for: Style Exposure – J.P. Morgan Quantitative and Derivatives Strategy; all other tables are company data and J.P. Morgan estimates.

See page 10 for analyst certification and important disclosures.

J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that
the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single
factor in making their investment decision.

www.jpmorganmarkets.com
This document is being provided for the exclusive use of CHRISTOPHER Olson at JPMorgan Chase & Co. and clients of J.P. Morgan.
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harlan.sur@jpmorgan.com

Price Performance Summary Investment Thesis and Valuation

 Our Overweight thesis is based on memory fundamentals
remaining solid in the midterm, and management’s focus
on improving margin profiles across business segments
(particularly in its NAND segment) should drive better
profitability.
 Longer term, the company’s increasing product and end-
market diversification should reduce revenue/earnings
volatility and also position the company to do well in
markets (handset) that require multiple types of memory.
YTD 1m 3m 12m
Abs 13.0% 1.0% -1.8% 65.0%  Micron should benefit from secular trends in mobile
Rel -1.4% -1.2% -10.4% 26.3% DRAM, which should help it reduce volatility to
commodity DRAM.
Company Data
Shares O/S (mn) 1,154  After the Elpida acquisition, we believe Micron will be
52-week range ($) 96.96-42.25 positioned well to benefit from secular trends in mobility,
Market cap ($ mn) 98,066.92 networking, and cloud computing.
Exchange rate 1.00
Free float(%) 99.8%  New technology, divestiture of non-core assets, and cost-
3M - Avg daily vol (mn) 18.78
3M - Avg daily val ($ mn) 1,585.7 cutting efforts should help it improve gross margins and
Volatility (90 Day) 45 profitability in the coming quarters.
Index S&P 500
BBG BUY|HOLD|SELL 30|5|0  Our Dec 2021 price target of $140 assumes that Micron
Key Metrics (FYE Aug)
should trade at ~10x C2H22E earnings power of ~$7 on an
annualized basis ($14). At 10x, Micron would trade in-line
$ in millions FY20A FY21E FY22E
Financial Estimates
with the historical range of 8x-12x.
Revenue 21,435 27,625 37,098
Adj. EBIT 3,003 6,174 15,059 Performance Drivers
Adj. EBITDA 8,653 12,317 21,209
Adj. net income 3,235 6,843 14,189
Adj. EPS 2.84 5.94 12.43
BBG EPS 2.75 5.61 11.08
Cashflow from operations 8,306 12,190 17,769
FCFF 259 2,845 6,436
Margins and Growth
Revenue growth (8.4%) 28.9% 34.3%
EBIT margin 14.0% 22.3% 40.6%
EBIT growth (59.3%) 105.6% 143.9%
EBITDA margin 40.4% 44.6% 57.2%
EBITDA growth (32.7%) 42.3% 72.2%
Net margin 15.1% 24.8% 38.2%
Adj. EPS growth (55.1%) 109.6% 109.1%
Ratios
Adj. tax rate 9.4% 6.8% 8.0%
Interest cover 44.6 67.7 117.2
Net debt/Equity NM NM NM
Net debt/EBITDA NM NM NM
ROE 8.5% 16.4% 28.2%
Valuation
FCFF yield 0.3% 2.9% 6.6%
Dividend yield - - -
EV/Revenue 4.5 3.4 2.4
EV/EBITDA 11.1 7.7 4.2
Adj. P/E 30.0 14.3 6.8

Source: J.P. Morgan Quantitative and Derivatives Strategy for Performance Drivers; company data, Bloomberg Finance L.P. and J.P. Morgan estimates for all other tables. Note: Price history may not be complete
or exact.2

This document is being provided for the exclusive use of CHRISTOPHER Olson at JPMorgan Chase & Co. and clients of J.P. Morgan.
 Harlan Sur North America Equity Research
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harlan.sur@jpmorgan.com

 August quarter guide also above consensus on continued strong pricing trends.
F4Q21 revenue guidance $8.20B at the midpoint (up 10% Q/Q, up 35% Y/Y) was
above consensus/JPMe of $7.85B/$8.03B on strong pricing in DRAM and NAND as
demand across most end-markets continues to be strong - partially offset by modest
DRAM bit shipment growth. GM guidance of 47.0% was above consensus 46.0% on a
continued strong pricing environment in DRAM and NAND which more than offsets
unfavorable product mix and COVID-19 mitigations costs. EPS guidance of $2.30 (+/-
$0.10) was above consensus of $2.17 on higher revenue and margins.

 Demand remains strong and broad-based; CY21 bit demand outlook raised.
Micron is seeing strong demand across its end markets – cloud, mobile, PC,
automotive, etc. as the company discussed at our TMC conference in late May (link).
In cloud, Micron is seeing demand strengthening in the back half of the year while
enterprise demand is also improving. Much of the strong demand is being driven by
memory and storage content gains in areas such as AI, new server CPU with higher
memory channels, mobile (5G), automotive (EVs, ADAS) and industrial. Content
gains in mobile (5G) is offsetting mixed demand (somewhat weaker unit demand in
Asia). It’s worth noting as well that inventory in the channel (e.g. at cloud and mobile
customers) appears to be lean while Micron's own inventory is also lean. Moreover,
Micron and we expect customers to try to increase the levels of safety stock in the
future (a move toward 'just-in-case' vs. 'just-in-time'). Reflective of the strong demand,
Micron now expects 2021 DRAM bit growth demand to be somewhat above 20% (vs
prior expectation of ~20%) and NAND bit growth demand to be in the mid-30% range
(vs prior expectation of low-to-mid 30%).

 Expect tight supply/strong demand into CY22; Memory makers remain

disciplined in adding supply. The team expects supply to remain tight in both DRAM
and NAND through CY21 and into CY22. We believe Micron and its competitors
remain disciplined in adding capacity in both DRAM and NAND. As a result, we and
Micron expect supply to lag demand through the balance of this year for both DRAM
and NAND. Such supply discipline, coupled with a strong demand environment is
supportive of a strong pricing environment at least through the balance of this year and
likely into 2022.

 On track with DRAM and NAND technology transitions and cost

improvements on a like-for-like basis; DRAM EUV insertion in the 2024
timeframe. Looking into FY22, we think bit shipments (and cost downs) can
accelerate as 1α DRAM and 176L 3D NAND become a larger portion of the mix.
Even if pricing starts to moderate in early 2022, we see the opportunity for strong
gross margin performance as a result of Micron driving outsized cost reductions on
a like-for-like basis. However, Micron is seeing some cost headwinds from
strategic product migrations to more advanced and higher-value products (e.g.
DDR5 DRAM, higher density server modules, and SSDs) and investments in the
supply chain (for COVID mitigation costs). For example, in DRAM in FY22
Micron anticipates annualized cost reductions near the lower end of its long-term range
of mid- to high-single-digits % annual cost declines. Longer term, the team is
planning to insert EUV in DRAM (introduction at 1γ node) in the 2024 timeframe
and has placed purchase orders with ASML as part of a long-term volume
purchase agreement, resulting in higher capex (FY21 >$9.5B and capital intensity
expected to increase to mid-30% as % of sales during EUV build-out).

 Micron to sell Lehi Fab to Texas Instruments for $1.5B in economic value. In
conjunction with the quarterly results, Micron announced that it is selling its Lehi fab

This document is being provided for the exclusive use of CHRISTOPHER Olson at JPMorgan Chase & Co. and clients of J.P. Morgan.
 Harlan Sur North America Equity Research
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harlan.sur@jpmorgan.com

to Texas Instruments for $900M while retaining select tools worth $600M (for
redeployment to other Micron or to be sold to other buyers). The sale is expected to
close by the end of 2021. The deal frees up free cash flow and enhances business
profitability. The team realized $75M less depreciation cost (classified as assets held
for sale) in F3Q and expects $20M less depreciation cost in F4Q. Once the sale is
completed, the team expects $20M of underutilization charges to be eliminated in F1Q.

 We continue to see further upside in OW-rated MU shares. With solid execution on

its technology migrations and product portfolio and with expectations of strong
supply/demand fundamentals we continue to see strong margin expansion and earnings
growth in 2022. We remain Overweight MU and continue to see upside in shares.

This document is being provided for the exclusive use of CHRISTOPHER Olson at JPMorgan Chase & Co. and clients of J.P. Morgan.
 Harlan Sur North America Equity Research
(1-415) 315-6700 01 July 2021
harlan.sur@jpmorgan.com

Micron Technology F3Q21 Results and F4Q21 Guidance

In F3Q21, DRAM accounted for 73% of revenue (DRAM revenues up 23% Q/Q),
while NAND accounted for 24% of revenue (NAND revenues up 10% Q/Q), vs.
71% DRAM, 26% NAND in F2Q21.

DRAM ASPs were up 20% Q/Q while shipments increased low-single-digits % Q/Q.
NAND ASPs increased high-single-digits % Q/Q while shipments were up low-
single-digits % Q/Q.

Table 1: F3Q21 (May-Q) Earnings Summary and F4Q21 (Aug-Q) Outlook

$ in millions, except per share data
F3Q21 JPM F3Q21 F4Q21 F4Q21
MU Actual Estimate Diff Consensus Guidance Consensus
Revenue ($M) $7,422 $7,401 $21 $7,217 $8,000-$8,400 $7,849
Q/Q Change 19.0% 18.7% 0.3%
Gross Margin (PF) 42.9% 42.0% 0.9% 42.0% 46.0%-48.0% 46.0%
Op Margin (PF) 31.9% 30.2% 1.7%
Net Income (Pro-forma) $2,173 $2,046 $127
Pro-forma EPS $1.88 $1.76 $0.12 $1.72 $2.20-$2.40 $2.17
Source: Company reports, Bloomberg Finance L.P. and J.P. Morgan estimates. From FY17 Non-GAAP excludes SBC and
amortization).

Cash Flow / Balance Sheet and Capital Expenditures

The company exited F3Q21 with ~$8.3B in cash/investments and generated $3.6B in
cash flow from operations (vs. $3.1B in F2Q21). Total capital investment in F3Q21
for the combined entity net of partner contributions was ~$2.0B (vs. $2.9B in the
prior quarter) and Micron’s adjusted free cash flow was $1.5BM during the quarter.
Micron expects FY21 capex of >$9.5B (up from ~$8.2B in FY20).

Tweaking forward earnings estimates

Our FY21 revenue / EPS estimates move to $27.6B/$5.94 from our prior estimates of
$27.4B/$5.87. Our FY22 revenue / EPS estimates move to $37.1B/$12.43 from our
prior estimates of $36.3B/$12.43.

Investment Thesis, Valuation and Risks

Micron Technology, Inc. (Overweight; Price Target: $140.00)
Investment Thesis
 Longer term, the company’s increasing product (DRAM, NAND, NOR) and end-
market diversification should dampen revenue/earnings volatility and also
position the company to do well in markets (handset) that require multiple types
of memory.
 Micron should benefit from secular trends in mobile DRAM, which should help it
reduce volatility to commodity DRAM. Post the Elpida acquisition, we believe
Micron will be positioned well to benefit from secular trends in mobility,
networking, and cloud computing.
 New technology, divestiture of non-core assets, and cost-cutting efforts should
help it improve gross margins and profitability in the coming quarters.

This document is being provided for the exclusive use of CHRISTOPHER Olson at JPMorgan Chase & Co. and clients of J.P. Morgan.
 Harlan Sur North America Equity Research
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harlan.sur@jpmorgan.com

Valuation
Our Dec 2021 price target of $140 assumes that Micron should trade at ~10x
C2H22E earning power of ~$7 on an annualized basis (~$14). At 10x, Micron would
trade in-line with the historical average of 8x-12x forward multiple. Above-average
upside potential from current levels drives our Overweight rating.

Risks to Rating and Price Target

 Micron competes in extremely competitive markets—operational execution is
critical.
 Any sudden weakness in demand outlook for PCs could reduce our estimates on
DRAM price recovery and memory content growth.
 An aggressive ASP decline combined with lower per gigabit manufacturing cost
reduction could cause us to lower our revenue and earnings estimates.
 Any imbalance in DRAM and NAND supply/demand could cause us to lower our
revenue and earnings estimates.
 Our NAND demand assumptions could change the overall growth for the sector if
we continue to see a further supply/demand disconnect.
 Any macroeconomic-driven demand softness could potentially result in lower
demand for Micron’s products and could impact revenues/profitability profile for
the company.

Appendix I – Valuation Table

Table 2: Memory Peer Companies Valuation Table
$ in millions

Bloomberg YTD Current

Company Name Ticker Currency Analyst Price Change % Market Cap Sales C21E Sales C22E EPS C2021 EPS C2022 P/2021E P/2022E P/B(x)
($ mm)
Micron MU USD Harlan Sur $84.98 13.0% $95,298 $ 30,705 $ 38,485 $ 8.01 $ 13.30 10.6 6.4 2.3x
Western Digital WDC USD Harlan Sur $71.17 28.5% $21,810 $ 18,640 $ 20,959 $ 7.00 $ 10.68 10.2 6.7 2.2x
Seagate STX USD N/A $87.93 41.5% $20,125 $ 11,561 $ 11,453 $ 7.01 $ 7.30 12.6 12.0 41.8x
Toshiba 6502 JT JPY Hisashi Moriyama ¥4,805.0 70.4% $19,689 ¥ 3,206,541 ¥ 3,305,100 ¥ 264.3 ¥ 333.6 18.2 14.4 1.9x
Samsung 005930 KS KRW JJ Park 80700 -0.4% $426,407 267,843,763 295,823,565 5649 7123 14.3 11.3 1.8x
SK hynix 000660 KS KRW JJ Park 127500 7.6% $82,155 41,292,930 52,376,536 13436 20739 9.5 6.1 1.7x
Nanya 2408 TT NTD JJ Park $79.70 -8.2% $8,855 82,555.7 90,336.3 $ 6.22 $ 6.72 12.8 11.9 1.6x
Avg 12.6x 9.8x 7.6x
Source: Company reports, Bloomberg and J.P. Morgan estimates. Note: JP Morgan estimates used for MU while Bloomberg estimates are used for all other companies. Pricing as of the close of
market on 6/30/21. MU’s earnings exclude SBC and amortization.

This document is being provided for the exclusive use of CHRISTOPHER Olson at JPMorgan Chase & Co. and clients of J.P. Morgan.
 Harlan Sur North America Equity Research
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harlan.sur@jpmorgan.com

Appendix II: Financial Tables

Table 3: MU Income Statement
$ in millions, except per share data
Nov ' 1 9 Feb '20 May '20 Aug '20 Nov '20 Feb '21 May '21 Aug '21 Nov '21 Feb '22 May '22 Aug '22 Nov '22
F19A 1Q20A 2Q20A 3Q20A 4Q20A F20A 1Q21A 2Q21A 3Q21A 4Q21E F21E 1Q22E 2Q22E 3Q22E 4Q22E F22E 1Q23E
Total Revenue 23,406 5,144 4,797 5,438 6,056 21,435 5,773 6,236 7,422 8,194 27,625 8,853 9,031 9,387 9,827 37,098 10,240
% Change Y/Y -23.0% -35.0% -17.8% 13.6% 24.4% -8.4% 12.2% 30.0% 36.5% 35.3% 28.9% 53.3% 44.8% 26.5% 19.9% 34.3% 15.7%
% Change Q/Q 5.6% -6.7% 13.4% 11.4% -4.7% 8.0% 19.0% 10.4% 8.0% 2.0% 3.9% 4.7% 4.2%

Cost of Sales - (GAAP) 12,704 3,778 3,442 3,675 3,988 14,883 4,037 4,587 4,296 4,393 17,313 4,436 4,475 4,559 4,648 18,119 4,743
% Change Y/Y 1.6% 14.6% 15.9% 24.2% 14.8% 17.2% 6.9% 33.3% 16.9% 10.2% 16.3% 9.9% -2.4% 6.1% 5.8% 4.7% 6.9%
% Change Q/Q 8.7% -8.9% 6.8% 8.5% 1.2% 13.6% -6.3% 2.3% 1.0% 0.9% 1.9% 1.9% 2.0%

Cost of Sales - (Pro forma - excl options) 12,433 3,739 3,399 3,634 3,945 14,717 3,989 4,182 4,237 4,342 16,750 4,380 4,415 4,503 4,592 17,891 4,687

Gross Profits 10,702 1,366 1,355 1,763 2,068 6,552 1,736 1,649 3,126 3,801 10,312 4,417 4,556 4,827 5,179 18,979 5,497
Gross Margin (GAAP) 45.7% 26.6% 28.2% 32.4% 34.1% 30.6% 30.1% 26.4% 42.1% 46.4% 37.3% 49.9% 50.4% 51.4% 52.7% 51.2% 53.7%

Gross Profits (Non-GAAP, excl. SBC) 10,973 1,405 1,398 1,804 2,111 6,718 1,784 2,054 3,185 3,852 10,875 4,473 4,616 4,883 5,235 19,207 5,553
Gross Margin (non-GAAP) 46.9% 27.3% 29.1% 33.2% 34.9% 31.3% 30.9% 32.9% 42.9% 47.0% 39.4% 50.5% 51.1% 52.0% 53.3% 51.8% 54.2%
Operating Expenses:
SG&A 836 211 223 216 231 881 214 214 230 235 893 240 240 245 245 970 250

R&D 2,441 640 681 649 630 2,600 647 641 670 710 2,668 730 735 740 745 2,950 750

Other Operating Expense 49 (3) 11 10 50 68 9 131 427 10 577 0 0 0 0 0 0

Goodwill Impairment 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
Restructuring Charges 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
GAAP total operating expenses 3,326 848 915 875 911 3,549 870 986 1,327 955 4,138 970 975 985 990 3,920 1,000

Operating Income (GAAP) 7,376 518 440 888 1,157 3,003 866 663 1,799 2,846 6,174 3,447 3,581 3,842 4,189 15,059 4,497
Operating Margin 31.5% 10.1% 9.2% 16.3% 19.1% 14.0% 15.0% 10.6% 24.2% 34.7% 22.3% 38.9% 39.7% 40.9% 42.6% 40.6% 43.9%

Pro-Forma Operating Income (excl. SBC) 7,801 594 542 981 1,252 3,369 965 1,257 2,364 2,952 7,538 3,561 3,698 3,956 4,303 15,518 4,611

Interest Income/(Expense) 77 (47) (46) (51) (50) (194) (48) (42) (46) (46) (182) (46) (46) (45) (44) (181) (43)
Other Income/(Expense), net (405) 90 33 33 18 174 23 14 53 15 105 15 15 15 15 60 15
Interest/Other (GAAP) (328) 43 (13) (18) (32) (20) (25) (28) 7 (31) (77) (31) (31) (30) (29) (121) (28)

Pretax Income (GAAP) 7,048 561 427 870 1,125 2,983 841 635 1,806 2,815 6,097 3,416 3,550 3,812 4,160 14,938 4,469
% Total Revenue 30.1% 10.9% 8.9% 16.0% 18.6% 13.9% 14.6% 10.2% 24.3% 34.4% 22.1% 38.6% 39.3% 40.6% 42.3% 40.3% 43.6%
GAAP Income Taxes (provis ion) (693) (55) (21) (68) (136) (280) (51) (48) (65) (253) (417) (273) (284) (305) (333) (1,195) (358)
Tax Rate 9.8% 9.8% 4.9% 7.8% 12.1% 9.4% 6.1% 7.6% 3.6% 9.0% 6.8% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0%

Non-GAAP Income Taxes (579) (42) (17) (29) (46) (134) (71) (125) (200) (253) (649) (273) (284) (305) (333) (1,195) (358)
Tax Rate 7.3% 7.1% 3.2% 3.0% 3.8% 4.0% 7.5% 10.1% 8.4% 8.7% 8.7% 7.7% 7.7% 7.8% 7.8% 7.8% 7.8%

Other/Extraordinary Items (equity method investees, net

3 of tax) 2 1 3 (1) 5 13 16 (6) 0 23 0 0 0 0 0 0
Non controlling interes t (45) (17) (2) (2) 0 (21) 0 0 0 0 0 0 0 0 0 0 0

Anti-dilutive effect of capped call 25 5 11 13 11 40 11 10 9 10 40 10 10 10 10 40 10

EPS (Pro-forma) $6.31 $0.48 $0.45 $0.82 $1.08 $2.84 $0.78 $0.98 $1.88 $2.30 $5.94 $2.85 $2.94 $3.18 $3.46 $12.43 $3.72
% Change Y/Y -47.0% -83.8% -73.8% -21.7% 91.6% -55.1% 62.0% 116.3% 128.5% 113.7% 109.6% 263.6% 200.7% 68.7% 50.6% 109.1% 30.8%
% Change Q/Q -14.0% -6.5% 82.3% 30.6% -27.3% 24.9% 92.6% 22.1% 23.7% 3.3% 8.1% 9.0% 7.5%
Wt. Average common share - diluted (with capped
1,149
call effect) 1,134 1,144 1,142 1,142 1,141 1,146 1,154 1,154 1,150 1,151 1,145 1,143 1,141 1,139 1,142 1,136

Source: Company reports and J.P. Morgan estimates, Pro-forma estimates exclude stock compensation and amortization of intangibles

Table 4: MU Balance Sheet

$ in millions
FY End - August 1Q20A 2Q20A 3Q20A 4Q20A 1Q21A 2Q21A 3Q21A 4Q21E 1Q22E 2Q22E 3Q22E 4Q22E 1Q23E
ASSETS
Cash & short-term investments 7,588 7,481 8,658 8,142 7,032 7,184 8,349 9,593 10,701 11,650 12,963 14,862 17,883
Accounts receivable, net 3,419 3,049 3,603 3,912 3,691 3,353 4,231 5,388 5,627 6,928 6,789 6,677 6,509
Inventories 4,943 5,208 5,405 5,607 5,521 4,743 4,537 4,814 5,348 5,885 6,495 6,367 6,238
Other 217 238 233 304 285 1,999 1,444 1,444 1,444 1,444 1,444 1,444 1,444
Total Current Assets 16,167 15,976 17,899 17,965 16,529 17,279 18,561 21,239 23,119 25,907 27,692 29,350 32,074

Goodwill, Intangible Ass ets, net 1,561 1,560 1,560 1,562 1,564 1,570 1,578 1,578 1,578 1,578 1,578 1,578 1,578
Property, Plant & Equipm ent, net 29,352 29,647 30,081 31,031 32,229 31,848 32,209 32,189 33,169 34,699 36,179 37,659 39,139
Deferred income taxes 783 764 775 707 726 726 822 822 822 822 822 822 822
Equity method investm ents 0 0 0 0 0 0 0 0 0 0 0 0 0
Restricted Cash 599 586 577 1,048 1,264 1,316 1,399 1,399 1,399 750 750 750 750
Other noncurrent assets 1,187 1,115 1,113 1,365 1,379 1,396 1,374 1,374 1,374 1,374 1,374 1,374 1,374
Total Assets 49,649 49,648 52,005 53,678 53,691 54,135 55,943 58,601 61,461 65,130 68,395 71,533 75,737
LIABILITIES
Accounts payable & accrued expenses 5,408 5,077 5,364 5,817 4,856 4,550 4,427 5,272 5,102 6,265 6,155 5,578 5,455
Deferred Income 447 508 491 548 559 560 738 738 738 738 738 738 738
Equipment purchase contracts 0 0 0 0 0 0 0 0 0 0 0 0 0
Current portion of long term debt 462 237 330 270 273 323 297 297 297 297 297 297 297
Other current liabilities 0 0 0 0 0 0 0 0 0 0 0 0 0
Total Current Liabilities 6,317 5,822 6,185 6,635 5,688 5,433 5,462 6,307 6,137 7,300 7,190 6,613 6,490

Long term debt 4,376 5,188 6,356 6,276 6,356 6,298 6,418 6,418 6,418 6,418 6,418 6,418 6,418
Deferred income taxes
Other noncurrent liabilities 426 1,517 1,546 1,546 1,740 1,741 1,804 1,804 1,804 1,804 1,804 1,804 1,804
Total Liabilities 11,119 12,527 14,087 14,457 13,784 13,472 13,684 14,529 14,359 15,522 15,412 14,835 14,712
Minority Interest 0 0 0 0 0 0 0 0 0 0 0 0 0
Total Stockholders' Equity 38,530 37,121 37,918 39,221 39,907 40,663 42,259 44,072 47,103 49,608 52,983 56,698 61,025
Total Liabilities & Stockholders' Equity 49,649 49,648 52,005 53,678 53,691 54,135 55,943 58,601 61,461 65,130 68,395 71,533 75,737

Source: Company reports and J.P. Morgan estimates

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Table 5: MU Cash Flow Statement

$ in millions
1Q20A 2Q20A 3Q20A 4Q20A 1Q21A 2Q21A 3Q21A 4Q21E 1Q22E 2Q22E 3Q22E 4Q22E 1Q23E
CASH FLOW FROM OPERATING ACTIVITIES
GAAP Net income (loss) 491 405 803 988 803 603 1735 2562 3142 3266 3507 3827 4112
Net cash provided by operating activities:
Loss from discontinued operations
Depreciation and amortization 1306 1371 1426 1547 1487 1549 1557 1550 1550 1500 1550 1550 1550
Amortization of debt discount & financing cos ts
Stock bas ed compensation 72 85 82 89 92 112 98 100 108 108 111 108 435
Loss on extinguishment of debt (42) 0 2 0 7
Equity in net (income) loss es of eqiuty method inves tees , net 0 0 (1) (3) (5) (5) (13) (16) 0 0 (23) 0 0
Non-cash restructuring charges (Gain)
Non-controlling interest 17 2 3 2 21 0 1 0 0 0 0 0 0
Inventory write-down
Loss from write-down/sale of equipment (currency hedges)
Loss (gain) from write-down/sale of investments
Gain from acq. Of Numonyx/MMJ Acq
Other 29 8 (26) 464
Changes in working capital
Receivables (208) 312 (565) (262) 251 282 (873) (1157) (239) (1301) 139 112 168
Inventories 175 (265) (196) (203) 86 543 185 (277) (533) (537) (610) 128 130
Deferred income taxes , net 19 19 (12) 53 (24) 13 (83)
Other current assets
Account payable & accrued expens es 178 79 443 25 (753) (24) 468 845 (170) 1163 (110) (578) (123)
Deferred income taxes
Other (cus tomer prepayments) 3 (7) 38 6 (6) 10 21

NET CASH PROVIDED BY OPERATING ACTIVITIES 2011 2001 2023 2271 1967 3057 3560 3606 3858 4199 4564 5148 6271

CASH FLOW FROM INVESTING ACTIVITIES:

Property, plant and equipment, net of sales (1943) (2056) (1944) (2280) (2738) (3018) (2259) (1500) (2500) (3000) (3000) (3000) (3000)
Proceeds from sales of property, plant and equipment 0 0 0 0 0 0 0 0 0 0 0 0 0
Sale/(Purchas es) of securities 766 355 19 (463) (680) 462 178
Increas e in restricted cash
Acquisitions/dispositions 0
Proceeds from sale of Hynix JV
Cash form acq. Of Numonyx/Elpida
Additions to /Return of Equity method inves tment
Other (12) (9) (27) 5 0 0 0 0 0 0 0 0 0
NET CASH USED IN INVESTING ACTIVITIES (1189) (1710) (1952) (2738) (3418) (2556) (2081) (1500) (2500) (3000) (3000) (3000) (3000)

CASH FLOW FROM FINANCING ACTIVITIES:

Issuance/(Repayments) of debt (165) (261) 1140 (80) (84) (19) (53) 0 0 0 0 0 0
Proceeds from equipment sale-leaseback (97) (26) (16)
Proceeds from issuance of common stock 0 0 0 225
Proceeds from issuances of warrants/Debt
Payments on equipment purchase contracts
Distribution/acquisition to/from noncontrolling interests (738) (6) 0 0 0 0 0 0 0 0 0 0 0
Purchas e of call spread options
Debt issuance costs
Other (inc. Share repurchases starting in FY19) (89) 52 (68) (327) (33) 50 (159) (250) (250) (250) (250) (250) (250)
Net cash from financing activities (992) (215) 1072 (182) (214) 5 (228) (250) (250) (250) (250) (250) (250)
Effect on changes in forex (14) 0 6 19 27 16 1 0 0 0 0 0 0
Net change in cash (184) 76 1149 (630) (1638) 522 1252 1856 1108 949 1314 1898 3021
Cash and equivalents at beginning of period 7190 7006 7082 8231 7601 5963 6485 7737 9593 10701 11650 12963 14862
Cash and equivalents at end of period 7006 7082 8231 7601 5963 6485 7737 9593 10701 11650 12963 14862 17883

Source: Company reports and J.P. Morgan estimates

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Micron Technology: Summary of Financials

Income Statement - Annual FY19A FY20A FY21E FY22E FY23E Income Statement - Quarterly 1Q21A 2Q21A 3Q21A 4Q21E
Revenue 23,406 21,435 27,625 37,098 - Revenue 5,773A 6,236A 7,422A 8,194
COGS (12,704) (14,883) (17,313) (18,119) - COGS (4,037)A (4,587)A (4,296)A (4,393)
Gross profit 10,702 6,552 10,312 18,979 - Gross profit 1,736A 1,649A 3,126A 3,801
SG&A (836) (881) (893) (970) - SG&A (214)A (214)A (230)A (235)
Adj. EBITDA 12,849 8,653 12,317 21,209 - Adj. EBITDA 2,353A 2,212A 3,356A 4,396
D&A (5,473) (5,650) (6,143) (6,150) - D&A (1,487)A (1,549)A (1,557)A (1,550)
Adj. EBIT 7,376 3,003 6,174 15,059 - Adj. EBIT 866A 663A 1,799A 2,846
Net Interest 77 (194) (182) (181) - Net Interest (48)A (42)A (46)A (46)
Adj. PBT 7,048 2,983 6,097 14,938 - Adj. PBT 841A 635A 1,806A 2,815
Tax (693) (280) (417) (1,195) - Tax (51)A (48)A (65)A (253)
Minority Interest (45) (21) 0 0 - Minority Interest 0A 0A 0A 0
Adj. Net Income 7,319 3,235 6,843 14,189 - Adj. Net Income 897A 1,128A 2,173A 2,645
Reported EPS 5.45 2.36 4.95 12.04 - Reported EPS 0.70A 0.52A 1.50A 2.23
Adj. EPS 6.31 2.84 5.94 12.43 - Adj. EPS 0.78A 0.98A 1.88A 2.30
DPS - - - - - DPS - - - -
Payout ratio - - - - - Payout ratio - - - -
Shares outstanding 1,159 1,141 1,151 1,142 - Shares outstanding 1,146A 1,154A 1,154A 1,150
Balance Sheet & Cash Flow Statement FY19A FY20A FY21E FY22E FY23E Ratio Analysis FY19A FY20A FY21E FY22E FY23E
Cash and cash equivalents 7,955 8,142 9,593 14,862 - Gross margin 45.7% 30.6% 37.3% 51.2% -
Accounts receivable 3,195 3,912 5,388 6,677 - EBITDA margin 54.9% 40.4% 44.6% 57.2% -
Inventories 5,118 5,607 4,814 6,367 - EBIT margin 31.5% 14.0% 22.3% 40.6% -
Other current assets 235 304 1,444 1,444 - Net profit margin 31.3% 15.1% 24.8% 38.2% -
Current assets 16,503 17,965 21,239 29,350 -
PP&E 28,240 31,031 32,189 37,659 - ROE 21.2% 8.5% 16.4% 28.2% -
LT investments - - - - - ROA 15.9% 6.3% 12.2% 21.8% -
Other non current assets 4,144 4,682 5,173 4,524 - ROCE 16.7% 6.2% 11.9% 24.3% -
Total assets 48,887 53,678 58,601 71,533 - SG&A/Sales 3.6% 4.1% 3.2% 2.6% -
Net debt/equity NM NM NM NM -
Short term borrowings 1,310 270 297 297 -
Payables 4,626 5,817 5,272 5,578 - P/E (x) 13.5 30.0 14.3 6.8 -
Other short term liabilities 454 548 738 738 - P/BV (x) 2.7 2.5 2.2 1.7 -
Current liabilities 6,390 6,635 6,307 6,613 - EV/EBITDA (x) 7.5 11.1 7.7 4.2 -
Long-term debt 4,541 6,276 6,418 6,418 - Dividend Yield - - - - -
Other long term liabilities 297 1,546 1,804 1,804 -
Total liabilities 11,228 14,457 14,529 14,835 - Sales/Assets (x) 0.5 0.4 0.5 0.6 -
Shareholders' equity 36,770 39,221 44,072 56,698 - Interest cover (x) - 44.6 67.7 117.2 -
Minority interests 889 0 0 0 - Operating leverage 221.1% 704.0% 365.7% 419.7% -
Total liabilities & equity 48,887 53,678 58,601 71,533 -
BVPS 31.71 34.38 38.28 49.66 - Revenue y/y Growth (23.0%) (8.4%) 28.9% 34.3% -
y/y Growth 20.8% 8.4% 11.4% 29.7% - EBITDA y/y Growth (35.3%) (32.7%) 42.3% 72.2% -
Net debt/(cash) (2,104) (1,596) (2,878) (8,147) - Tax rate 9.8% 9.4% 6.8% 8.0% -
Adj. Net Income y/y Growth (50.2%) (55.8%) 111.5% 107.4% -
Cash flow from operating activities 13,189 8,306 12,190 17,769 - EPS y/y Growth (47.0%) (55.1%) 109.6% 109.1% -
o/w Depreciation & amortization 5,473 5,650 6,143 6,150 - DPS y/y Growth - - - - -
o/w Changes in working capital 719 (368) (494) (2,536) -
Cash flow from investing activities (10,085) (7,589) (9,555) (11,500) -
o/w Capital expenditure (9,780) (8,223) (9,515) (11,500) -
as % of sales 41.8% 38.4% 34.4% 31.0% -
Cash flow from financing activities (2,438) (317) (687) (1,000) -
o/w Dividends paid - - - - -
o/w Net debt issued/(repaid) 210 (506) (156) 0 -
Net change in cash 666 400 1,948 5,269 -
Adj. Free cash flow to firm 3,409 259 2,845 6,436 -
y/y Growth (64.1%) (92.4%) 999.1% 126.2% -
Source: Company reports and J.P. Morgan estimates.
Note: $ in millions (except per-share data).Fiscal year ends Aug. o/w - out of which

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Micron Technology (MU, MU US) Price Chart Date Rating Price ($) Price Target
($)
21-Sep-18 OW 46.06 75
156 OW $64 OW $130 19-Dec-18 OW 34.11 55
21-Mar-19 OW 40.13 64
130 OW $55 OW $65 OW $65 OW $100 21-Jun-19 OW 34.15 50
20-Sep-19 OW 49.82 65
104 OW $75 OW $50 OW $70 OW $85 OW $140 30-Jun-20 OW 49.14 70

Price($)
14-Aug-20 OW 46.14 65
78 02-Dec-20 OW 67.08 85
08-Jan-21 OW 79.11 100
52 03-Mar-21 OW 91.09 130
01-Apr-21 OW 88.21 140
26

0
Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr
18 18 19 19 19 19 20 20 20 20 21 21

Source: Bloomberg Finance L.P. and J.P. Morgan; price data adjusted for stock splits and dividends.
Initiated coverage Apr 01, 2004. All share prices are as of market close on the previous business day.

The chart(s) show J.P. Morgan's continuing coverage of the stocks; the current analysts may or may not have covered it over the entire
period.
J.P. Morgan ratings or designations: OW = Overweight, N= Neutral, UW = Underweight, NR = Not Rated
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Integrated Products (MXIM), Microchip Technology (MCHP), Micron Technology (MU), NVIDIA Corporation (NVDA), NXP
Semiconductors (NXPI), ON Semiconductor Corporation (ON), Texas Instruments (TXN), Vishay Intertechnology (VSH), Western
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J.P. Morgan Equity Research Ratings Distribution, as of April 03, 2021

Overweight Neutral Underweight
(buy) (hold) (sell)
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IB clients** 54% 48% 38%
JPMS Equity Research Coverage* 46% 39% 14%
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13

This document is being provided for the exclusive use of CHRISTOPHER Olson at JPMorgan Chase & Co. and clients of J.P. Morgan.
 Harlan Sur North America Equity Research
(1-415) 315-6700 01 July 2021
harlan.sur@jpmorgan.com

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14
Completed 01 Jul 2021 04:22 AM EDT Disseminated 01 Jul 2021 04:28 AM EDT
This document is being provided for the exclusive use of CHRISTOPHER Olson at JPMorgan Chase & Co. and clients of J.P. Morgan.