Kipp Bedard, Vice President of Investor Relations Wilbur G. Stover Jr., Principal Accounting Officer and VP of Finance, CFO Michael Sadler, VP of Worldwide Sales Mark Durcan, Chief Operating Officer Steven Appleton, Chairman, President, Chief Executive Officer

Randy Abrams, Credit Suisse First Boston Glen Yeung, Citigroup Tim Luke, Lehman Brothers Joseph Osha, Merrill Lynch James Covello, Goldman Sachs Samir Barua, JP Morgan David Wong, A.G. Edwards & Sons, Inc. Krishna Shankar, JMP Securities Gus Richard, First Albany Corp. Adam Parker, Sanford Bernstein John Lau, Jefferies & Company Hans Mosesmann, Moors & Cabot Alex Gauna, UBS Bill Dezellem, Titan Capital Management Ben Lynch, Deutsche Bank Shailesh Jaitly, Nomura Securities Richard Prati, American Technology

Thank you. It’s now my pleasure to turn the floor over to your host, Mr. Kipp Bedard. Sir, you may begin. Kipp Bedard, Vice President of Investor Relations: Thank you very much. I would also like to welcome everyone to Micron Technology's Second-Quarter Fiscal-Year 2006 Financial Release Conference Call. On the call today are of course, Mr. Steve Appleton, Chairman, CEO and President; Mr. Mark Durcan, Chief Operating Officer; Mr. Bill Stover, Vice President of Finance and Chief Financial Officer; and Mr. Mike Sadler, Vice President of Worldwide Sales. This conference call, including audio and slides are also available on Micron's home page on the Internet at www.micron.com. If you have not had an opportunity to review the second-quarter 2006 financial press release, it is available again on our website at www.micron.com. Our call will be approximately 60 minutes in length. There will be a taped audio replay of this call available later this evening at 5:30 PM Mountain Daylight Savings Time. You can reach that by dialing 973-341-3080 with a confirmation code of 725-2236. This replay will run through Monday, April 17, 2006 at 5:30 PM, again Mountain Daylight Savings Time. A webcast replay will be available on the Company's website until April 10, 2007. We encourage you to monitor our website at micron.com throughout the quarter for the most current information on the company including information on the various financial conferences that we will be attending. During the course of this call, we may make projections or other forward-looking statements regarding future events or the future financial performance of the company and the industry. We wish to caution you that such statements are predictions, and that actual events or results may differ materially. We refer you to the documents the company files on a consolidated basis from time to time with the Securities and Exchange Commission, specifically the company's most recent Form 10-K and Form 10-Q. These documents contain and identify important factors that could cause the actual results for the company on a consolidated basis to differ materially from those contained in our projections or forward-looking statements. These certain factors can be found on the company's website. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. We are under no duty to update any of the forward-looking statements after the date of the presentation to conform these statements to actual results. With that, I would like to turn the call over to Mr. Bill Stover. Wilbur G. Stover Jr., Principal Accounting Officer and VP of Finance, Chief Financial Officer: Thanks Kipp. Let's start with a discussion of what these financials reflect. That is the results of operations for Micron's historical memory and imaging operations and, beginning January 6th, results of operations for IM Flash's NAND business. These quarterly results for the period ended March 2nd do not yet consolidate TECH Semiconductor's operations. Rather, this is the final quarter in which production from TECH Semi is accounted as a supply arrangement. Neither do they reflect any results of Lexar Media, the pending acquisition which Micron announced March 8th. For our second quarter, net sales totaled $1.23 billion, and the company recorded net income of 193 million or $0.27 per diluted share. The diluted earnings per share calculation is based on 715 million shares. As you are well aware, the company has a long history of investing in research and development. The accomplishments being made in R&D were recognized in part in the second quarter, as operating income reflects the sale of designs and technology to Intel in conjunction with the establishment of IM Flash Technologies. That was for $230 million. As of second quarter end, Micron had cash and investment balances of 2.6 billion. Approximately 500 million of the entries came from Intel as part of formation of IM Flash. Cash provided by operating activities for the six months of 1.3 billion includes 250 million received from Apple as a prepayment for NAND product supply. At quarter end, total debt declined to 461 million. You'll note on review of the balance sheet that receivables increased approximately $120 million over the quarter. And quarter-end total included 171 million from unwind of our call spread option, which was collected the day after quarter end. The benefit of closing out our position was booked as a credit to equity. Our second fiscal quarter is normally a seasonally slower quarter, and that generalization held true for 2006. Average selling prices for PC memory declined noticeably in the first half of the quarter and then increased somewhat resulting in a 12% quarter-over-quarter decline in memory ASPs. The expected seasonal slowing in image sensors did not materialize, as demand for the company's CMOS image sensors remained very strong. Gross margin for the quarter came in at 19%, holding up relatively well despite price pressure in commodity PC DRAMs. Gross margins on CMOS image sensors remained the highest product category for this period. Gross margin on TECH Semiconductor products was slightly higher than the gross margin for similar PC DRAM products and slightly less than the overall gross margin percentage for the period. R&D expense for the second quarter was 160 million. Our partnering efforts are paying off as we continue to have more extensive development across our diversified portfolio, yet are able to hold the absolute dollar of expenditures in check. The quarterly run rate for R&D will likely move up to about 165 million per quarter due to the inclusion of TECH Semi. Selling, general and administrative expenses with the consolidation of IM Flash and TECH Semi will approximate $115 million per quarter for the balance of '06. For the last three years, we have had continued improvement in cash flow provided by operations. The overall improvement reflects our successful diversification efforts. The second quarter's operating cash flow reached 880 million, of which 250 million resulted from the Apple prepayment and 230 million from the sale of designs to Intel. I’ll turn the commentary over to Mike. Michael Sadler, VP of Worldwide Sales: Thanks Bill. We had a solid quarter of executing to our strategy of pursuing markets that value differentiated semiconductor solutions. Specifically, those markets in addition to desktop and notebook PCs include mobile phones, communications infrastructure equipment, servers and various consumer devices. In those PC markets, we experienced a quarterly decline in ASPs as a result of depressed prices at the beginning of the second quarter. However, we are somewhat pleasantly surprised by an environment in which DRAM demand exceeded supply in the second half of the quarter and this dynamic continues today, defying seasonal expectations. End result being a commodity DRAM prices are up significantly and in good shape as we move through the May quarter. Bottom line, good progress on strategy execution with the bonus of a strong PC DRAM market. There are no surprises on the demand side of the PC market when it comes to DRAM. We are seeing reasonable PC unit growth, continued encroachment of notebook versus desktop systems, steadily expanding memory content for systems and increased penetration of DDR2 in PC platforms. All of this is resulting in a profile of DRAM megabyte demand and technology mix about as expected. We did observe slowing industry wide DRAM megabyte output growth in calendar Q1, and from our perspective, this drove a favorable supply/demand balance. It resulted in commodity DRAM price increases of 60% from the low seen early in the quarter. The environment is generally unchanged since the close of our fiscal Q2, with prices stable and inventories virtually nonexistent. The mobile phone market looks to be on track for another year of healthy unit growth in 2006. Our revenue growth in the mobile phone market is tracking to be a multiple of the overall unit growth rate in this space. This comes from market share gains by Micron, as well as accelerated semiconductor imaging and memory content in mobile platforms. Our mobile phone imaging business achieved modest unit and revenue growth in fiscal Q2 that was mitigated by our supply. We continue to see opportunities for new business in this space and have taken measures to increase imaging capacity that will come to fruition with stronger unit and revenue growth in the current quarter. We got a portfolio of mobile imaging products ranging from VGA through 3-Megapixel in mass production, and are in the early stages of winning designs and ramping production with a 5-Megapixel device. 1-Megapixel and above sensors now represent about one-half of the total imaging business and are on a growth path as new phone designs are moving to mass production and becoming available in the market. Our mobile phone memory business is anchored by the family of low-power DRAM products, including CellularRAM, also referred to as pseudostatic RAM and an offering of mobile DDR and SDRAM products. Our DRAM business in this space continues to migrate up from a density perspective, as the sweet spot in value phones is gradually shifting from 64 megabytes to 128 megabytes of RAM. As the trend of memory density expansion continues, we are intersecting the high end of the market with our own NAND Flash low-power DRAM-based Multichip package devices or MCPs. The first such offering consists of 1 gigabyte of Flash plus an option of either 256 megabytes or 512 megabytes of low-power DRAM. Micron is just one of the few companies capable of integrating our own Flash and DRAM silicon in a memory subsystem, and we believe this offers a compelling advantage as we engage our customers. The consumer electronics markets are driving solid DRAM business for Micron and require a wide variety of memory technologies, chip densities and form factors. This plays into our strength as a manufacturer with a broad DRAM product portfolio. On that note, we're currently manufacturing DRAM chips in densities ranging from 64 megabyte to 2 gigabytes in three different interface technologies, synchronous DRAM, DDR and DDR2. DRAM is leading the way for Micron in consumer markets, and has created a solid on-ramp for our CMOS imaging and NAND Flash products. We have observed some seasonal demand weakness in certain segments of the consumer markets, specifically MP3 players that has resulted in an oversupplied Flash market. Our expectations are that the market demand will recover as we move through the year, the lower Flash prices will result in per-device memory density boost, and the NAND market will have another year of very strong growth in the neighborhood of 200% on a per-bit basis. NAND Flash is a product that requires sales and marketing efforts be directed to consumers as well as OEM customers. Micron plans to expand our presence in the consumer NAND Flash market, and we have multiple options for doing so. We believe that the Crucial brand and online capability and infrastructure combined with Micron's technology, leadership and robust customer relationships offer exciting prospects to achieve this goal. In addition, our proposed acquisition of Lexar will create a strong vertical presence and brand equity position in this market. We believe the combined entity will allow synergies to the benefit of both companies. Our efforts to broaden the product portfolio and balance our exposure to a variety of markets is continuing to progress. While these efforts are evolving, we are quite pleased with the strength of demand in all of the markets that we serve including the PC markets and are quite optimistic about the future. Thanks for your continued interest and support. I will turn it back over to Kipp. Kipp Bedard, Vice President of Investor Relations: Thanks Mike. What we would like to do now is take questions from callers. And just a reminder, if you are using a speakerphone please pick up the handset when asking the questions so we can hear you more clearly. With that, we would like to open up the lines to questions.

Q - Randy Abrams: Yes, good afternoon. I wanted to see if you could give us a snapshot of the ASP change you have for the May quarter, if pricing held firm across your product lines? A - Michael Sadler: Yeah, on the DRAM side, presumably you are referring to DRAM, actually, I give you both DRAM and Flash. On the DRAM side, if prices were flat, this would be DRAM -- commodity DRAM for PCs, if prices were flat for the balance of the quarter, they would be up in the neighborhood of 20% quarter-over-quarter. In the NAND Flash area, if they were to be flat for the balance of the quarter, they would be down in the neighborhood of 20% to 25% quarter-over-quarter. Q - Randy Abrams: And if you could talk about the NAND market, looks like there has been some stabilization in the past week, are you starting to see signs of a demand recovery that would suggest a seasonal bottom short-term blip or what do you think is taking place in the market? A - Michael Sadler: I would share your observation that we’ve seen prices stabilize relatively here in the last week or so. I think it's probably too early to draw a conclusion. It might be a little bit early from a seasonal standpoint for seasonal demand really to be kicking in, but I take it as a positive that prices have stabilized somewhere in that $5 to $6 per 2 gigabyte device range in the last week. Q - Randy Abrams: Okay, final question. Maybe you can talk about the capital spending. In the press release, you mentioned 2.6 billion, and the prior guidance was 1.9. Is the difference the TECH JV and maybe within that talk about where capital spending has been the past couple of years in TECH JV, if that's what the delta is? A - Wilbur Stover: The 2.6 billion is the good number is an estimate for fiscal year '06. That has picked up Q3 and Q4 TECH spending, about 200 million for those two quarters. There has also been a little bit of a go forward of spending at the IM Flash effort. So I think it's between 100 million and 200 million that we have go forward into fiscal year '06, and that really was not a dramatic movement but rather just a slide of a couple months there. With regard to the capital spending profile for TECH, we have previously indicated that they do have a migration program to 300 mm; it's probably most significant as opposed to their historical pattern. I would go ahead and give you an indication that fiscal year '07 right now – it’s a little bit of a wide range, but the expectation is that's going to be between 3 billion and 3.5 billion consolidated including TECH, IM Flash and historical Micron operations. And that’s slightly more than 2 billion for IM Flash where you appreciate we have a partner that will be making capital contributions to share in the funding for that and the estimate for TECH in '07 is a little more than 500 million. Q - Randy Abrams: Okay, thanks a lot for the clarification. A - Wilbur Stover: Thanks Randy.

Thank you, our next question is coming from Glen Yeung of Citigroup. Q - Glen Yeung: Thanks. I think, I forgot who was speaking, was referring to supply/demand imbalance that emerged over the course of the latter part of the quarter, and part of that being driven by a reduced supply curve that you saw over the course of the quarter. I wonder, if we were to look forward into the next, call it two or three quarters, the remainder of the calendar year, what your sense is as to the supply/demand balance for DRAM looking forward. A - Michael Sadler: It's very difficult for us to predict what the supply/demand balance is going to be; it's so sensitive to a variety of factors. On the demand side, we feel -- on the DRAM side, we feel pretty good about a 50% to 60% annual demand growth in the DRAM area, and that could be accelerated somewhat if prices were to decline but we feel that's a pretty solid figure. And on the NAND Flash side, we feel pretty good about 200% on a per-bit basis growth rate for the year. And your guess is probably better than mine on what's going to happen to the supply side. I would add that we still believe that NAND Flash prices are offering better margins in general for DRAM today, and so the draw, if you will, for flex capacity shifting from Flash to DRAM probably isn't there yet. Q - Glen Yeung: Would that be true looking forward to your price expectations potentially down 20 or 25 for NAND and up 20 for DRAM? A - Michael Sadler: My statement refers to the current pricing today, so yes, it does take that into account. Q - Glen Yeung: So, I guess the obvious question would be, given the pricing that you see, and any mix shift that we will see in the quarter, what should we expect to see for gross margins? And just directionally is fine for the May quarter, particularly as we fold in the TECH JV. A - Wilbur Stover: Glen as you know, we historically have not guided to gross margins. We can’t tell you to expect again a mid to high single-digit cost reduction profile, and then on the ASP side, we'll let you continue to estimate what you think the rest of the quarter will be. Q - Glen Yeung: Okay great, thanks.

Thank you. Our next question is coming from Tim Luke of Lehman Brothers. Q - Tim Luke: Thank you. I was just wondering if you could clarify what your sense was of, what bit growth would be into the May period in the DRAM arena? Was that mid to high single digit? A - Wilbur Stover: Yes, it is. Q - Tim Luke: And could you give us a reminder on the split, DDR/DDR2, and how pricing might look in those two different arenas? A - Wilbur Stover: I can handle the split. We ran in Q2 about a 50/50 split. We're going to move a little bit more capacity into the DDR2, so maybe it ends up a 55% to 60% split. And maybe, Mike, you would like to address the ASP difference in DDR2 to DDR1? A - Michael Sadler: Sure. Today, the price that we are realizing for DDR and DDR2 on a per-bit basis is about the same. I would expect that as the PC becomes less of a demand driver for DDR, and it lends itself more towards server applications, that would tend to result in probably a higher selling price per bit. But that's certainly not a guarantee, but that's more than likely what's going to happen. Q - Tim Luke: I was also wondering with respect to the Flash business, I think you had suggested that the revenue in this February period might have been -- I think your guidance was that it might be flat, with units somewhat higher. Did it end up as around 7%, 8% of the mix or and going forward, should we think about with the lower pricing and limited capacity the revenue being slightly lower? Or you could offer some framework for thinking about how we should think about modeling the back half of the year for NAND? A - Wilbur Stover: Tim, we're going to stay away from providing any guidance on the revenue side, but maybe I can help you a little bit. The manufacturing arm of IMFT has gone really well. We have seen wafers up 30% Q2 over Q1. We will have another pretty hefty quarter of at least 20% wafer output growth in Q3 over Q2 as well. Again, we're going to stay away from kind of the revenue and bit growth expectations for now. Q - Tim Luke: Okay, and then another 20% in the following quarter in terms of the units? A - Wilbur Stover: In terms of wafer output. Q - Tim Luke: Wafer output, sorry. A - Wilbur Stover: And as you may know, we're also going through a shrink from 90 into the 70-nanometer node as well. Q - Tim Luke: Thank you very much. A - Wilbur Stover: Okay. You bet.

Thank you, our next question is coming from Joe Osha of Merrill Lynch. Q - Joseph Osha: Hey folks. Are you able to discuss on sort of a backward-looking basis what the Flash revenues are? Is it just sort of a wafer number that you are willing to give at this point? A - Kipp Bedard: Well, I think we’ve done that in the past. You saw a revenue percentage of around 6% last quarter, around 8% in fiscal Q2. So I'm referring fiscal Q1 to fiscal Q2. Wafer outs were about 6% last quarter. Again, that will be kind of in that 10% to 12% going into fiscal Q3, pretty good jump in wafer output. A - Steve Appleton: The other thing Joe worth noting is that we are now splitting that with our partner. So keep in mind that even though there's a cost basis, it comes back to the JV, that half of all of the -- if you think of it as revenue flow now goes through our partner. Q - Joseph Osha: And I remember Bill, you and I talked about this. As we model the consolidation of the JV, obviously, the margin that you pick up on your external sales from IMFT is subject to whatever pricing assumptions we have but IMFT itself should run at a 0% operating margin, and call it a mid to high single digits gross margin, as we think about how that consolidates? Would that be fair? A - Wilbur Stover: You've got the overall picture pretty close there, Joe. There's not much margin to the bottom line to the operating income from the sales to our partners or the IM Flash. Q - Joseph Osha: Right, but the entity has to generate enough gross margins to cover its own operating costs whatever those are. But they are not that high. A - Wilbur Stover: That's correct. Q - Joseph Osha: And then, have you guys said when we're going to see NAND output from Dominion? A - Mark Durcan: Yeah, we have. We will have product qualified, we shipping for revenues this quarter. And then it's basically a second half calendar '06 pretty steep ramp. Q - Joseph Osha: Okay and then last question, usually and I apologize you may have said this. Did you say that we should expect bit production to be mid to high single digits year end in this quarter? A - Mark Durcan: That's correct. Q - Joseph Osha: And that obviously pertains just to DRAM, not to the NAND business, does that wrap in that NAND number there as well? A - Mark Durcan: That's correct. That was just for DRAM only. We're going to stay away from guiding specifics on the NAND bit growth. Q - Joseph Osha: But you did give us the wafer, a wafer out number? A - Mark Durcan: That's correct. Q - Joseph Osha: Which is what again? I'm sorry. A - Mark Durcan: It was up 30% fiscal Q2 over Q1, and we'll see another at least 20% growth phase here in fiscal Q3 over Q2. Q - Joseph Osha: Can you give us a base? A - Mark Durcan: No. Actually, I can't. I can't, because if you remember what Steve mentioned at the analysts meeting in February, he said basically, we were beginning to process about 7200 wafer outs a week at that time. Q - Joseph Osha: Out of Boise? A - Mark Durcan: It has been mostly out of Boise; that's correct. And as I just mentioned, we will get first qualified product out of Virginia this quarter. Q - Joseph Osha: Understood. Thank you very much. A - Mark Durcan: You bet.

Thank you. Our next question is coming from Jim Covello of Goldman Sachs. Q - James Covello: Good afternoon guys, thanks so much. Big picture question. If I'm understanding the release correctly, if you strip out the one-time gain, on an operating basis you're still losing a little bit of money. And this is despite very good restructuring efforts and the pretty healthy end-market environment. And so the question is, what is the pathway to some meaningful profitability? And I guess seasonality has to be considered in all this, but what’s the pathway to meaningful profitability from here? A - Steven Appleton: Well, two things Jim. First, what we, of course we disclosed, I think the more significant items, which you referenced a gain, there are quite a few things that go on in the quarter that are pluses and minuses and even though cumulatively may add up to something of significance, we don't break them out because individually they are not that significant. I think you should think of -- basically, we thought we would be right about where we were forecasting internally this quarter. We ended up about where we thought. We did have some pluses and minuses besides what you noted. And, having said that, though, there's really few things that really lead us to better profitability. One is to continue the transition and get less dependent on the more commoditized parts, and the other is getting better pricing in the commoditized parts. Both of those will have an impact on us, and again it's mostly forecasted from the research groups. But most of them think that the remainder of this year will be more positive than what we have experienced historically, in particular on the DRAM front. Q - James Covello: Just quick follow-up question, then on the NAND Flash side. I don't think anybody doubts the 200% bit growth on the demand side. But with everybody increasing CapEx as robustly as they have, if you wind up with 220% supply growth and the pricing in NAND or the margins in NAND wind up being a little bit less attractive than in DRAM, what is your ability to respond to that to create tangible profitability if you will? A - Steven Appleton: Pretty good, and we've said all along that we would have the ability, the flexibility within the fabs to move back and forth. Obviously, we have a partner on the NAND front with Intel, so it has to be joint discussions with them. But regardless, the flexibility of the fabs that we currently are producing NAND, which primarily are Boise and then, obviously, Virginia we have noted is going to ramp this summer. Both of those -- well, in fact, they both produce DRAM today. So, the flexibility is very good for us. Q - James Covello: Terrific, final question from me. On the Lexar deal, deal on the surface which seems to make a lot of sense. A lot of the Lexar shareholders are obviously making some noise. Can you give us any perspective about why you think the deal makes sense, and your optimism that the deal can be closed without any further upheavals from the Lexar shareholders? Thank you so much. A - Steven Appleton: Yeah sure. I don't know if I'll be able to address that last part, because you'll have to talk to Lexar shareholders on that one. But with respect to the reason that we entered discussions to acquire Lexar, there are many of them. Of course, let me just first point out that the Lexar alternative is just one of many alternatives we have of taking our product to the marketplace. There's lots of different channels to do that, and lots of different customers to have that flow through. But having said that, we believe that the combination is good for a number of reasons. First of all, they do have a good team, they demonstrated some good engineering and good capability in the past. And we think we can take a lot of advantage of that. We also think that the potential of combining the two companies will bring a lot of value to the marketplace. When you take really what you think of as the silicon side of it and then you take the form factor side of it, and you put those two together and you optimize them for each other, that there are lot of things that can happen in the new product space that are pretty exciting. Obviously, it's also another channel in addition to the channels that we have in order to take the products to the market. So, we think just in combination, there are lot of good things that can happen and obviously, that's why we did what we did. And in terms of the latter part of your question, we think we’ve offered a fair price. And we’ve done a lot of evaluation, looked at the model, and we think that's a good price. It's going to be up to the Lexar shareholders now to do evaluation as to whether they think it's a fair price. And obviously, I can't speak for them. Q - James Covello: Thanks so much.

Thank you. Our next question is coming from Shawn Webster of JP Morgan. Q - Samir Barua: Hi, this is Samir Barua for Shawn Webster. I had a few clarifications. You had mentioned about megabyte production, could you clarify what were the megabyte shipments this quarter? A - Michael Sadler: Well, we don't give an exact number to that but I think we did say the shipments were roughly flat with last quarter, maybe down a percent or so. Q - Samir Barua: Right. And then in terms of just the inventories, you mentioned about having lean inventories, could you give some more color on what is the inventory composition you have, and what do you expect as inventory trends going into this quarter? A - Michael Sadler: Sure. Well, we are five weeks into fiscal Q3, and so, we are almost a little over a third of the way through the current quarter. Our inventory levels on virtually all our products are minimal. So, our business model requires us to carry somewhere between or close to two weeks worth of inventory in order to keep our customers running. And that's about where we are, maybe slightly less than that, so not much inventory at all. Q - Samir Barua: Last question was, if you could clarify your ranking of products by gross margin, is it same as last quarter, or have you seen some movements there? A - Michael Sadler: Pretty similar. We saw CMOS continue to lead in the highest gross margin and specialty DRAM, NAND and then PC DRAM. Q - Samir Barua: Great, thank you. A - Michael Sadler: You bet.

Thank you. Our next question is coming from David Wong of AG Edwards. Q - David Wong: Thank you very much. Can you give us some idea of how much your shipments -- you said it was roughly flat, bit shipment growth last quarter. Did you sell any stuff out of inventory? Was there any inventory wind-down? Approximately how much was that? A - Michael Sadler: Yeah, we are, our inventory levels at the end of the quarter were down from where we started the quarter. We started the quarter pretty lean as well. So, I don't remember exactly or I don't have at my fingertips exactly how much we brought them down, but probably a couple days' worth. Q - David Wong: Right. And on the TECH joint venture, when you consolidate it, does it have anything other than a minimal impact on either your top line or bottom line? Are there any revenues associated with the joint venture that don't actually get sold to Micron? A - Wilbur Stover: Micron has always had the complete off-take of production from TECH, such that the revenue line does not change at all. The TECH financials have been public, and throughout their history they have made a modest profitability. And when you look at the circumstances, you can anticipate over a reasonable time period, if there's no significant change, that there will not be a significant minority interests pickup. We get rid of the lag pricing relationship in consolidation, but you picked it up accurately -- revenue already fully recognized and no significant other impact. Q - David Wong: Thank you.

Thank you. Our next question is coming from Krishna Shankar of JMP Securities. Q - Krishna Shankar: You have given the recent pricing on 2 Gig, you mentioned around $5 to $6 per 2 Gigabyte NAND Flash and 512 Megabyte DRAM being somewhere in the $4.50 to $5 range. Would you still say that NAND Flash on a revenue per wafer basis is more profitable than DRAM? Can you sort of walk us through the cost dynamics of both NAND and DRAM at current levels? A - Michael Sadler: Yeah. Number one, I'm not going to be able to walk you through our cost structure, certainly. Our assumption is that the industry's cost on a per-bit basis for NAND Flash versus DRAM is probably about 1 to 3. And you can do the math, and that's where we think kind of the profitability crossover would be. Q - Krishna Shankar: Okay and with MP3 player demand being somewhat soft seasonally, what is your expectation for NAND Flash pricing going into Q2? Are we seeing -- do you expect the stability we have seen in the last couple of weeks to hold, or is this something where we could continue to see downward pressure on NAND Flash pricing? A - Michael Sadler: Don't know. I mean we could see to, continue to see downward pressure. As I mentioned earlier, we have seen some stability in spot market prices for NAND Flash over the last week, somewhere close to $6. And again, your guess would probably be as good as mine as to what’s going to happen over the next several weeks. Q - Krishna Shankar: And final question, what are your observations on the push-out of the consumer version of Vista, what that does for DRAM content in PCs in the second half of this year and potential PC demand given the delay in Vista? A - Michael Sadler: I think on the margin, it results in a more conservative DRAM demand for PCs than otherwise would have been the case. It wasn't fantastic news for us, but our expectations weren’t that Vista was going to result in a huge demand boost in calendar 2006. We still think, by and large, it's a -- we always thought of it as kind of a 2007 product. And sooner it gets in the marketplace, the better for us. But it's not going to save the day. Q - Krishna Shankar: Thank you.

Thank you. Our next question is coming from Gus Richard of First Albany Corp. Q - Gus Richard: Yes, could you just walk me through how you're accounting for the startup costs of IMFT as you ramp up the new fabs? A - Bill Stover: There were some initial, if you will, legal negotiation costs were expensed. But the bulk of the costs are set up as part of the formation of the entity. Honestly, I do not have any significant number in my head, so the answer is that there were not measurable costs to worry about. Q - Gus Richard: Okay, I was thinking as you ramp up the fab before they have production. A - Bill Stover: Excuse me. There's nothing different in the IM Flash accounting relative to ramping any other fab. So, the production costs of initial wafers being processed up to the point of qualification, going through an R&D process and once we hit quall, move into inventory. Q - Gus Richard: Got it, okay and then, if you look at IMFT on a stand-alone basis use, when you combine your sales and the sale to Intel, is that gross margin of the revenue from that above or below corporate average at current pricing? A - Bill Stover: Well, the gross margin on the NAND Flash product that sells to Intel is very, very thin. Q - Gus Richard: Exactly. And then, if you -- but that's 49% of the output. 51% of the output you sell in the open market. When you combine those two and just look at it all in, that total gross margin, how does that compare to the corporate? I'm just trying to get a slightly better way of modeling this. A - Bill Stover: Yeah, I think Mike's already given you an indication of the relative pricing environment and overall cost structure, NAND versus DRAM. We won't be giving any further guidance than that. Q - Gus Richard: Okay. Thanks a lot.

Thank you. Our next question is coming from Adam Parker of Sanford Bernstein. Q - Adam Parker: Yeah, hi, how would you put the 8% cost per megabyte reduction that you said -- how would you put that in terms of your normal cost reduction? I think you said it would be mid single-digits going forward. I'm just trying to figure out if that's the kind of cost reduction you get long term and year-end these days. A – Bill Stover: Yeah, I think that has been a pretty good number over the last year, Adam, and probably a solid number to look at going forward over the next four or five quarters. Q - Adam Parker: So it wasn't -- you weren't pointing it out -- you were just pointing it out as a fact, not as a good or bad thing? A – Bill Stover: That's right. Q - Adam Parker: Okay. I know you mentioned that the -- this is second question here in terms of getting rid of the lag pricing relationship with the TECH JV, but you still did get the same discount you always got. Is that right Steve? A - Steve Appleton: That's correct as far as cash flow. Q - Adam Parker: So it's just that it's no longer lag; it would just be that when the quarter starts you apply the discount, I'm just trying to figure out how to assume -- take the DRAM, multiply it -- 20, 25% comes from the TECH JV at the same discount you always got, and then the rest is what it is. A - Steve Appleton: The contractual relationship with TECH Semiconductor doesn't change, such that for purposes of our purchase of product, it remains the 25% lag quarter relationship. So in consolidation, we're picking up revenues, and then you start getting the actual cost profile of TECH as opposed to the discount purchase price relationship. What I was trying to convey earlier was if you look at the long-term history of TECH, it's modestly above breakeven. So when you aggregate the two entities results, the margin that Micron has earned over time on the TECH product is pretty representative of what the consolidated would look like going forward. Q - Adam Parker: But it should be true over time, the micron DRAM margins or profits are higher than the TECH profits. Is that -- by definition, right? A - Steve Appleton: If you think of the TECH being breakeven over time, and look at the long-term relationship of the discount pricing that Micron has enjoyed, that’s not that far off of the long-term history of DRAM margin enjoyed by Micron. Q - Adam Parker: I don't think I understood what you just said. Can you say that – I’m not that smart. Can you say again? So the TECH JV, long-term, has had -- you said profits at about the level of your industry. Is that above or below yours? A - Steve Appleton: The easiest way to think is that the margins enjoyed by TECH roughly approximate our historical margins. Q - Adam Parker: How could that be when you are getting it at a discount? A - Steve Appleton: I don't know how to take you through your host of questions on the conference call. We will be happy to engage with you offline and work the model. Q - Adam Parker: That's fine. Kipp has explained it to me so many times, I should know it by now anyway. But I still can't figure it out. All right. Thanks guys.

Thank you. Our next question is coming from John Lau of Jefferies & Company. Q - John Lau: Great, thank you. A lot of questions have been answered, but in terms of recent trends and the big picture, can you walk us through what has happened in terms of the PC demand given the slowdown? And have you seen that impact? And also, have you seen it pick up again? And if so, when? Thank you. A - Michael Sadler: Hi John, this is Mike speaking. I don't know that we have the best visibility on PC demand, because we are a supplier of components for the PC industry. I'll share with you my observations. We are seeing very strong notebook demand, based on the demand for small outlined end products from us, and that has not really slowed down at all. As a matter of fact, we have got customers screaming at us for more notebook memory today. Server demand has been pretty solid. We are continuing to see more memory density per server, and desktops relatively slow. But all in all, I would say it's about as expected. I don't know how the industry is going to grow this year on a unit basis, probably somewhere close to 10%. And we are seeing pretty healthy three percentage per month content growth, so quite happy with the demand profile. Q - John Lau: Okay. In terms of what you have been seeing in your end markets, not appreciably different from, then, what you had expected. But maybe you care to characterize that the supply was a little bit tighter than we thought, and you are enjoying a little bit better of a pricing environment as a result of that? A - Michael Sadler: My belief, our collective belief is that the more moderate supply growth in the first part of the year has resulted in an improved pricing environment. That's correct. Q - John Lau: Well, thank you. Thank you.

Thank you. Our next question is coming from Hans Mosesmann of Moors & Cabot. Q - Hans Mosesmann: Thank you. Question on CMOS sensors. What do you expect to get out of the constrained environment that you have there? Will that be in the May quarter? A - Michael Sadler: You are talking about our supply constraints on image sensors? Q - Hans Mosesmann: That's right. A - Michael Sadler: Yeah, it will be, it will be, should be in the August quarter, so in our fiscal Q4, although we are going to have very significant growth in the quarter that we are in right now versus Q2. So, we should be able to lift constraints altogether by our fiscal Q4. Q - Hans Mosesmann: Okay and what kind of market share do you estimate you have right now? I think you mentioned last time it was around 30% or 30% plus? A - Michael Sadler: I believe we are still taking market share, so it's probably slightly higher than that. It's very difficult to measure with precision, but somewhere between 30 and 40. Okay. Q - Hans Mosesmann: Thanks a lot.

Thank you, our next question is coming from Lilian Li of Kraft Investment (phonetic). Lilian your line is alive. Our next question is coming from Alex Gauna of UBS. Q - Alex Gauna: Yes thank you. You mentioned that if NAND conditions hold that you would be down perhaps some 20, 25% quarter-on-quarter for the May timeframe. Did you see a similar decline this current quarter, so that we are really talking about for the first half of the year is some 40 to 50% decline? And is that within your expectations? A - Michael Sadler: Can you repeat that? I just want to make sure I got the question right. Could you repeat the question? Q - Alex Gauna: I'm wondering, combining – when you gave some – I listened earlier, and you mentioned NAND pricing falling some 20 to 25%. If they hold now, for the May time frame, would be your expectation, and did you see a similar sort of decline for the February time frame? What was the ASP dynamic there? And is that consistent with the first-half pricing environment of being off some 40 to 50%? And is that within your expectations? A - Michael Sadler: Yes. I'd say that's an accurate statement. I mean ballpark, NAND prices are down roughly 50% since the beginning of the calendar year, and if they stabilize from this -- anyway, they are down roughly 50% from the beginning of the calendar year. Q - Alex Gauna: And you mentioned MP3s being one area of softness. Are there any areas that are under particular pressure right now? Are there any ways for you to find relief within certain card formats? What’s your mix dynamic like on that front? A - Michael Sadler: It is heavily weighted towards embedded consumer products like MP3 players, our mix today is. And as we are growing output through the IMFT joint venture, we're starting to enable some other markets like a variety of – participating with players who get us into a variety of card form factors and various other end products. But to date, we have been largely dependent upon embedded applications, specifically MP3 players. Q - Alex Gauna: Okay. And are you able to progress in terms of while you are involved with the Lexar negotiations, to develop some of these new relationships? Is that being impeded all by the talks right now? A - Michael Sadler: No, no. The Lexar negotiations or the intended acquisition of Lexar is really independent of our ability to develop new customers and new markets for our products. Q - Alex Gauna: And last one if I could. The development of your MLC technology -- how is that progressing? What are your expectations there? A - Michael Sadler: We're moving ahead well. The 90-nanometer is now -- MLC is now an internal quall. We anticipate qualifying that sometime this summer. We have silicon on our 72-nanometer MLC, and that’s looking pretty solid too. So we'd anticipate having samples out on that later this year, and in full flow development on 50-nanometer MLC. Q - Alex Gauna: Thank you very much.

Thank you. Our next question is coming from Bill Dezellem of Titan Capital Management. Q - Bill Dezellem: Thank you. We have a group of questions. First of all, relative to the Vista operating system delay, there were rumblings in the industry that there were going to be Vista-compatible systems out sometime in the spring, or required by Microsoft to be out in that timeframe. Does this impact the timing of that at all, given that it was only a couple of months movement in the actual shipment date? What's your view on that? A - Michael Sadler: I believe that it does, and I think the PC guys are probably breathing a big sigh of relief on that, because they were not too keen about loading a lot more memory into their systems in the face of rising DRAM prices. So yeah, I believe it does probably result in a push out of that by a quarter or two or something like that, Bill. It's probably worth mentioning that… Q - Bill Dezellem: At this point, when would you anticipate PC makers to start shipping the Vista-compatible systems? A - Michael Sadler: I don't know. I don't know. I really don't know. I mean, I didn't comb through the Microsoft announcement in any detail, as far as when they were going to release the operating system. But our customers, the PC makers were telling us that they were going to be maybe a quarter or so ahead of the release with the Vista-compliant systems from a hardware standpoint. So, I would imagine that's probably still going to hold. It's worth mentioning that we, all along, have thought the effective impact of Vista was going to be a lifting of the minimum configuration from a memory content standpoint to 1 gigabyte. We're on our way there, anyway. We're at somewhere between 700 megabyte and 800 megabyte per system today, growing 3% per month or something along those lines. So, we are headed there anyway; it's just, it is a delay of a quarter or two. Q - Bill Dezellem: That's helpful. And then, relative to shift from DRAM to Flash NAND in the industry, what update do you have in terms of the magnitude that continues to take place? Or is it a perception of you all that has stabilized now? A - Kipp Bedard: Bill, if you look at the public reports from other companies, they basically would say they’ve flattened out any kind of a conversion from DRAM to NAND. So now you can look at NAND growth and DRAM growth based more on the CapEx that they’ve guided to. Q - Bill Dezellem: And from everything you’ve seen, the public reports are reasonably reliable? A - Kipp Bedard: That's a whole different answer, whole different question, I guess, to that one. Q - Bill Dezellem: Well I will shift off to that then. Image sensors, very quickly, a couple of questions. What percent of the outs do they represent? I apologize if I missed it. And then secondarily, would you please update relative to the opportunities that you see for the non-mobile phone markets for image sensors? A - Kipp Bedard: Mike, do you want to start with that one? And then I'll follow up with the production piece. A - Michael Sadler: Sure. From today's revenue standpoint Bill, the most significant non-mobile phone piece for image sensors would be computer products. So, either accessory cameras to computers or embedded cameras to computers. We’ve talked publicly about some big design wins that we've had in the past, particularly in the notebook area, where we continue to make progress there. It's a meaningful portion of our imaging business today. Beyond that, we've got some business in the medical field as well, which is, I would say, it's also a meaningful percentage of our imaging business today, and we expect that's going to be growing pretty significantly as we move forward. We’ve got a whole slew of designs in the automotive area which are probably not going to come to fruition from a revenue generation standpoint until -- meaningfully, anyway, until late '07/'08 timeframe. And security is another area that we're starting to secure some design wins and should start to generate some revenue there within a year or so. A - Kipp Bedard: Bill on the image sensor side, we saw wafers up in the mid-teens level, which put it at about that level for total wafer outs compared to total micron wafer outs. In fiscal Q3 over Q2, we're looking at probably a little more than 20% wafer growth dedicated to image sensors. Q - Bill Dezellem: Great, thank you both. A - Michael Sadler: You bet.

Thank you. Our next question is coming from Ben Lynch of Deutsche Bank. Q - Ben Lynch: Yeah, hi guys, a couple of questions probably not as many, to allow speaker. It looks like gross margins were down around 250 basis points, Q on Q. Pretty simplistically, that is sort of in line with what you spoke about as the delta between DRAM ASPs being down about 12% and costs down about 8%. But it looks like you had a couple of positive things, deals that would have helped you -- TECH Semi costs would have been down, I guess, in line with the ASP drop in the prior quarter, so 15% or so. And CMOS image sensors, you haven't given specific numbers there, but you were talking about it quite positively. So, I am assuming it grew within the overall mix. I'm just wondering why we didn't see sort of just a better performance of gross margins. Is it maybe the increased sale of NAND products to Intel, or is there something I'm missing in the mixed space? A - Kipp Bedard: Yeah, that’s part of it Ben. We did start sharing half the output basically with our partners there for half the quarter, so that didn’t impact gross margins. And TECH Semi, just to be clarified, actually contributed lower gross margin percentage than it did last quarter. Keep in mind, in fiscal Q2, we still were under the quarter lag, and prices were down Q2 over Q1. So basically, those two impacted us on a more negative standpoint. Image sensors have a… Q - Ben Lynch: Your TECH Semi costs will have been down faster than your internal DRAM costs. So, the relative gross margin would have improved for TECH Semi. A - Kipp Bedard: No, you're… Q - Ben Lynch: Internal costs were down 8%, and your TECH Semi costs would have been down 15%, which is the ASP drop in the prior quarter. A - Kipp Bedard: No, you still saw a more significant price decline in fiscal Q2 than what we averaged buying product from TECH at in fiscal Q1. That's the relative comparison you need to make. Q - Ben Lynch: Okay, I still don't get that but I'll maybe get you offline. This is for Mike. When you spoke about, if you hold NAND ASPs where they are now, they would still be down 20% to 25%, is that for Micron's February to May, or from March to June? A - Michael Sadler: That is for our fiscal quarter, so the… Q - Ben Lynch: So, yes, February to May? A - Michael Sadler: May quarter. Q - Ben Lynch: My understanding is the steepest contract price declines are actually in March, so the June to March comparison would be even worse. Is that right? A - Michael Sadler: I believe the prices declined more severely in March than any other period. That's correct. Q - Ben Lynch: Okay, very good, and then just -- A - Kipp Bedard: And, Ben, I would like to just clarify that. That was just relative to NAND Flash. I didn't catch that in your question, but this is long, as everybody on the call… Q - Ben Lynch: Yeah, thank you. And the last question I had Bill, at the analysts day -- and maybe I just took bad notes, but I had understood that you said for SG&A to model 100 million going forward as some costs sort of go away. Now, this quarter, you said 115 million for the rest of the year. Did I just take bad notes, or has been maybe some change or…? A - Bill Stover: I don't remember my notes that time Ben. There has been an increase in our internal estimate. So, I do believe it's a byproduct of increased or most recent estimates reflective of both TECH and IM Flash. So, 115 looks like pretty solid guidance. Q - Ben Lynch: Right, thank you very much.

Thank you. Our next question is coming from Shailesh Jaitly of Nomura Securities. Q - Shailesh Jaitly: Yeah, hi thanks for taking my question. If you could just help me understand the cost reduction dynamics in the NAND segment, what proportion of your output in NAND is 70-nanometer now, and where do you expect it by end of the year? And if you could also help me walk through the MLC ramp in the same time frame, thanks? A - Michael Sadler: Sure. We haven’t given specific guidance for 70, but 90 and below is roughly 30% of all of our advanced products. So, it's a pretty good conversion happening there. As Mark mentioned, we're qualified on 72 coming out of Boise today, and we're looking on it on SLC and we’re looking at qualifying on the 72 range in MLC in the second half of the year. Q - Shailesh Jaitly:

A - Michael Sadler: That is correct. Q - Shailesh Jaitly: Okay, thank you. A - Michael Sadler: Welcome.

Thank you. Our next question is coming from Richard Prati of American Technology. Q - Richard Prati: Hi guys. Could you please tell us where you are right now as a percentage of output by product today, and where you would expect that to be, say, 6 to 12 months from now? A - Kipp Bedard: Sure. I think Steve did a pretty good job of outlining that at our analysts meeting in February, Richard. We’ve been running around 50% of our revenues coming from PC DRAM. Obviously, that's starting to move down. We have not as many wafers aimed at PC DRAM as we go forward here. So, I'm trying to give you a little bit of a feel for two things, one, the wafer allocation; and two, we're going to have to estimate the revenue impact based on what you think ASPs are going to do. But we're going to see, as a percentage, fewer PC DRAM heading down into that 40 range. We're going to see image sensors around 20% range. We had guided NAND Flash to be in the 17% to 20% range and the balance to be in specialty DRAM, in the fourth calendar quarter of '06. Q - Richard Prati: Okay, thanks a lot. A - Kipp Bedard: Yeah, you bet. And with that, we would like to thank everyone for participating on the call. If you will please bear with me, I need to repeat the Safe Harbor protection language. During the course of this call, we may have made forward-looking statements regarding the company and the industry. These particular forward-looking statements and all other statements that may have been made on this call that are not historical facts are subject to a number of risks and uncertainties, and actual results may differ materially. For information on the important factors that may cause actual results to differ materially, please refer to our filings with the SEC including the company's most recent 10-Q and 10-K. Thank you for joining us.

Thank you. This does conclude today's conference. You may disconnect all lines at this time and have a great day.