ORIGINAL TITLE: "HANDING A TRILLION-DOLLAR WARRANTY." LIGHTPHONE CONFERENCE: THE MEMORY IS NOW AN AI-ERA STRATEGIC ASSET, AND IT IS NOT CLEAR WHEN SUPPLY WILL CATCH UP WITH DEMAND (WITH FULL QUESTION AND ANSWER)
Original: Yang Zhen, Wall Street

The CEO and CEO Sanjay Mehrotra at the American Light Performance Teleconference stated that data centre operations generated more than $25 billion in the third quarter of the fiscal year and more than $100 billion in annualized revenue, which highlighted the position of beauty as leader of the AI era. Also AI makes memory a strategic asset of the times。

Mi-goon has just handed over a marketside response. Fiscal data show that the company ' s total income for the third financial season reached a record $41.5 billion, an increase of 74 per cent in the ring, 346 per cent over the same period; the aggregate Māori ratio rose sharply to 84.9 per cent. This performance not only resulted in an income record for the fifth consecutive quarter, but also marked an unprecedented cycle in the storage industry。

America's fourth fiscal season revenues are projected to reach a record $50 billion (up and down $1 billion), with a Maori rate of about 86 per cent. However, what is more important to Wall Street than a bright-eyed financial paper is the "fundamental reshaping" of the business model that beauty is experiencing。

"The bottom business model has been turned upside down: signing hundreds of billions of bonds, raffling 18 billion cash deposits

IN THE FACE OF THIS UNPRECEDENTED WAVE OF AI, MIGWANG IS RESHAPING THE CERTAINTY OF PROFIT BY CHANGING THE RULES OF TRADE. AT PRESENT, MISANG HAS SIGNED 16 STRATEGIC CLIENT AGREEMENTS (SCAS) WITH CLIENTS IN DATA CENTRES, CONSUMER AND AUTOMOBILE MARKETS, COMPRISING 4 MEGA-CLIENTS AND 3 MEDIUM-SIZED CUSTOMERS。

At the conference, CEO and CEO Sanjay Mehrotra stated:

"The spread of artificial intelligence has structurally changed the storage industry. We are happy to announce thatWE HAVE NOW SIGNED 16 STRATEGIC CLIENT AGREEMENTS (SCAS), AND WE EXPECT THIS TO CHANGE OUR BUSINESS MODEL COMPLETELY."

These long bills are in no way a simple agreement of intent, but rather a binding "Take-or-pay" contract. The agreement usually lasts five years (from 2026 to the end of 2030), provides for specific purchases and sets price thresholds and ceilings。

Here are 16 long lists that bring very powerful financial moat data to the market:

1.100 billion minimum income:ON THE BASIS OF THE MINIMUM PRICE AGREED IN THE CONTRACT AND THE MINIMUM VOLUME OF DELIVERIES, THE INCOME FROM THE FUTURE PERFORMANCE OBLIGATION (RPO) HAS BEEN SET AT $100 BILLION。

2.Large cash flows ahead:In order to secure a stable supply of energy, the customer produced real silver and silver. CFO Mark Murphy revealed that "under the SCA signed so far, we expect to receive $22 billion in cash deposits and related financial commitments. The vast majority of them (approximately $18 billion) will appear in the form of cash deposits”

3.Total iron cycle fluctuations:These long sheets now lock around 20% of DRAM and 33% of NAND during the period of beauty light. Mehrotra stressed that "for SCAs that include the price range, even at the floor level, U.S. Light's Māori rate will be very high, well above the peak quarterly profit margin of any previous cycle."

"The supply shortage will continue beyond 2027." "I can't see when the supply will catch up."

The market is highly concerned about the sustainability of this round of storage. In response, it was clear to the management that the shortfall was not only a state of the moment, but a normal pattern for the next two to three years. According to Mehrotra, this dependency has led to a qualitative change in memory role:

"THE PERFORMANCE OF THE AI SYSTEM DEPENDS ON THE PERFORMANCE AND CAPACITY OF THE MEMORY SUBSYSTEM IN TERMS OF STRUCTURE。IT UPGRADES THE EXISTENCE OF AI INTO A STRATEGIC ASSETI don't know

In response to supply and demand conflicts, Mehrotra makes a clear assertion:

"WE EXPECT THAT, DUE TO AI-DRIVEN DEMAND IN ALL SUB-MARKETS, COMBINED WITH STRUCTURAL SUPPLY CONSTRAINTS, THE SHORTFALL WILL CONTINUE BEYOND 2027... EVEN IF WE EXPECT INDUSTRY SUPPLY TO IMPROVE GRADUALLY IN 2028, WE'LL BEIt is still not clear when memory supplies will keep pace with growing demand

Why is it so hard to keep up with suppliesFour major structural pain points:

The first is the size, time-consuming nature of the project to build a new crystal round plant, which is constrained by a shortage of labour and energy infrastructure; the second is that, with the upgrading of nodes (e.g. One Gamma and G9), the increased complexity of the process has led to a slowdown in bits growth; the third is that HBM is extremely consuming the capacity of the crystal round, which has severely squeezed the supply of non-HBM products; and the fourth is that limited dustless space limits expansion。

HBM4 DELIVERS BILLIONS, HUMAN ROBOTS AND AUTOPILOTS OPEN UP LONG-TERM IMAGINATION

On the cutting edge of technology, the light is moving faster than market expectations. It was revealed that:

"HBM4-12hi is twice as fast as HBM3E-12hiWE'VE ACHIEVED OVER $1 BILLION IN HBM4 REVENUE

THE U.S. IS STRATEGICALLY ALIGNING ITS HBM MARKET SHARE WITH ITS OVERALL DRAM SHARE IN ORDER TO BALANCE OVERALL MARKET DEMAND。

APART FROM DATA CENTRES, THE IMAGINATION OF EDGE AI AND TERMINAL DEVICES IS BEING OPENED. IN THE AREA OF AUTOMOBILES, THE MEMORY AND STORAGE CAPACITY OF THE L2+ AND ABOVE AUTOMATIC-DRIVING VEHICLES IS MORE THAN FIVE TIMES THAT OF ORDINARY VEHICLES, AND THE PENETRATION RATE OF SUCH VEHICLES IS RAPIDLY RISING。

It's the robot track that's more powerful. Mehrotra paints a huge incremental blueprint for the market:

"HUMAN ROBOTS CARRY 10 TIMES THE MEMORY OF A NORMAL L2+ CAR。We anticipate that, in the second half of the decade, there will be a sustained, substantial and decades-long cycle of memory needs”

2026 The full text of the performance teleconference for the third quarter of the fiscal year is translated as follows:

Sanj Mehrotra (President and Chief Executive Officer):IN THE THIRD QUARTER OF THE 2026 FISCAL YEAR, MIGWANG PERFORMED WELL, WITH A SIGNIFICANT RECORD OF INCOME, MĀORI RATES AND EACH SHARE OF EARNINGS, EXCEEDING THE HEIGHT OF OUR GUIDANCE. OUR DATA CENTRE BUSINESS INCOME IN THE THIRD QUARTER OF THE FISCAL YEAR IS OVER $25 BILLION, AND OUR ANNUALIZED RUN RATE IS OVER $100 BILLION, WHICH HIGHLIGHTS AMERICA'S POSITION AS LEADER OF THE AI ERA。

OUR DATA CENTRE SSG HAS MORE THAN $5 BILLION IN OPERATING INCOME, AND THE RING HAS MORE THAN DOUBLED. DEMAND IN THE DRAM AND NAND INDUSTRIES CONTINUES TO OUTPACE SUPPLY. WE EXPECT THIS TENSION TO CONTINUE BEYOND THE 2027 CALENDAR YEAR DUE TO AI-DRIVEN DEMAND SPREAD ACROSS ALL SUB-MARKETS AND STRUCTURAL SUPPLY CONSTRAINTS。

WE ARE PLEASED TO ANNOUNCE THAT WE HAVE NOW SIGNED 16 STRATEGIC CLIENT AGREEMENTS (SCAS), WHICH WE EXPECT WILL FUNDAMENTALLY TRANSFORM OUR BUSINESS MODEL. THE MEMORY INDUSTRY HAS UNDERGONE STRUCTURAL CHANGES DUE TO THE SPREAD OF AI. WE ARE ONLY IN THE EARLY STAGES OF THE MAJOR INNOVATIONS AND PRODUCTIVITY THAT WILL BE UNLEASHED IN THE FUTURE, WHICH WILL GRADUALLY PERMEATE ALL CORNERS OF THE GLOBAL ECONOMY。

DATA CENTRE DRIVEN GROWTH WILL INCREASINGLY BE COMPLEMENTED BY SMARTPHONES, HIGH-END PCS, NEW CONSUMER EQUIPMENT AND AI FUNCTIONALITY IN THE AUTOMOTIVE, INDUSTRIAL APPLICATIONS AND ROBOTICS FIELDS. THE EXCITING POSSIBILITIES OFFERED BY ROBOTS, HUMAN-SHAPED ROBOTS AND FULLY AUTOMATIC AUTOMOBILES PRESUPPOSE A STRONG LONG-TERM DEMAND ENVIRONMENT FOR MEMORY AND STORAGE. ON THE SUPPLY SIDE, OUR CLIENTS RECOGNIZE THAT SHORTAGES IN MEMORY AND STORAGE TAKE CONSIDERABLE TIME TO IMPROVE. EVEN IF WE EXPECT A GRADUAL IMPROVEMENT IN INDUSTRY SUPPLY IN 2028, WE CANNOT CURRENTLY PREDICT WHEN THE SUPPLY OF MEMORY WILL CATCH UP WITH GROWING DEMAND。

The supply growth of the memory industry is dependent on large-scale construction of new extensions of the round mill. These new projects are large, complex and time-consuming. In addition, its speed is constrained by a number of factors, including the long delivery cycle of the global round plant, the shortage of workers with critical process skills, complex regulations, including licences, and the need for enhanced energy infrastructure。

At the same time, memory technology (one of the most advanced in the semiconductor field and one of the most difficult to develop) becomes more complex with the introduction of each new node. Technological transformation is leading to a slowdown in crystal round energy growth over time, a significant increase in demand for clean room space and new round plants, and the growth of HBM (high bandwidth memory), as well as an increase in trade radio in each generation of new products (i.e. the ratio of crystal round capacity consumed by HBM to non-HBM products), further putting pressure on non-HBM supply。

IN THE NAND AREA, INDUSTRY SUPPLIERS HAVE SHIFTED CLEAN ROOM SPACE FROM NAND TO DRAM, AND OVERALL LIMITED CLEAN ROOM SPACE LIMITS NAND ' S BYTE GROWTH. THE COMBINATION OF THESE FACTORS MEANS THAT, DESPITE OUR OVERALL EFFORTS TO INCREASE SUPPLY, THE GROWTH OF SUPPLY AND ITS ABILITY TO MEET INDUSTRY NEEDS ARE STRUCTURALLY CONSTRAINED。

AI SYSTEMS ARE SUPPORTED BY GPU, ASIC AND CPU DESIGNS FROM A GROWING RANGE OF SUPPLIERS. HOWEVER, THEY ALL HAVE AN IMPORTANT COMMON GROUND. THE PERFORMANCE OF AI SYSTEMS DEPENDS ON THE PERFORMANCE AND CAPACITY OF MEMORY SUBSYSTEMS IN TERMS OF STRUCTURE. THIS HAS LED TO THE EMERGENCE OF MORE COMPLEX LAYERS OF MEMORY, PROVIDING GREATER OPPORTUNITIES FOR DIFFERENTIATION THAN EVER BEFORE。

IT ALSO ELEVATES THE ROLE IN THE AI WORLD TO A STRATEGIC ASSET. STRONG LONG-TERM DEMAND GROWTH, STRUCTURALLY CONSTRAINED SUPPLY GROWTH AND THE STRATEGIC IMPORTANCE OF MEMORY HAVE LED CLIENTS TO RECOGNIZE THAT THEIR PRODUCT ROAD MAP RELIES ON ACCESS TO ADVANCED MEMORY TECHNOLOGIES AND RELIABLE, LONG-TERM MEMORY SUPPLY COMMITMENTS。

MIZUOKA HAS BEEN A PIONEER IN THE INDUSTRY, AND WE HAVE CREATED A NEW STRATEGIC CUSTOMER AGREEMENT (SCA) WITH VERY ROBUST PROVISIONS. WE'RE HAPPY TO ANNOUNCE THAT WE'VE COMPLETED 16 SCAS WITH CUSTOMERS IN DATA CENTRES, CONSUMER CATEGORIES AND AUTOMOBILE MARKETS. THESE SCAS HAVE ACCELERATED THE TRANSFORMATION OF OUR BUSINESS MODEL, STRENGTHENED PARTNERSHIPS IN TECHNOLOGY AND INNOVATION AND PROVIDED CONTRACTUAL SUPPLY GUARANTEES TO CLIENTS. THESE AGREEMENTS NORMALLY LAST FOR FIVE YEARS, FROM CALENDAR YEAR 2026 UNTIL THE END OF CALENDAR YEAR 2030. AGREEMENTS IN THE AREA OF AUTOMOBILES ARE USUALLY THREE-YEAR. SIXTEEN AGREEMENTS HAVE BEEN SIGNED ABOUT 20 PER CENT OF OUR DRAM SALES AND ONE THIRD OF OUR NAND SALES DURING THIS PERIOD。

THESE SCAS INCLUDE FOUR VERY LARGE CLIENTS AND THREE LARGE CLIENTS. THE REMAINING AGREEMENTS, INVOLVING SMALL CLIENTS FROM THE AUTOMOBILE INDUSTRY, REPRESENT OUR COMMITMENT TO THIS IMPORTANT AREA. UPON COMPLETION, WE EXPECT ABOUT HALF OR MORE OF THE COMPANY'S REVENUES TO COME FROM THESE SCAS, WHICH COVER DIFFERENT END-MARKET CUSTOMERS。

CLIENTS VALUE OUR U.S. SUPPLY PLANS, AS REFLECTED IN OUR SCA. THESE SCAS ARE DESIGNED TO BE PAY-AS-YOU-GO AGREEMENTS AND CONTAIN BINDING COMMITMENTS TO PURCHASE SPECIFIC QUANTITIES OVER A MULTI-YEAR PERIOD. THE LARGEST AGREEMENTS USUALLY HAVE A MAXIMUM MARKET PRICE FOR EXISTING PRODUCTS IN THE SECOND QUARTER OF THE CURRENT PERIOD AND A LOWER PRICE FOR THE DURATION OF THE AGREEMENT. SEVERAL SCAS (WHICH REPRESENT A SMALL PROPORTION OF SCA-RELATED INCOME) CONTAIN FIXED OR NO PRICE BANDS AND THEIR PRICES WILL BE AFFECTED BY MARKET CONDITIONS. WHEN ALL PLANNED SCAS ARE IMPLEMENTED, AGREEMENTS CONTAINING FIXED OR MAXIMUM PRICES ARE EXPECTED TO ACCOUNT FOR ABOUT 40 PER CENT OF OUR INCOME, EITHER AT OR NEAR THE CURRENT MARKET PRICE LEVEL IN THE SECOND QUARTER。

FOR SCAS THAT DO CONTAIN SUCH PRICE ZONES, THE PRICING IS INTENDED TO REMAIN WITHIN THAT FLOOR TO THE CEILING FOR THE DURATION OF THE AGREEMENT. THIS PRICING VISIBILITY WILL HELP OUR SCA CLIENTS IN THE VARIOUS SUBDIVISIONS OF THE MARKET BETTER MANAGE THEIR BUSINESS AND INCREASE THEIR DEMAND. FOR THE SCA BETWEEN OUR PRICE BANDS, THE FLOOR PRICE ENSURES A VERY STRONG MAORI RATE FOR BEAUTYLIGHT, FAR HIGHER THAN THE PEAK QUARTERLY PROFIT MARGIN IN ANY PREVIOUS CYCLE。

OF THE 16 SCAS THAT WE HAVE SIGNED, 14 EARNED ABOUT $100 BILLION OVER THE REMAINING PERIOD OF THE AGREEMENT, BASED ON THE MINIMUM CONTRACT PRICE. THESE AGREEMENTS HAVE ALSO ENHANCED OUR LONG-TERM FINANCIAL PERFORMANCE, PROFITABILITY AND FREE-FLOW EXPECTATIONS THROUGH GREATER VISIBILITY AND IMPROVED BUSINESS STABILITY。

ACCORDING TO THE SCA WE HAVE SIGNED SO FAR, WE EXPECT TO RECEIVE $22 BILLION IN CASH BONDS AND RELATED FINANCIAL COMMITMENTS. THIS IS FURTHER EVIDENCE OF CLIENT COMMITMENT TO THIS NEW BUSINESS MODEL. MARK WILL PROVIDE MORE DETAILS. OUR SCA WITH CLIENTS IN DATA CENTRES, CONSUMER EQUIPMENT, AUTOMOBILES AND INDUSTRIAL APPLICATIONS HAS CREATED A NEW PARADIGM FOR STRENGTHENING OUR CUSTOMER RELATIONSHIP. THEY PROVIDE COMMITTED DRAM (INCLUDING APPROPRIATE HBM) AND NAND SUPPLIES TO CLIENTS OVER A MULTI-YEAR PERIOD. DURING PERIODS OF SEVERE SHORTAGES, THIS SUPPLY VISIBILITY IS EXTREMELY BENEFICIAL TO CLIENTS. THIS VISIBILITY ENABLES OUR CLIENTS TO USE SCA SUPPLIES TO DRIVE THEIR STRATEGIC PLANS, DRIVE GROWTH AND ENABLE THEIR FINAL CONSUMERS TO BENEFIT FROM THEIR PRODUCTS AND SERVICES. WE ARE VERY GRATEFUL TO THE CLIENTS WHO WORKED WITH US AT THIS TIME OF SUPPLY CONSTRAINTS, IN A STRONG SPIRIT OF COLLABORATION, TO CREATE THE CONDITIONS FOR LONG-TERM WIN-WINS FOR THE ENTIRE ECOSYSTEM AND CONSUMERS。

AI ' s unlimited demand for memory bandwidth, capacity, low delay and low power consumption is driving memory architecture selection, memory portfolio transformation and manufacturing technology decision-making, all of which add to the complexity of industry memory and storage road maps. Migwang is continuing to build on its technological leadership. Our One Gamma DRAM nodes and G9 NAND nodes have been able to increase their yields and are expected to be the highest in the history of beauty. Our next generation of DRAM and NAND nodes are also well developed and are expected to start production in the second half of calendar 2027. We are applying the leading DRAM and NAND nodes to our entire product mix. The HBM412 high bandwidth memory is twice as fast as the HBM3E12 floor, and our HBM4 income is over $1 billion. We expect the HBM412 level to reach maturity rates significantly faster than the HBM3E12 level. For other highlights of our HBM, high-capacity DDRs and servers, DRAMs, data centres SSD, PC, smartphones and automobile product combinations, please refer to our revenue press release。

WE EXPECT FUTURE MEMORY NEEDS TO CONTINUE TO FAVOUR HIGHER PERFORMANCE AND HIGHER VALUE PRODUCTS, WHOSE COMPLEXITY LEADS TO HIGHER COSTS PER CRYSTAL. THE TRANSITION FROM LP5 TO LP6, DDR5 TO DDR6 AND TO A NEW GENERATION OF HBMS IS ACCOMPANIED BY AN INCREASE IN THE COST OF CRYSTAL PARTICLES. THIS TREND, COMBINED WITH THE START-UP OF LARGE-SCALE NEW CAPACITY IN THE COMING YEARS, IS EXPECTED TO LEAD TO AN INCREASE IN THE COST OF DRAM MIXED CRYSTAL GRAINS FROM CURRENT LEVELS. OUR CLIENT SCA PROVIDES SPACE FOR FUTURE NEGOTIATIONS ON APPROPRIATE PRICE PREMIUMS FOR SUCH NEW PRODUCTS。

TURN TO OUR END MARKET. AI IS DRIVING AN UNPRECEDENTED GROWTH IN DATA CENTRES, AND IT IS EXPECTED THAT THE OUTPUT OF INDUSTRIAL DATA CENTRES DRAM AND NAND IN CALENDAR YEAR 2026 WILL MORE THAN DOUBLE THAT OF TWO YEARS AGO. THE PROXY AI IS STRUCTURALLY RESHAPING THE DATA CENTRE INFRASTRUCTURE, EXTENDING NOT ONLY TO RACKS WITH ACCELERATORS ONLY, BUT ALSO TO CPU RACKS FOR PROXY CONTROL OF PLANE AND PROGRAM EXECUTION, AS WELL AS STORAGE RACKS FOR RAPID EXPANSION OF CONTEXT STORAGE. WE NOW EXPECT THAT THE OUTPUT OF INDUSTRY SERVERS WILL GROW BY MORE THAN A DOZEN PERCENTAGE POINTS IN CALENDAR YEAR 2026, HIGHER THAN WE HAD PREVIOUSLY EXPECTED IN THE LOWER DOUBLE DIGITS, THANKS TO THE GROWTH OF TRADITIONAL SERVERS BY MORE THAN A DOZEN PERCENTAGE POINTS AND THE STRONGER GROWTH OF AI ACCELERATOR SERVERS. WE ESTIMATE THAT THE EXPECTED INCREASE IN THE VOLUME OF DELIVERIES IS DRIVEN BY A MODERATE DECREASE IN THE AVERAGE DRAM CONTENT GROWTH ON THE SERVER, AS CLIENTS FOCUS ON MAXIMIZING THE UNIT VOLUME OF DELIVERIES IN A SITUATION OF EXTREME STRESS IN THE DISTRIBUTION OF THEIR MEMORY. IN THE NAND AREA, AI CONTEXT MEMORY STORAGE AND HDD (MECHANICAL HARD DRIVE) SUBSTITUTION OPPORTUNITIES ARE EXPANDING THE SEARCHABLE MARKET FOR SSD (SOLID HARD DRIVE)。

Despite a decline in the output of PC and smartphone industries, revenues are expected to increase, reflecting the flexible demand for high-priced high-end equipment in the terminal category. A proxy AI platform such as OpenClo enhances the value of peripheral equipment, achieves better technical economics, greater privacy and lower delays, and more efficient AI organization between clouds and edges. Over time, we expect that the value of the end-of-equipment AI plus the suppressed replacement demand will drive the growth of memory demand for PC and smartphones。

IN THE AREA OF AUTOMOBILES, ADAS (ADVANCED DRIVING AIDS) REMAINS A POWERFUL DRIVER OF CONTENT GROWTH. THE MEMORY AND STORAGE CONTENT OF VEHICLES AT THE L2+ LEVEL AND ABOVE (WITH PROGRESSIVELY INCREASED LEVELS OF AUTOMATIC DRIVING) IS, ON AVERAGE, MORE THAN FIVE TIMES THAT OF ORDINARY VEHICLES. THE SHARE OF L2+ AND ABOVE VEHICLES WILL MORE THAN DOUBLE THIS YEAR TO OVER 20 PER CENT, AND IS EXPECTED TO EXCEED 40 PER CENT BY 2030. THE AVERAGE VEHICLE MEMORY AND STORAGE CONTENT IS EXPECTED TO INCREASE FURTHER AS THE MARKET PORTFOLIO MOVES TO A HIGHER LEVEL OF AUTOMATIC DRIVING (WITH HIGHER CONTENT)。

IN THE ROBOTIC FIELD, CONTINUOUS PROGRESS IN SIMULATIONS, BASIC MODELS AND INTEGRATED HARDWARE AND SOFTWARE STACKS IS ACCELERATING THE DEVELOPMENT OF PHYSICAL AI. THIS CREATES A GROWING AND RICH OPPORTUNITY FOR HIGH BANDWIDTH, LOW-CAPACITY MEMORY AND STORAGE TO SUPPORT REAL-TIME PERCEPTION, REASONING AND CONTROL. THE INTERNAL STOCK OF HUMAN ROBOTS IS 10 TIMES THAT OF ORDINARY L2+ VEHICLES, AND WE EXPECT TO START A CONTINUOUS, LARGE-SCALE MEMORY DEMAND CYCLE FOR DECADES IN THE SECOND HALF OF THE DECADE。

NOW TURN TO OUR MARKET OUTLOOK. WE NOW EXPECT THAT THE SUPPLY AND DEMAND SITUATION OF DRAM AND NAND WILL REMAIN TENSE BEYOND CALENDAR YEAR 2027. IN TERMS OF DRAM, WE'RE PREDICTING AN INCREASE IN DRAM OUTPUT IN CALENDAR YEAR 2026 FROM 20% TO A MEDIAN PERCENTAGE RANGE, SLIGHTLY HIGHER THAN OUR PREVIOUS PROJECTIONS. IN TERMS OF NAND, WE'RE PREDICTING AN INCREASE OF ABOUT 20 PER CENT IN THE VOLUME OF NAND BITS DELIVERED IN THE 2026 CALENDAR YEAR, THE SAME AS THE PREVIOUS FORECAST. WE EXPECT THAT DRAM SUPPLY GROWTH WILL BE ROUGHLY THE SAME AS INDUSTRY SUPPLY GROWTH, AND THAT NAND SUPPLY GROWTH WILL BE SLIGHTLY LOWER THAN INDUSTRY SUPPLY GROWTH IN CALENDAR YEAR 2026. OUR SCA ENHANCES OUR VISIBILITY OF LONG-TERM NEEDS AND GIVES US GREATER CONFIDENCE IN CAPITAL SPENDING AND INVESTMENT IN RESEARCH AND DEVELOPMENT. WE HAVE FOCUSED ON MAXIMIZING THE OUTPUT OF THE ROUND MILL, INCLUDING ACCELERATED PROCUREMENT OF TOOLS IN COOPERATION WITH SUPPLIERS, INSTALLATION OF THE ROUND FACTORY TOOLS, RAMPING AND REPLACEMENT AND UPGRADING OF TOOLS TO INCREASE PRODUCTIVITY。

Recently, we entered into a multi-year EUV supply agreement with ASML to support the addition of EUV applications to the One Delta node and future generations of products. We have also made good progress in expanding the global footprint to increase supply over time. This includes our major investment in the U.S. leading DRAM manufacturing industry, namely, our ID1 and ID2 crystal mills in Idaho, whose construction is well under way, and our first CRM cluster in New York, which began in January this year. DID1 is expected to produce the first round in the middle of calendar year 2027, while DID2 is expected to be later in calendar year 2028. We recently launched the first production launch of One Alpha DDR4 technology at the Crystal Mill in Manassas, Virginia, which will enhance our ability to support the traditional product demand of customers in the automobile, industry, medical, aerospace and defence markets. In our new acquired Taiwan base, we expect to start delivering meaningful products from the existing 300,000 square-foot crystal mill by mid-year 2027, about a quarter ahead of our previous expectations。

IN ADDITION TO THE EXISTING ROUNDING PLANT, WE HAVE BEGUN TO BUILD A SECOND CLEAN HOUSE OF SIMILAR SIZE AT THE BASE. THIS CLEANER ROOM WILL SUPPORT EUV EQUIPMENT. CONSTRUCTION ACTIVITIES AND TIMELINES FOR OUR OTHER FACILITIES IN JAPAN AND SINGAPORE ARE ALSO ON SCHEDULE. AS A COMPLEMENT TO OUR ADVANCED CONTAINMENT CAPABILITY IN TAIWAN, CHINA, OUR SINGAPORE BASE WILL BE ANOTHER ADVANCED CONTAINMENT CENTRE OF EXCELLENCE. WE EXPECT THE FACILITY TO MAKE A MEANINGFUL CONTRIBUTION TO THE LIGHT HBM CONTAINMENT CAPABILITY STARTING IN THE FIRST HALF OF CALENDAR 2027. WHILE WE UNDERTAKE THESE INVESTMENTS, WE WILL MAINTAIN A DISCIPLINED APPROACH AND RESPOND TO THE MARKET ENVIRONMENT TO PROPERLY ADJUST OUR SUPPLY PLANS. I WILL NOW GIVE MARK THE PHONE TO PRESENT OUR FINANCIAL PERFORMANCE AND OUTLOOK FOR THE THIRD QUARTER OF FISCAL YEAR 2026。

Mark Murphy (Chief Financial Officer):THANK YOU, SONEJI. GOOD AFTERNOON. IN THE THIRD QUARTER OF FISCAL YEAR 2026, MIGWANG HANDED OVER OUTSTANDING PERFORMANCE, WITH REVENUES, MĀORI RATES AND EACH SHARE OF PROCEEDS EXCEEDING THE HIGH END OF OUR GUIDELINES. OUR PERFORMANCE AND THE OUTLOOK FOR TODAY HIGHLIGHT THE GROWING VALUE OF THE EXISTENCE OF THE AI ERA AND THE STRUCTURAL ADVANTAGES OF OUR OPERATIONS. AS STATED, WE HAVE SIGNED 16 STRATEGIC CLIENT AGREEMENTS. FOR SCAS WITH CLEAR PRICES (WHETHER FIXED OR SUBJECT TO FLOOR/CEILING), IN ACCORDANCE WITH THE REVENUE RECOGNITION ACCOUNTING STANDARDS, WE BEGAN TO DISCLOSE THE REMAINING PERFORMANCE OBLIGATIONS (RPO) THIS QUARTER OF MAY。

THE RPO AT THE END OF THE THIRD QUARTER OF THE FISCAL YEAR EXCEEDED $5 BILLION. FOR THE SCA THAT WE'VE SIGNED, INCLUDING THE AGREEMENTS IMPLEMENTED AFTER THE THIRD QUARTER OF FISCAL YEAR 2026, THE RPO IS ABOUT $100 BILLION. RPOS ARE BASED ON MINIMUM COMMITMENTS AND MINIMUM PRICING AND REFLECT INHERENT CONSERVATIVE ESTIMATES. THE RPO DOES NOT REPRESENT THE TOTAL REVENUE THAT WE EXPECT TO RECOGNIZE IN THE COMING PERIOD. AS A RESULT, WE EXPECT THAT REVENUES OVER THE PERIOD OF THE AGREEMENT WILL SIGNIFICANTLY EXCEED THE RELEVANT RPOS. AS SONEJI MENTIONED, ACCORDING TO THE SCA WE HAVE SIGNED SO FAR, WE EXPECT TO RECEIVE $22 BILLION IN CASH BONDS AND RELATED FINANCIAL COMMITMENTS。

THE VAST MAJORITY OF THESE COMMITMENTS, APPROXIMATELY $18 BILLION, WILL EXIST IN THE FORM OF CASH GUARANTEES. WHEN ALL THE GOALS OF THE SCA ARE COMPLETED, WE EXPECT THAT THE LEVEL OF THE SCA CLIENT BONDS AND RELATED COMMITMENTS WILL INCREASE SIGNIFICANTLY. THESE CUSTOMER BONDS WILL APPEAR MORE ON OUR BALANCE SHEETS IN THE FOURTH FINANCIAL SEASON。

CASH FLOWS ASSOCIATED WITH CUSTOMER BONDS APPEAR IN CASH FLOWS FOR FINANCING ACTIVITIES AND DO NOT AFFECT OUR FREE CASH FLOWS. THE CASH WILL BE RETURNED TO THE CLIENT AT THE END OF THE SECOND HALF OF THE AGREEMENT PERIOD. WE ARE EXCITED ABOUT THE PROGRESS MADE IN SIGNING THESE SCAS, WHICH WILL STRENGTHEN OUR LONG-TERM FINANCIAL PERFORMANCE AND DRIVE FIRM LONG-TERM ROBUST ROI (INVESTMENT RETURN)。

TOTAL INCOME FOR THE THIRD QUARTER OF THE FISCAL YEAR WAS $41.5 BILLION, AN INCREASE OF 74 PER CENT IN THE RING, OR 346 PER CENT OVER THE SAME PERIOD, WHICH IS THE FIFTH CONSECUTIVE QUARTER OF OUR INCOME RECORD. THE RING GROWTH OF $17.6 BILLION IS THE LARGEST INCREASE IN OUR HISTORY, SURPASSING THE RECORD OF $10.2 BILLION IN THE LAST QUARTER. DRAM INCOME REACHED A RECORD $31.3 BILLION IN THE THIRD QUARTER OF THE FISCAL YEAR, AN INCREASE OF 343 PER CENT OVER THE SAME PERIOD, OR 76 PER CENT OF TOTAL INCOME. BY COMPARISON, DRAM INCOME GREW BY 67 PER CENT. THE VOLUME OF BITS OUT INCREASED BY A LOW-DIGIT PERCENTAGE RANGE. OWING TO THE SUPPLY CONSTRAINTS OF THE INDUSTRY AND THE FAVOURABLE PRODUCT MIX, THE PRICE ROSE BY 60 PER CENT. IN THE THIRD QUARTER OF THE FISCAL YEAR, NAND INCOME REACHED A RECORD $9.9 BILLION, AN INCREASE OF 361 PER CENT OVER THE SAME PERIOD, OR 24 PER CENT OF TOTAL INCOME. NAND INCOME GREW 99 PER CENT BY RING. THE VOLUME OF BITS OUT INCREASED BY A MEDIUM-DIGIT PERCENTAGE RANGE. AS A RESULT OF THE TIGHT SUPPLY AND FAVOURABLE PRODUCT MIX IN THE NAND SECTOR, THE PRICE ROSE BY 80 PER CENT. 2026 THE COMBINED MĀORI RATIO FOR THE THIRD QUARTER OF THE FISCAL YEAR WAS 84.9 PER CENT, AN INCREASE OF 10 PERCENTAGE POINTS IN THE RING. THIS IMPROVEMENT WAS DRIVEN LARGELY BY HIGHER PRICING, WHILE ALSO BENEFITING FROM CONTINUED STRONG IMPLEMENTATION AND A FAVOURABLE PRODUCT MIX. 2026 THE MĀORI RATIO IN THE THIRD QUARTER OF THE FISCAL YEAR HAS MORE THAN DOUBLED FROM THE SAME PERIOD LAST YEAR, WITH A NEW CORPORATE RECORD. THERE IS NOW A SHIFT TO QUARTERLY FINANCIAL PERFORMANCE ACROSS OPERATIONAL SECTORS。

THE CLOUD MEMORY BUSINESS SECTOR RECEIVED A RECORD $13.8 BILLION, OR 33 PER CENT OF THE COMPANY ' S TOTAL REVENUE. CMBU INCOME RINGS INCREASED BY 78 PER CENT AND BENEFITED FROM HIGHER PRICING AND BITS OF OUTPUT. THE MĀORI RATE OF CMBU IS 83 PER CENT, WITH AN INCREASE OF 9 PERCENTAGE POINTS IN THE RING, BENEFITING FROM HIGHER PRICING. THE CORE DATA CENTRE BUSINESS SECTOR EARNED A RECORD $11.5 BILLION, OR 28 PER CENT OF THE COMPANY ' S TOTAL REVENUE. THE CDBU INCOME CYCLE GREW BY 103 PER CENT, BENEFITING FROM HIGHER PRICING AND A FAVOURABLE PRODUCT MIX. THE MĀORI RATE OF CDBU IS 87 PER CENT, WITH AN INCREASE OF 12 PERCENTAGE POINTS IN THE RING, BENEFITING FROM HIGHER PRICING。

MOBILE AND CLIENT OPERATIONS RECORDED A RECORD INCOME OF $11.5 BILLION, OR 28 PER CENT OF TOTAL CORPORATE INCOME. THE MCBU INCOME RING GREW BY 49 PER CENT, PARTLY OFFSET BY A DROP IN THE VOLUME OF BETS EXPORTED, THANKS TO HIGHER PRICING. THE MMBU MĀORI RATE IS 87 PER CENT, WITH AN INCREASE OF 9 PERCENTAGE POINTS IN THE RING, MAINLY DUE TO HIGHER PRICING AND A FAVOURABLE PRODUCT MIX。

CARS AND EMBEDDED BUSINESS SECTORS RECORDED A RECORD INCOME OF $4.6 BILLION, OR 11 PER CENT OF CORPORATE INCOME. THE AEBU INCOME RING GREW BY 71 PER CENT, THANKS TO HIGHER PRICING AND HIGHER BITS OF OUTPUT. THE AEBU MĀORI RATE IS 79 PER CENT, WITH AN INCREASE OF 11 PERCENTAGE POINTS IN THE RING, BENEFITING FROM HIGHER PRICING AND A FAVOURABLE PRODUCT MIX。

The operating cost for the third quarter of the fiscal year was $1.5 billion, representing an increase of $97 million in the ring. The increase in the ring is due to the increase in variable remuneration costs resulting from strong business performance. In the third quarter of fiscal year 2026, we achieved $33.7 billion in operating income, with a profit margin of 81.2 per cent, an increase of 12 percentage points in the ring and 54 percentage points in the same year。

FOR THE THIRD QUARTER OF THE FISCAL YEAR, TAXES WERE $5.1 BILLION AND EFFECTIVE RATES WERE 14.9 PER CENT. 2026 THE NON-GAAP DILUTED PROCEEDS PER SHARE IN THE THIRD QUARTER OF THE FISCAL YEAR WAS $25.11, AN INCREASE OF 106 PER CENT。

SHIFT TO CASH FLOW AND CAPITAL EXPENDITURE. THE OPERATING CASH FLOW WAS $25.4 BILLION IN THE THIRD QUARTER OF THE FISCAL YEAR. CAPITAL EXPENDITURE WAS $7.1 BILLION AND FREE CASH FLOWS $18.3 BILLION. 2026 FREE CASH FLOWS IN THE THIRD QUARTER OF THE FISCAL YEAR ARE THE QUARTERLY RECORDS OF COMPANIES. 2026 INVENTORY AT THE END OF THE THIRD QUARTER OF THE FISCAL YEAR WAS $8.6 BILLION AND INVENTORY DAYS WERE 120 DAYS. DRAM STOCKS ARE VERY TIGHT, BELOW 120 DAYS. CASH AND INVESTMENTS REACHED A RECORD $30.2 BILLION AT THE END OF THE QUARTER。

In the third quarter of fiscal year 2026, we reduced our debt by $4.4 billion, including $4.3 billion in priority instruments through cash offers. The weighted average maturity of our outstanding debt is April 2035. At the end of the quarter, we had $5.7 billion in debt and $24.4 billion in net cash balances。

DURING THE FISCAL YEAR, WE WERE UPGRADED TO BBB+ BY ALL THREE MAJOR CREDIT RATING AGENCIES, INCLUDING STRENGTH BASED ON OUR TECHNICAL AND PRODUCT STATUS, FINANCIAL OUTLOOK AND STRONG BALANCE SHEETS. OUR BALANCE SHEET HAS NEVER BEEN SO STRONG, AND WE EXPECT THAT EVEN IF WE INCREASE OUR INVESTMENT IN TECHNOLOGY AND THE REQUIRED CAPACITY, IT WILL BE FURTHER STRENGTHENED。

There is now a shift to performance guidance. We expect revenue to reach a record $50 billion in the fourth financial season, floating upwards and downwards by $1 billion. The Māori rate is about 86 per cent and the operating cost is about US$ 16.50 billion. Based on the number of shares of approximately 1.5 billion shares, we expect a record gain of $31 per share, floating upwards and downwards of $1. The Māori rate outlook for our fourth fiscal season reflects a meaningful slowdown in the rate of price increases. We expect that the operating costs of the 2027 fiscal year will increase by approximately $1 billion, as we expand our research and development to support unprecedented opportunities in the areas of memory and storage. We expect the increase in operating costs to be concentrated in the second half of the year. We expect a tax rate of about 15 per cent for the fourth fiscal season and 2026 fiscal years。

Light continues to invest globally in a disciplined manner to meet client needs. By way of reminder, our capital expenditures are net of expected government incentives. In the fourth financial season, we projected capital expenditure at about $10 billion, making it about $27 billion for the whole of fiscal year 2026. We expect that quarterly capital spending in fiscal year 2027 will be higher than in fiscal year 4, and that more than half of the growth in fiscal year 2027 over the same period will come from construction capital expenditure, as we introduce cleaner room capacity in advance to meet long-term needs. We predict that free cash flows will again increase significantly in the fourth financial season. Since December 9th, 2026, we intend to increase capital returns. Over time, we plan to return 100% of the excess cash to shareholders. Nothing that could be affected by trade or geopolitical developments is included in our guidance. I will now give the call to Soneji to summarize。

Sanj Mehrotra (President and Chief Executive Officer):THANKS, MARK. AI RAISED THE VALUE OF MEMORY. IN THIS TIGHT SUPPLY ENVIRONMENT, MEI-GWANG WORKS CLOSELY WITH OUR CLIENTS AND SUPPLIERS IN TERMS OF TECHNOLOGY, PRODUCTS, MANUFACTURING AND BUSINESS TEAMS. STRATEGIC CLIENT AGREEMENTS ARE OPENING AN EXCITING TIME FOR BEAUTY. WE EXPECT THESE SCAS TO SIGNIFICANTLY ENHANCE THE SUSTAINABILITY AND PREDICTABILITY OF AMERICA'S STRONG FINANCIAL PERFORMANCE AND ACCELERATE THE TRANSFORMATION OF OUR BUSINESS MODEL. I AM GRATEFUL TO THE MEMBERS OF THE GLORY TEAM AROUND THE GLOBE, WHO HAVE DEVOTED THEIR TIRELESS EFFORTS TO IMPLEMENTING IT, MAKING IT A LEADER IN THIS NEW AI ERA, WHILE WE CONTINUE TO ADVANCE OUR MISSION — TO ACCELERATE INTELLIGENCE AND ENRICH OUR LIVES。

Questions and answers

Timothy Akuri (analyst):HI, SONEJI, I -- I THINK WE'RE ALL TRYING TO FIGURE OUT HOW MUCH (INCOME) WE'RE LOCKED INTO THE LOWER PRICE SCENARIO OVER THE NEXT FIVE YEARS. YOU MENTIONED TWO POINTS, AND YOU SAID THAT 14 OUT OF 16 SCAS HAD $100 BILLION IN ACCUMULATED INCOME. IT'S PROBABLY ABOUT $20 BILLION A YEAR IN LOWER-PRICE INCOME, WHICH IS FAR BELOW THE RUN RATE YOU JUST GAVE. SO THIS SHOWS THAT NOT MUCH INCOME IS COVERED BY THE LOWER PRICE, BUT YOU ALSO MENTIONED THAT 40% OF THE INCOME WILL BE INCLUDED IN THESE SCAS. COULD YOU THEN ELABORATE AND HELP US TO THINK UNDER THE FLOOR PRICE SCENARIO? CAN YOU HELP US THINK ABOUT HOW MUCH INCOME IS GUARANTEED EVERY YEAR

Sanj Mehrotra (President and Chief Executive Officer):AS WE HAVE POINTED OUT, UNDER THESE SCAS, WHICH HAVE BEEN COMPLETED SO FAR, REVENUES ARE PROJECTED AT $100 BILLION AT LOWER PRICE. BUT AGAIN, AS MARK POINTED OUT IN HIS STATEMENT, WE EXPECT REVENUES TO BE MUCH HIGHER. PLEASE NOTE THAT, AT THE LOWER PRICE, OUR MĀORI RATE IS HIGHER THAN THE PEAK PROFIT MARGIN FOR ANY PERIOD IN THE PAST。

OVERALL, ABOUT 20% OF DRAM AND ABOUT 30% OF NAND SALES ARE NOW COVERED BY THESE SCAS. SO THIS IS ABOUT 25 PERCENT OF OUR INCOME, AND YOU CAN MAKE PROJECTIONS OVER THE DURATION OF THESE AGREEMENTS. THUS, RPOS ARE REPORTED AS ACCOUNTING MEASURES AT LOWER PRICES, BUT WE FULLY EXPECT REVENUES TO BE MUCH HIGHER。

Timothy Akuri (analyst):GOT IT. THEN, IN TERMS OF HOW THESE AGREEMENTS ARE ACTUALLY IMPLEMENTED, MARK, FOR EXAMPLE, HOW MUCH REVENUE THIS QUARTER IN AUGUST WILL COME UNDER SA? I'M JUST TRYING TO FIGURE OUT HOW TO INCORPORATE IT INTO THE MODEL AND WHEN TO REACH FULL OPERATIONAL RATES, FOR EXAMPLE, BY THE FOURTH QUARTER OF THE NEXT FISCAL YEAR, WILL YOU REACH THE FULL OPERATING RATES COVERED BY SCA? CAN YOU HELP US UNDERSTAND THAT

Mark Murphy (Chief Financial Officer):YES, TIM. SO YOU WILL SEE A DISCLOSURE IN Q (QUARTERLY REPORT) THAT WILL DISCLOSE THE FUTURE 12 MONTHS OF INCOME ASSOCIATED WITH EACH RPO AGREEMENT. FOR EXAMPLE, FOR THOSE AGREEMENTS THAT ARE COMPLETED IN THE THIRD QUARTER, YOU WILL SEE RPOS AT $5 BILLION, OVER $5 BILLION. YOU'LL SEE THE ASSOCIATED INCOME FOR THE NEXT 12 MONTHS IS ABOUT $1.8 BILLION。

THIS IS BECAUSE SOME OF THESE ARE SMALLER AGREEMENTS, SUCH AS THE ONE IN THE AREA OF AUTOMOBILES MENTIONED BY SANJ. NOW IN THE FOURTH QUARTER, AS SONEJI MENTIONED, YOU WILL SEE THAT 14 OF THESE 16 AGREEMENTS REPORT RPOS OF ABOUT $100 BILLION。

THE RELATED INCOME FOR THE NEXT 12 MONTHS WILL ALSO BE DISCLOSED IN K (ANNUAL REPORT). SO YOU WILL BE ABLE TO GET A GENERAL IDEA OF HOW THESE ARE IMPLEMENTED GRADUALLY. REMEMBER, THIS RPO FIGURE IS THE MINIMUM CONTRACT ENFORCEABLE AMOUNT AT THE INTERSECTION OF VOLUME AND PRICE. SO, TIM, YOU SEE A MINIMUM NUMBER, AND IT IS IMPORTANT TO REMEMBER THAT, AND WE MAKE IT CLEAR THAT THIS DOES NOT REFLECT WHAT WE THINK WILL HAPPEN. BESIDES, THIS RPO NUMBER CHANGES EVERY QUARTER. IT WILL VARY ACCORDING TO THE NEW CONTRACT AND MAY VARY ACCORDING TO ADDITIONAL VOLUME COMMITMENTS TO DETERMINE THE PRICE。

IT CHANGES DEPENDING ON THE VOLUME OF THE GOODS DELIVERED AND HOW THE RPOS REDUCE AFTER THE PERFORMANCE OBLIGATION IS COMPLETED. SO YOU'LL GET A LOT OF EXTRA REPORTS. THIS IS BASED ON THE ASC 606. I KNOW IT'S US -- WE DON'T USUALLY USE THIS STANDARD IN SOME REPORTS, BUT THIS RPO FEATURE, YOU'LL SEE。

I WOULD ALSO LIKE TO STRESS, AS SONEJI MENTIONED, THAT EVEN UNDER THE FLOOR PRICE, EVENTUALLY WE EXPECT ABOUT 40 PER CENT OF OUR INCOME TO BE UNDER THIS RPO-RELATED COMMITMENT. BUT EVEN BELOW THE FLOOR PRICE, WE EXPECT THE PROFIT MARGIN TO BE SIGNIFICANTLY HIGHER THAN THE PREVIOUS PEAK。

Timothy Akuri (analyst):Okay. Thank you both。

Unidentified participants:I'd like to ask you about the LTAs. Can you talk about the cash deposit? Should we consider it a collateral account? If the client cancels, you can use the cash? If not income, what is the meaning of this bond and what does it have to do with RPO (if any)

Sanj Mehrotra (President and Chief Executive Officer):All right, Joe. With respect to the bond, we mention that as of this teleconference, we have signed an agreement of $22 billion in bonds and financial commitments. About $18 billion of that amount is cash deposits. We will receive these bonds. We received about $400 million in the third quarter. We will receive about $10 billion in the fourth quarter. These will — yes, they will be considered cash deposits and will appear in cash flows for financing activities without affecting free cash flows. We hold them during their implementation commitments. As these agreements are implemented, the deposits will be returned over time, but mainly in the second half. The difference between $22 billion and $18 billion, approximately $4 billion, is a letter of credit。

Unidentified participants:All right. But what does it do? I mean, what happens to this cash? It appears that they made a bond and then they recovered it. You know why they promised the cash? Is this about some sort of payback? This is not an advance payment. Can you help us understand

Mark Murphy (Chief Financial Officer):Yeah. Thanks, Joe. It's not an advance. This is a separate commitment of the client, reflecting our binding agreements, and these are non-payment agreements, which we hold in cash, reflecting our common commitment to implement. This is in the interest of beauty, and of course these agreements enable us to see demand, the amount of commitment, and we can invest confidently, invest in large-scale capital, and build closer technological relationships. This is in the interest of clients, who are provided with security of supply and lead technology。

That is why it seems to us to be win-win, and we are very satisfied with the nature of the agreement and its impact on operations, as well as with the signs of a shift in the business model of beauty. Unidentified participants: very helpful. Thank you for all your disclosure. Really helpful. Thank you。

C.J. MUSE (ANALYST):Good afternoon. Thank you for answering my question. Maybe as a follow-up to Joe's problem, Mark. When you consider these cash deposits, do you regard them as discretionary cash and as capital expenditure? And as part of it, when you consider the return of capital, especially after the end date of the chip bill on December 14。

Would you include the cash received in your overall cash and capital return considerations? Or, given that you will eventually have to return the cash, will this lead you to believe that there is a need to hold more total cash in a stable state, with other conditions unchanged

Mark Murphy (Chief Financial Officer):CJ, THIS IS UNRESTRICTED。

C.J. MUSE (ANALYST):But will this change your consideration of how much cash is needed to be comfortable

Mark Murphy (Chief Financial Officer):Not in the short term. I think that we will certainly have what we think is sufficient liquidity to support the operation, which will include the return of the bond over time as clients and the United States light fulfil their contracts. Of course, it is important, but we will have liquidity to meet the investment we consider to be important for business。

We have many — we are carrying out large-scale projects to provide supplies, as well as research and development projects. So — I stress once again that, as I mentioned earlier, the client will get the deposit back in the second half of the agreement。

C.J. MUSE (ANALYST):GOT IT. THEN MAYBE AS A FOLLOW-UP TO HBM INCOME. CAN YOU SHARE YOUR VIEWS ON MARKET SHARE AND TOTAL INCOME FOR CALENDAR YEAR 2026? AND IS THERE ANY EXPECTATION THAT IN CALENDAR YEAR 2027 YOU CAN RAISE YOUR PROFIT MARGIN TO CLOSE TO D5? OR WILL THIS BE AN AREA PERMANENTLY BELOW D5 LEVEL? THANK YOU VERY MUCH。

Sanj Mehrotra (President and Chief Executive Officer):On HBM, first of all, we're very happy that our HBM4 product and our HBM4 income has exceeded $1 billion. In terms of HBM market share, we strategically chose to bring it closer to our DRAM share. This is important because HBM's track radio is the crystal circle consumption ratio. As you know, it consumes a lot of crystal circles and puts pressure on non-HBM supplies in the industry. Therefore, setting our HBM share target close to our DRAM share strategically enables us to supply diversified end-market customers, covering markets that require non-HBM supplies, such as data centres, consumer categories, automobiles, industry, etc。

WITH REGARD TO YOUR PRICING FOR NEXT YEAR, WE DO NOT ACTUALLY COMMENT ON PRICING, BUT CERTAINLY, HBM IS A PRODUCT OF AMERICA'S STRONG LEADERSHIP, AND WE HAVE DEMONSTRATED GREAT SUCCESS ON HBM3E 8, HBM3E12 AND NOW HBM4 WITH A STRONG ROAD MAP AND CONFIDENCE IN IMPLEMENTATION。

IT'S MORE EXPENSIVE THAN A NON-HBM PRODUCT PER BIT. AND IT'S VITAL FOR THE ENTIRE AI ECOSYSTEM FROM THE DATA CENTRE TO THE EDGE. SO STRATEGICALLY, IT'S A VERY IMPORTANT PRODUCT FOR US, AND IT'S ALSO A PRODUCT THAT PROVIDES A STRONG ROI。

Vivek Alia (analyst):THANK YOU FOR ANSWERING MY QUESTION. FIRST QUESTION, SONEJI, YOU MENTIONED FOUR LARGE AND THREE-HOME CUSTOMER AGREEMENTS. I WONDER HOW MANY OF THEM ARE RELATED TO DATA CENTERS? SHOULD WE EXPECT MORE DATA CENTRE-RELATED ANNOUNCEMENTS? SO, IS $100 BILLION A MATCH FOR LARGE AND MEDIUM-SIZED CLIENTS OR A MATCH FOR SMALL CLIENTS? I THINK I'M STILL TRYING TO FIGURE OUT WHAT A TYPICAL DATA CENTRE CLIENT'S SCA IS. DO YOU HAVE ENOUGH CLUES TO HELP US FIGURE OUT THE DATA CENTRE SCA FOR THE NEXT FEW YEARS

Sanj Mehrotra (President and Chief Executive Officer):Our large clients include data centre clients, and the large and medium-sized clients you mentioned, and, of course, our small clients, do cover data centres, consumer categories and automobile markets. We have already provided information that large agreements usually have price ceilings, a price range, with floors and ceilings, which are set at price levels in the second quarter of the year. Of course, you know that price levels in the second quarter are reflected in our third quarter performance and in the fourth quarter guidelines, which provide an unprecedented level of profitability. These price ranges also provide lower-limit prices, under which the Māori rate is much higher than the peak of any previous cycle in the company ' s history. The large agreements to which we have referred are multi-year agreements that provide us with tremendous demand visibility, client commitment and, of course, with financial commitments, including cash guarantees, as detailed earlier by Mark。

Vivek Alia (analyst):THANK YOU. AS MY FOLLOW-UP QUESTION, MARK, IS 86% OF THE MĀORI RATE GOING ON FOR SOME TIME? IS THERE A CEILING? AND THEN, WITH THESE SCAS COMING INTO EFFECT, SHOULD WE ASSUME A CERTAIN DEGREE OF NORMALIZATION, BETWEEN THE 80% IN WHICH YOU ARE NOW LIVING AND THE 60% PEAK THAT I THINK PRECEDED? SO, AS YOUR LONG-TERM INVESTORS, SHOULD THEY ASSUME THAT A NORMALIZED MĀORI RATE RANGE IS AROUND 70% BETWEEN YOUR CURRENT LEVEL AND PREVIOUS PEAKS? IF YOU CAN GIVE US SOME GUIDANCE ON HOW TO TAKE INTO ACCOUNT THE RECENT MĀORI RATE OF 86 PER CENT AND HOW THESE MĀORI RATES CAN BE CARRIED OUT IN THE LONG TERM. THANK YOU。

Mark Murphy (Chief Financial Officer):Yes, Vivek, we don't provide guidance after the fourth quarter. But we are at a profit margin level, and as we have said before, the effects of the expansion of the Māori rate as a result of rising incremental prices are diminishing. Nevertheless, as we mentioned, we have updated our view of the market situation, which we expect will remain tense beyond 2027。

WE ARE AT A STAGE WHERE MEMORY IS HIGHLY VALUED FOR STRATEGIC ASSETS, ITS VALUE FOR UPGRADING AI INTELLIGENCE AND THE NEED FOR MORE AND MORE PERFORMANCE MEMORY. AS A RESULT, WE CONTINUE TO DEPLOY PRODUCTION CAPACITY TO HIGHER PERFORMANCE APPLICATIONS SUCH AS DATA CENTRES AND PERIPHERAL EQUIPMENT, WHICH WILL HELP US OPTIMIZE THE CONFIGURATION OF PRODUCTION WITH CLIENTS, INCLUDING THOSE WHO SIGN UP WITH US FOR SCAS, AT A TIME WHEN PRICE INCREASES ARE SLOWING. AND AT THE SAME TIME, AS WE SAID, WE'RE GOING TO START PRODUCING SIGNIFICANT NEW PRODUCTION IN 2027, AND WE'RE GOING TO GROW IN 28 YEARS. THERE WILL BE SOME START-UP COSTS, BUT AS THESE SLOPES PROCEED, WE WILL BE ABSORBED. SO OVER TIME, WE'LL GET LEVERAGE。

Yeah. So I think we feel very good about the trajectories of our business, the technological status of the lights, the world-class product mix, and you can see that we are doing very well, all of which help us to sustain strong financial performance。

Krish Sankar (analyst):Yeah, hi. Thank you for answering my question. I have two questions, Soneji or Mark. Congratulations on your outstanding performance. With regard to the LTAs (LTA) price limit, you said it was about the previous peak MUR or a level of 60 per cent (about 62 per cent). If I try to estimate the price of a 64GB server DRAM, I might get about $700, compared to $1,500 today, which means roughly $10 to $12 per GB is the floor, while the current price is about $20 per GB. Is this what we should think about the range of the LTAs, that is, the range of the LTAs for every ten to twenty dollars lower

Sanj Mehrotra (President and Chief Executive Officer):Krish, we will not discuss specific pricing in depth, but I would just like to point out once again that I said that the Māori rate at the lower price would be far higher than the high points that we have experienced in the past cycle, those historical ones. So much more than that, right? But obviously we're not going to reveal the details about pricing。

THE BOTTOM LINE IS, THESE SCAS DO HELP PROVIDE US WITH VISIBILITY, INTENSITY AND SUSTAINABILITY OF DEMAND. THEY HAVE DEFINITELY ACCELERATED OUR FINANCIAL PERFORMANCE AND BUSINESS TRANSFORMATION。

Krish Sankar (analyst):GOT IT. VERY HELPFUL, SONEJI. AND THEN QUICK FOLLOW-UP, YOU MENTION THAT DRAM SHOULD GROW BY 20 PERCENT THIS YEAR, DOWN TO THE MEDIAN, AND NAND BY ABOUT 20 PERCENT. IT IS CLEAR THAT NEITHER SUPPLY IS SUFFICIENT. IS THERE ANY WAY TO QUANTIFY WHAT HAPPENS IN 2027? IS THERE ANY WAY TO SAY THAT SUPPLY AND DEMAND IN 2027 WILL BE TWICE AS HIGH AS THIS YEAR, OR HOW TO CONSIDER THE SUPPLY AND DEMAND IMBALANCE IN 2027

Sanj Mehrotra (President and Chief Executive Officer):We expect overall tension in 2027. We have already indicated that we expect tensions to continue beyond 2027, and we are working to increase supplies, but we have shared with you that it will take a long time to bring in the additional capacity needed to meet the needs of our clients, the additional capacity of the round, and, of course, the technological transformation and the lesser bits gain per generation node, as well as the fact that HBM's trade radio (the crystal circle consumption ratio) has put enormous pressure on overall supply growth。

Thus, supply - even in 2028, when supply begins to improve gradually - we expect demand to remain strong, as these AI trends are very long-term trends. AI is still at a very early stage. The entire token economy (means AI model processing costs) requires more memory. AI systemic performance is effectively limited by memory capacity, memory performance and memory bandwidth。

Thus, as demand is calculated to grow and our clients see the enormous opportunities for transformation ahead, their memory needs will continue to invest in infrastructure, as they have never done. The demand trajectory is extremely strong. Our memory is at its centre, a strategic asset, and access to memory supply is clearly a key priority, as you can see from the multi-year agreements that our clients have signed with us. I mean, these agreements reflect their confidence in demand growth. So we're trying to raise the supply, but we expect tensions to continue beyond 2027。

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