Thank you for standing by and welcome to Micron's Post Earnings Analyst Call. At this time, all participants are in listen only mode. After the speaker's remarks, there will be a question and answer session. To ask a question during the session, you'll need to press star one one on your telephone. If your question has been answered and you'd like to remove yourself from the queue, simply press star one one again. I'd now like to introduce your host for today's program, Farhan Ahmad, Vice President, Investor Relations. Please go ahead, sir. Thank you, welcome to Micron Technology's fiscal second quarter 2023 sell side call back. On the call with me today are our Chief Business Officer, Sumit Sadana, our EVP of Global Operations, Manish Bhatia, and our CFO, Mark Murphy. As a reminder, the matters we are discussing today include forward-looking statements regarding market demand and supply, our expected results, and other matters. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from the statements made today. We refer you to the documents we filed with the SEC, including our most recent form 10- K and 10- Q, for a discussion of risks that may affect our future results. I'll now turn the call over to the operator to begin the Q&A session. Certainly. Once again, if you have a question at this time, please press star one one on your telephone. One moment for our first question. Our first question comes from the line of Vivek Arya from Bank of America. Your question please. Thank you for the call back. I had a 2-part question. One is, how far is Micron in terms of your cash cost in DRAM and NAND, and what do you think is the delta for your competitors right now? Maybe one for Mark. Mark, even when I take your inventory write down expectations for May, it still seems like the ending inventory would be, you know, $7 billion-$7.5 billion, that would still be up higher than what you had exiting the last fiscal year. Is that a comfortable range to be in or do you think that still leaves open the room for more inventory write downs in the future? Let me start maybe and then go to the cost question. You know, the question of, you know, we're not comfortable with where inventory levels are and, you know, separate and apart from the write down question, Vivek. We do have elevated inventory levels. We expect, you know, pre-write down the DIOs have peaked in the second quarter, we would expect over time for the supply-demand balance to improve on customer inventories improving and volumes increasing sequentially and eventually working inventory levels down. It's going to take some time and, you know, we would like certainly targets have not changed around, you know, 100 to 110 days of inventories on hand. That's, you know, again, gonna take some time. You know, the question of write downs is a function of the quantity of inventories and the cost, of course, but also pricing. That's why we made the point on the call to indicate that, you know, write down assumptions are sensitive to, you know, those factors, including price. You know, if prices in our outlook are better than expected, then, you know, we'll have, you know, less write downs of inventory, potentially even less in the third quarter. If inventory or price projections worsen versus our current view, we could have larger write downs, for example, in the third quarter, maybe the fourth quarter. It just depends on the, you know, the shape of the recovery, and we have a certain view which is in, you know, which is incorporated in the write-offs that we took. Okay. Vivek, on your first question, about cash costs, I can take that. It's Manish. You know, we've, you know, we've said that we're not yet at cash costs for either DRAM and NAND. Really the underutilization actions that we've taken have really been, you know, around managing the overall supply-demand environment, but managing our inventory, and trying to, you know, manage our supply to come down in line with demand that we see. You know, with regard to, you know, competitors, I can't really, you know, really comment other than to say, and we've given some disclosures in the past about how our, you know, technology leadership, you know, 1α and 176-layer last year, has definitely helped us to become very competitive in cost. We feel good about where we are and where our cash cost position would be relative to others as well. If I could quickly, follow up. Mark, I know it's never a simple question, but, you know, modeling your gross margins past Q3 is quite challenging. Any rough guidelines you could, you know, give to us, so that we at least have some kind of boundary conditions on how to model gross margins for the next several quarters? It's a good question, Vivek, and, you know, anticipating the question I did in the other call, make an effort to provide a profile on gross margin. Of course, it's as we just discussed, it's difficult because at these levels of profitability and, you know, the gross margins will be very sensitive to pricing assumptions and cost actions such as underutilization. I, you know... You know, with that qualification, you know, we did say, you know, if you, if you look at our reported margins, we would expect the 2Q to be the trough. Then on lower inventory charges in third quarter, we expect a sequential improvement. Then, you know, in the fourth quarter, as mentioned, based on our current pricing assumptions, we would have a small or no write-off. Then, of course, as the underutilization charges, they weigh on, you know, the fourth quarter and first quarter and then, you know, improve, you know, gross margins will then improve through the year. That's on reported. If you, if you strip out just the write-downs in the second quarter and third quarter, the second quarter would be 7.3% gross margin. The third quarter would be -7.5%. Clearly that profile is down. Then, you know, and that's just, you know, your, you know, that's just a function of the pricing environment and again, the cost of underutilization, which includes period costs. Now, with this view of pulling those charges out, those, and, you know, write-downs out, under this view, we would trough in the second quarter, then we would begin to improve off these low levels, you know, as we get volume leverage on our period costs, as the underutilization effects play through. Most importantly, as customer inventories begin to improve and inventories begin to come down, and the supply-demand picture begins to improve. You know, clearly the, supply-demand balance and supply coming out of the system and, in concert with volumes increasing sequentially is an important part of the recovery here. Just wanted to make a quick clarification on the pricing comment as well. As Manish said, the pricing is not close to cash cost, you know, in the last couple of quarters, Q2, Q1. In the guidance that we have provided in Q3 with the pricing that we have assumed there and the pricing that trends we are seeing in the market, particularly NAND, definitely close to cash cost for Q3, and getting closer in terms of DRAM as well. Just wanted to highlight that cash cost is obviously different from variable cost. The variable cost is much lower than cash cost because certain cash costs are fixed in nature. Wanted to just provide that clarification. Thank you. One moment for our next question. Our next question comes from the line of Vijay Rakesh from Mizuho. Your question please. Yeah. Hi, just a quick question. Just going back on the inventory side. As you look out, exiting May quarter, given the incremental $500 million of write-downs, and I know you mentioned 25% wafer start cuts now, and the CapEx tweaks, I guess. Would you expect inventory exiting the quarter to be closer to that $7 billion, lower $7 billion range or? A follow-up. Yeah. On a dollar basis, we would expect inventory levels to remain elevated for some time, but begin to come down, you know, through 2024. But again, this depends on, you know, it depends on the, you know, nature of the recovery and, you know, and we do expect bit shipment volumes to increase through the year and, you know, inventory days certainly to on a pre-write off basis to come down and then on a dollar basis eventually begin to come down. Got it. Then on the write-downs between the February and the May quarter, just wondering what would be the split between DRAM, NAND, DRAM and NAND? In DRAM is the write-down that you're taken more on the DDR4 or DDR5 side? Since you'd expect some DDR5 demand to probably pick up into the back half, so might be some benefits from that. Any color there? Thanks. We just report these write-downs at the corporate level and, you know, given how we run the business, on precedents and other factors, so we don't break it down by technology or by BU. Thank you. One moment for our next question. Our next question comes from the line of Sidney Ho from Deutsche Bank. Your question please. Thanks for taking the question. I'm still trying to figure out the under your utilization charges you are embedding in the fiscal third quarter guidance, try to bridge the gross margin from Q2 to Q3, excluding that inventory write down, you talk about, maybe down 15 percentage points. Is there any color you can provide just for fiscal Q3? I know we talked about $900 million for the full year. Yeah. We're just providing the full year. you know, Or I just provided the full year. If you give me a few minutes, maybe go to the next question, I can maybe give you a little bit more detail, but let me work that out. Okay. The reason I ask that, just to give you background, is because if I look at that down 15 points, let's assume half of that $900 million is included in fiscal Q3, that's already 12 points of margin difference. That implies the ASP has not really declined that much, but I'm not sure if I'm, where I'm missing. Maybe a second question while you look at that, are you still expecting to have production cuts now 25% instead of 20% through the end of this fiscal year? Are there any plans to go beyond the current fiscal year? Yeah, let me maybe answer your first question. I've already got the answer on the first one. Of the $900 million, not quite half of it is in the third quarter. We've got amounts split between some second and some fourth. As it relates to, you know, we've not commented on utilization beyond 2023. Sanjay mentioned on the call that we'll have to evaluate it based on market conditions and, you know, so forth. Yeah. That's right. Okay. The plan is still through this year. Sidney, one thing I do wanna clarify is that the underutilization charge that Mark mentioned, a portion of it is going to be in the write-down amount inclusion- Yes As well. just let you know, just that is a piece that, you know, you have to take into account and. Yeah. Just to be clear, and I think I mentioned this on the main call, that the reason the proportion is higher to the total underutilization charge is because of that write-down accounting and its effect. Part of that $500 million of write-down is this. It's the underutilization charges. Part of the $500 would include utilization also. Those higher costs. Okay. 'Cause utilization underutilization creates higher cost inventory. By definition, as you're writing that inventory down, part of that charge would be that underutilization related cost. Got it. Got it. Maybe a quick follow-up, if I, if I may. If you exclude the inventory write-downs, can you say whether DRAM gross margin is negative in fiscal Q3? At what point does it make sense to cut further production or completely stop production? probably not realistic, since you want to maintain your share. I mean, we are not giving out specific gross margin breakout, breakdown between DRAM and NAND, particularly, you know, with all of these charges that we are talking about related to underutilization, inventory, write-down, et cetera. Definitely we'll provide more color when we report results in due time. Having said that, you know, broadly speaking, our goal is to certainly keep flat bit share, add customers and to not drive the pricing down to gain share. Just we are a follower on price, and we try to just keep our bit share flat and manage our business carefully. Sidney, one more thing that Mark mentioned on the main call was that the gross margins, excluding the impact of the write-downs in Q3, was 7.5% -. Obviously the DRAM margins are a lot better than NAND. That is something that we can say, while we are not providing you the details and split between the DRAM and NAND gross margins. Sidney, one other, just one other thing. On the, on the underutilization charge, which I mentioned, that's inclusive of costs that are absorbed in inventories and also period costs. Just keep in mind that if you're then translating what portion of that goes into the write-down, it's clearly the only the portion that's related to the inventory costs. Just wanted to make sure that distinction was noted. Thank you. Our next question comes from the line of Harsh Kumar from Piper Sandler. Your question please. Yeah. Hey, guys. Thanks for letting me ask a question. I was just curious, very roughly, you know, what is the price difference between DDR4 and DDR5 right now that you guys are seeing? Then also maybe you could help us think about how much of your DRAM revenues- Is DDR5 right now and, you know, how much do you think or when do you think the crossover will occur for you guys? Yeah. In terms of DDR4 versus DDR5, we still have a healthy premium between DDR4 and DDR5. DDR5 does sell at a premium. The premium is bigger in the data center than it is in the client space. Both data center and client, DDR5 is going to continue ramping through this current and next calendar year. We expect crossover to happen in both segments around mid-calendar 2024 from a bit perspective. The crossover will happen earlier on a revenue basis, but will happen around mid-2024 on a bit basis between the two. Understood. Thank you, guys. Thank you. One moment for our next question. Our next question comes from the line of Ambrish Srivastava from BMO. Your question please. Hi. Thank you. Excuse me, Mark, I know you've been very helpful in answering all these questions on the inventory. I had a couple of clarifications. At the, at the beginning of your prepared remarks, you said this is not due to obsolescence. Then did I get it right, that in the fiscal third quarter, there will be $300 million included in that from the $1.4 billion dollar right now? Yeah. The reference to the $300, Ambrish, was, you know, the $1.4 creates lower cost inventories. Mm-hmm. The 300 was in reference to the benefit associated with that lower cost inventory sell through. In other words, had we not written it down, we would have $300 million less income in 3Q, versus since we pulled those inventory costs forward into 2Q, we now have $300 million higher income in 3Q. Got it. It's not necessarily... That's separate. That's separate, of course, from. Yes. The inventory charge in 3Q is the $500 million. That's an incremental inventory charge. Got it. The $1.4 and $500, the charges that you have taken now, we should continue to see benefit of that, right? If this inventory is not being, is not going obsolete, you said there's no risk of obsolescence then. Correct. It's permanently lower cost inventory. Yeah. Got it. Over the period that we sell. Yes. Yeah. It'll move through and pass on it, as per the terms in the business. Got it. You'll call it out explicitly, right? Every quarter then, you get the benefit, correct? I mean, we haven't decided. Like, we'll see how the business proceeds. Okay. Sorry, just on the -7.5 number that you gave for fiscal third quarter, is that inclusive of the benefit from the $300 million? Because you said strip out everything and fiscal third quarter. No, I just said that's stripping out the write down. Okay. Got it. Got it. Then I had a quick one for Sumit on the CapEx side. Sumit, this is a question I'm sure you get, we all get, you know, what happens to your competitiveness as you push out your nodes? What's the right way to think about it in terms of specifically on the DRAM side? I'll have Manish answer that question. Sure. Sure. you know, Ambrish, I think we gave some good color on the call about the progress that we are making on our both of our new technology nodes that we announced last year, 1β for DRAM and 232-layer for NAND, and feel very good about what those nodes are gonna be able to deliver in terms of, you know, bit per wafer gain over the prior nodes, both of which were also good nodes. We feel really good about the intrinsic technology capability. now the, you know, the yield ramps that we have been able to demonstrate are, you know, reaching targeted yields faster than prior nodes, really faster than any nodes in our history. We feel very good about our ability to demonstrate technology capability. Now what we're preparing to do is to enable those, both of those technologies across a broad portfolio of products. For example, in 1β, you know, we talked about in our prepared remarks the LPDDR5 parts that's going to be generating revenue for us later this year, but we're also going to be utilizing that technology across DDR5 and compute, across High-Bandwidth Memory, graphics, et cetera. We're kind of getting ready to use that really strong node across the portfolio. Similarly in NAND, you know, we've started in client SSD, and we'll move the 232-layer into mobile, into data center, as we go. We feel very good about that. As we look forward to, you know, the next generation nodes, for example, 1γ, making very good progress on 1γ. You know, in particular, that's the node where we're gonna introduce EUV. We've actually already taken delivery of, I believe we've mentioned before, of our first production EUV tools in Taiwan. We've actually already started using those tools to some degree on limited production in our 1α, and it's already within, you know, just a couple of quarters of having landed the tools. Demonstrated the ability to match yields with our multi-patterning immersion technology on 1α that's been in production now for a couple of years. Really, really good progress on EUV, you know that, you know, gives us confidence that when we introduce 1γ, it will also be a strong introduction with good, you know, inherent technology capability for, you know, bit per wafer gain and cost reduction, as well as is gonna ramp predictably and provide a strong cost reduction for across the portfolio. Okay, thank you. Thank you. One moment for our next question. Our next question comes from the line of Conor Inkerman from BNP. Your question please. Yes, thank you. Two quick ones if I may. Just, I was hoping you could discuss your China exposure bar by product category. My understanding is that you're primarily tied to mobile, if you perhaps rank order the remaining segments, it would be very helpful as we think about the pending recovery in China? Yeah. I mean, we definitely have a good deal of business in China. As you said, mobile customers, very strong center in China for mobile OEMs. We also have a very strong automotive business there. As you know, EV vehicle growth. Not EUV. E.V. vehicle growth. Those would be expensive cars. That was expensive cars. EV vehicle growth is really high in China. The penetration is very high. The uptake is very high in these cars, especially at the medium to higher end, have a lot of electronics, semiconductor components in them. We have a good position. As you know, we are worldwide market share leaders in automotive, we continue to have a good position there as well. Of course we have customers on the client side, as well as on the data center side, over a broad range of customers. We are pretty diversified across many different segments. We expect that as the China recovery gains momentum after the reopening, we do expect that there will be some demand uplift coming from China later in calendar 2023. That's helpful. Thank you. If I may, for my second question, you, Mark, you indicated 2024 CapEx would decline from 2023. Perhaps maybe this is a question for Manish, but is it fair to suggest your implicit outlook is that CapEx will be all brownfield or upgrades, and then you would achieve projected bit demand, which should recover in fiscal 2024 through the inventory on your balance sheet, unless maybe demand were to recover faster than you currently expect? If you could just discuss that a bit more in color, that'd be very helpful. Thank you. Sure. You know, as we, you know, we have taken multiple levers that to be able to reduce the supply. You know, we've reduced CapEx and WFE in particular, as we talked about more than 50% for FY 2023. We've said that for 2024 it'll be even lower. We've also, you know, reduced utilization within the, within our facilities. The last one is we've held inventory or holding inventory on our balance sheet. As we look forward into 2024, you know, the first thing we'll do is bring our inventories down, and that'll help us to be able to meet demand and, you know, keep up as the market increases, as bit growth increases that we see, that we talked about, occur, you know, our inventories will come down. As we start to feel, you know, comfortable that we're, you know, we have a trajectory to reach our inventory targets, of course, we can increase our utilization rates to be able to increase supply as well. CapEx for, you know, supply growth would be the kind of the next lever and the last lever. Really right now, even in 23, the CapEx that we have, the WFE that we've put to work has been primarily, actually more than primarily, I'd say exclusively for technology transition and technology learning on these two new nodes that I mentioned. That'll be, you know, what we'll, you know, we'll be focused on even as we go through 2024, is bringing the benefits of the new technology to the product portfolio, whether that's 1β or whether that's, you know, 232-layer. Very clear. Thanks. Thank you. One moment for our next question. Our next question comes from the line of Mehdi Hosseini from SIG. Your question please. Yes, thanks for taking my question. A couple of follow-ups. I'm just looking at quarterly CapEx trends throughout several cycles, and I come up with an estimate of $4 billion annualized CapEx just from maintenance, just what it would take to kind of run your utilization rate at 70%-80%. This is obviously making a broad guesstimate, but is the $4 billion annualized maintenance CapEx in the ballpark? I don't, Mehdi, I don't know that we've really, you know, kind of given a definition. I think, you know, different folks have different definitions about what maintenance CapEx, you know, involves. I don't think we're really prepared. Let's go with the, maintain- They're sort of. To zero If you think about, you know, the CapEx and the way we're, you know, the elements that we have, the big buckets are of course, you know, WFE, which primarily is for technology transitions. When implemented the way we typically have, that does provide bit growth. The technology transition WFE does provide bit growth. That's the primary source of the bit growth that we would target within our supply. There's the facilities requirements that we have for, you know, implementing those, for implementing those technologies and adding the new equipment. Those tend to be, you know, a little bit lumpier and, you know, you do those sort of well in advance of when you, when you need them. In fact, you know, I think we mentioned that the mix of our CapEx in the second half of this year is moving more towards, you know, construction is becoming increasing part of our in the second half of the year. In fact, more than double, more than twice what it was in the first half of the year. You sort of starting to prepare clean room space for the future. Then we have the assembly test and, other R&D and other areas that we have that are to be able to either, provide us with our, with good cost reductions on, you know, for our managing our assembly test costs or to provide R&D capabilities for the future. These are kind of the big buckets that we typically define our CapEx in. Maybe the CapEx is not really like a consumable. It's mostly it is for technology transition, product enablement and advancing to more advanced nodes, which is giving you better cost and better production. More bit. More bit. You shouldn't think that just for maintaining the bit production, we need to invest in CapEx. Gotcha. Okay. I was just trying to get a sense of where net cash would go to as I try to forecast free cash flows. Okay. Just looking beyond the current environment, obviously there's a lot of moving parts with the write-off and underutilization charges. Let's say February of calendar 2024, Q2 FY 2024, and you have your, let's say some of the DDR4 that are cost down, and then DDR5 that is at a premium off of a DDR4. If all equal, even if prices were to go sideways, given this inventory adjustment, if prices were like stable, you should be able to have a better margin profile excluding all the one-time charges. Yeah, Mehdi, we're not providing, you know, specific guidance that far out. We, and we will as we get closer to the date and the market situation becomes clearer. We, we did give you a profile on, you know, how to look at the back half of this year and expected improvement on gross margin through 2024, assuming that all these factors we laid out move in the direction that we expect. As you, as you point out, you know, particularly if you're talking about second quarter 2024, some of the write-downs that would occur in third quarter, that lower cost inventory would be passing through in the second quarter of 2024. Can I ask a clarification question? Do you mind if I just have a quick follow-up? Let's say- Go ahead. Thank you. Let's say February of next year. As you think about DDR5 premium for both PC and server application, would that be off of a like a market pricing for DDR4, or would that be off of a cost-adjusted DDR4 that you have? Yeah. I mean, I think, a lot depends on the market environment and competitive behavior. Generally, obviously, DDR4, as you know, versus DDR5, tends to be a bigger die, more expensive at the module level as well because it has further integration at the module level compared to DDR4. It's higher ASE, but also higher cost. Those are some of the factors that come into play. Like you said, I mean, the DDR4, DDR5 transition is going to be taking place, and there is, more inventory in DDR4 than there is in DDR5. A lot more DDR5 deployment in the future comes in as new purchases, from our customers. That's another thing to look at. I think broadly speaking, I think you have a number of data points that we have provided to you know, which include our bits bottoming in fiscal Q1 of this year, our before write-down days of inventory peaking in fiscal Q2, our data center revenue bottoming in fiscal Q2, customer inventory is improving. When you zoom out of all of this, we've also told you know, that looking at 2025 calendar year, we expect record TAM in that year. We do expect that, looking out multiple quarters and into 2025, there is going to be a very substantial amount of growth that we are expecting in that timeframe. In the, particularly in the late 2024, 2025 timeframe, and obviously continuing to focus on significant improvements in profitability and trajectory of free cash flow in the interim from here to 2024. Got it. Thank you. One other thing. Oh, go ahead. Sorry. Oh, go ahead. Sorry. Just one other thing, you asked about DDR5, Mehdi. Our 1 β technology is optimized for, you know, DDR5, in terms of the architecture and the technology. We feel very good about what that will eventually position us for as the market transitions. Got it. Thank you. Thank you. One moment for our next question. Our next question comes from the line of Brian Chin from Stifel. Your question please. Hi there. Good afternoon. Thanks for taking the question. Maybe a two-parter on sort of demand. I don't think too many people have really asked about that, but was the lion's share of the reduction in the calendar 2023 memory, the demand forecast, is that related mainly to data center? What is your also underlying assumption for data center bit demand growth in calendar 2023? Sort of the second part of that is, does your expectation for a mid-single-digit decline in the calendar 2023 PC TAM, is that a sell out or a sell in figure? I ask because sell in sounds like it could be weaker than down mid-single-digits, and I think sell in ties more into kind of activity levels at OEMs. Yeah. I mean, this is definitely a good question. We focus on a lot of these dynamics with our customers on an ongoing basis. In the last three months since our last earnings call, we definitely have been continuously assessing, as we always do, the level of inventories our customers have and its impact on demand for the near-term planning over the next several quarters. The degradation in our calendar 2023 outlook for DRAM and NAND came as a result of the assessment of the inventories, particularly in the data center, and also the pace of progress of inventories. The inventories have been improving. It's a matter of the rate and pace of that improvement that we had to adjust for in our TAM. Also the extent of the pullback in growth estimates for both PC units as well as smartphones. Smartphones going from low single-digit increase to low single-digit decrease in units in calendar 2023 over the last three months. On the PC side, yes, mid-single-digit decrease, that puts the PC units, and this is more of a sell-through comment, puts the PC units at a level that is very consistent with the level they were at pre-COVID in 2019 from a global PCs unit sales perspective. That's how we think about the PC business and, you know, certainly different customers have different amounts of channel inventory, so their own sell in versus sell out rates will be different. Our demand expectations are based on a bottoms up view of what we are feeling our customers' sell out is going to be, because, sorry, sell in is going to be into the channel, so that's going to determine the consumption of DRAM and NAND. Okay. Yeah. Okay. Okay. Great. That makes sense. Maybe just a quick thing, tying in technology kind of separate, but in terms of mix, I know you wouldn't wanna be too specific about, you know, percentages and crossover, et cetera, but when next year would you kind of plan for wafer inputs to really begin to shift toward 1β and 232-layer technologies? I know, you know, it may become more observant, you know, once you're kind of out of some of the utilization charges and et cetera, right? You know, FIFO inventory, et cetera. I'm wondering if there's a particular point in next year that you kind of anticipate that to start to pick up some inertia. It's too far out, Brian, right? Like, at this point, I don't think it's worthwhile, but like you said, as demand picture improves, we will have more clarity on it. We just have to see time play out and as we turn back on the utilization, and that is currently being implemented, we will also ramp 1-beta at that time when the demand improves. Okay. That's fair enough. Thank you. Thank you. One moment for our next question. Our next question comes from the line of Srini Pajjuri from Raymond James. Your question please. Thank you, Mark. I'm just trying to figure out the cash flow for next quarter. Obviously, you got some help from working capital in the February quarter. If you could maybe help us, you know, if you're expecting some more similar benefit from working capital in the next quarter or two, I think that'll be really helpful. Yeah. I, I think, listen, on free cash, I think it's helpful to maybe step back and, you know, it, this has been such a sharp and sudden downturn, you know, we know, we know all the factors and we've been aggressively and with even greater intensity through the fall, taking actions, CapEx reductions, cutting operating spend, lowering utilization, you even heard some additional actions announced today. You know, we've also, over the past several months, used our balance sheet to bolster liquidity and make sure that, you know, we're making the best long-term decisions for the business. You know, that sort of gives some backdrop as to where we are. I mean, our actions are helping improve the financial picture from what it would be otherwise. You know, it's clear that we need the broader market to recover and more specifically, more supply to come out of the system. On free cash flow, we do expect free cash flow to improve from here, slightly as going 2nd to 3rd quarter, as reductions in CapEx are partially offset by weak operating cash flows. You know, we have low volumes and challenging pricing. Yeah, that's weighing on operating cash flow as the benefits of the receivables have waned and the inventories remain elevated. You know, over time, though, we see free cash flow improving sequentially, by sustaining our capital discipline, and importantly, improving operating fundamentals. Specifically, we do see shipments continuing to increase from here. As we've talked about, customers replenish inventories. Inventories begin to decline across the industry and channel. Supply-demand balance to improve and pricing to revert to more sustainable levels. It's not sustainable where it is. Between our actions and a healthier industry, we see fundamentals improving and we're certainly focused on returning to positive free cash flow within quarterly positive free cash flow within fiscal 2024. Got it. It doesn't look like you're assuming your inventory levels to decline on an absolute basis in the May quarter. Right. I mean, the sort of elevated inventory levels are, you know, in part contributing to this, you know, free cash flow use that we have. You know, we're certainly reducing CapEx and spend and other things to improve the situation. We do expect slight improvement in free cash flow in the third quarter relative to the second, but it is still negative, significantly. Got it. Thank you. One question on the mechanics of the underutilization, maybe for Manish. As we go through the next few quarters and as, you know, demand starts to recover, just curious if you expect, you know, pretty much all of the 100% of the underutilized capacity to come back or, you know, at what point, you know, some of the capacity becomes permanently impaired or moved to the next node, I guess. As you bring that back, is there any incremental CapEx that we should be aware of? Sri, I'm glad you asked that. It's actually definitely one of the considerations that we have when we think about underutilization is, you know, as we implement these new technology nodes, we can utilize some of this, you know, idled equipment to be capital efficient as we implement the next generation nodes, right? You know, that's always a balance that we're thinking about. I wouldn't think of it in terms of any sort of impairment. You know, I don't think that we're in that window. Our reuse node to node is very good, so I don't think that, you know, idled equipment ends up getting impaired. That's not a first order consideration. The ability to utilize some of the equipment to be a little bit more efficient as we transition to new nodes, because as we mentioned, new nodes could provide new product capabilities, whether that's higher performance products or as we mentioned, you know, DDR5 capability or others. You know, we're trying to make sure we balance the whole picture on, you know, utilization, CapEx and demand for new technologies, you know, across our portfolio. I guess as you bring that capacity back online, is there any incremental CapEx, Manish, that we should be aware of in the short term? Not specifically for bringing online, but it depends on how we have multiple options of how we bring that capacity online in order to implement, you know, you know, new technology nodes or to just replace the capacity that we had taken down before. Got it. Thank you. Thank you. This does conclude the question and answer session as well as today's program. Thank you, ladies and gentlemen. You may now disconnect. Good day.