 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 co-host, David Floyer. Sanjay Marotra is here. He's the president and CEO of Micron Sanjay. Great to see you again. Good to see you too. They're giving back. I love the show because you guys are a highly technical company. You can get down on 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 a year on, what's new from this event? You know, at this event, there's so many new products that we announced today. You know, you see Micron. I like to say that Micron, 41 years 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 an authentic security solution, as well as demonstrated a test platform, a platform for deep learning algorithms to be applied enabling inference at edge, right? 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-clad cash flow for the company. Yeah, about $13 billion in trillion, 12 months. 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 due to Moore's Law 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, bespoke processors that 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 opportunity 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 Ballistics DRAM, a delight to the gamers. But we also announced new SSDs for enterprise application. We announced a 3D crosspoint, X100, a 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 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, you see all these alternative processes going on. You see companies, you know, tech companies building their own custom silicon, right? I mean. So yes, I mean we're seeing these hybrid solutions being put together, and seeing the rise of new players completely like ARM for example, now taking a more and more important part in that. So, but I'd like to just ask one question on 3D crosspoint, 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 processes essentially. Are you looking at new ways that you can use that at the lower end to get volume up? Yeah, where does that fit in your overall strategy? That would be a great question. Certainly as we said, in the memory hierarchy, 3D crosspoint fits in very nicely between NAND on one end and DRAM on the other end. 3D crosspoint as a persistent memory gives the benefit that it has capacities, and it has a higher 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 crosspoint technology. 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 what we announced the product, and we will of course continue to evolve the roadmap of 3D crosspoint 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, A6 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. Silicon is driving the innovations today that are coming out of Silicon Valley, regardless of what end market segment, and memory and storage is very much at the heart, is at the center of those. So I want to talk about vertical integration, and one of my early business heroes was Al Shugart, when I was a young pop at IDC, and 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 the time, Seagate. How is vertical, 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, you know, more than six million, wait for us a year, and extending it to controller and firmware 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 cloud to the edge. And now we are extending our vertical integration capabilities even deeper. We have gone from silicon to solutions, and now going from 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, you know, driving their deep learning algorithms for training as well as for inference. This is the vertical integration built on the most unique platform of technologies. Nobody else in the world has DRAM, NAND, and 3D cost point. 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 record number two free cash flow year for you guys. Two summers ago, I listened to you at the analysts, the Wall Street analysts meetings and you were very much aware of the demand supply, you know, 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. So, and you've done a masterful job. The stock prices stayed up. Now, granted, you know, you've reduced share count. But how have you done that? What is the new discipline that has allowed you to, to navigate through those icebergs? So we are focused on accelerating our technology development. We are focused on making, for example, technology development acceleration, I mentioned earlier, being the first to the market with one Z, 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 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 to the DRAM memory to the benefit of our customers. High-value solutions, cost positioning, technology acceleration, these have been the elements that will give us 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 around tech for good. Mark 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. You know, and of course you see your life's change with the benefit of more memory and storage, whether it is in your smart home or your smartphone, or all 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, a Micron Foundation is matching our team members' contributions, and through that, through our team member contributions, as well as our match, we have given two and a half million dollars 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 dollars 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 Foundation 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 that, 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, 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. 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.