Micron Technology Inc.

10/09/2026 | Press release | Distributed by Public on 10/09/2026 06:21

Annual Report for Fiscal Year Ending 09-03, 2026 (Form 10-K)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This discussion should be read in conjunction with the consolidated financial statements and accompanying notes for the year ended September 3, 2026. All period references are to our fiscal periods unless otherwise indicated. Our fiscal year is the 52- or 53-week period ending on the Thursday closest to August 31. Fiscal 2026 contained 53 weeks and fiscal 2025 and 2024 each contained 52 weeks. All tabular dollar amounts are in millions, except per share amounts.
Overview
For an overview of our business, see Part I, Item 1. Business, Overview.
Industry Conditions
Memory and Storage Demand
AI-driven memory and storage demand growth is outpacing industry supply. In 2026, we continued to benefit from substantial improvements in pricing and margins, reflecting strong demand growth, driven in large part by the continued advancement of AI. The AI-driven growth in the data center has accelerated demand for memory and storage at a rate greater than our ability and the industry's ability to increase supply. This has led to decisions on supply allocation that may impact certain customers and end markets. Robust overall DRAM and NAND demand and constrained supply has led to increased pricing and improved the profitability across our portfolio.
In 2025, we benefited from substantial improvements in DRAM pricing, volumes and margins as compared to 2024, reflecting strong demand growth, driven in part by the continued advancement of AI. During 2025, we shifted a portion of our DRAM supply to the data center and hyperscale cloud markets to meet the strong demand fueled by AI, resulting in a revenue mix weighted more prominently toward segments experiencing higher growth. The pivot to higher-growth segments, together with our strong execution, robust overall industry DRAM demand, and constrained supply, led to improved profitability across our DRAM portfolio. In 2025, NAND revenue increased from 2024 on higher bit shipments due to demand growth. The 2025 NAND gross margin percentage increased from 2024 due to cost reductions.
Strategic Customer Agreements
The evolving industry landscape, characterized by strong long-term customer demand for memory solutions and structurally constrained supply growth, has elevated the strategic importance of memory to our customers' product roadmaps. As customers increasingly seek to secure committed long-term access to advanced memory technology and committed long-term memory supply, we have experienced increased customer engagement in strategic commitments. In the third and fourth quarters of 2026, we entered into, and expect to continue to enter into, strategic customer agreements. These agreements provide customers with contracted supply assurance and greater pricing visibility, and provide us with greater visibility and improved stability in our business performance.
Strategic customer agreements are structured as take-or-pay agreements, with binding commitments for specific volumes over the multi-year contract terms. Pricing for our contracts is either fixed or periodically negotiated, with the majority of the strategic customer agreements having pricing that is subject to minimum and maximum bands. We expect gross margins from our strategic customer agreements with price bands, even at floor pricing levels, to yield gross margins meaningfully above our peak quarterly margins in any past cycle. Accordingly, we believe these agreements accelerate the transformation of our business model and will significantly enhance the durability and predictability of our financial performance.
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Results of Operations
Consolidated Results
For the year ended 2026 2025 2024
Revenue $ 133,188 100 % $ 37,378 100 % $ 25,111 100 %
Cost of goods sold 25,684 19 % 22,505 60 % 19,498 78 %
Gross margin 107,504 81 % 14,873 40 % 5,613 22 %
Research and development 5,650 4 % 3,798 10 % 3,430 14 %
Selling, general, and administrative 1,947 1 % 1,205 3 % 1,129 4 %
Other operating (income) expense, net
567 - % 100 - % (250) (1) %
Operating income 99,340 75 % 9,770 26 % 1,304 5 %
Interest income (expense), net 978 1 % 19 - % (33) - %
Other non-operating income (expense), net
(647) - % (135) - % (31) - %
Income tax (provision) benefit
(14,761) (11) % (1,124) (3) % (451) (2) %
Equity in net income (loss) of equity method investees
59 - % 9 - % (11) - %
Net income $ 84,969 64 % $ 8,539 23 % $ 778 3 %
Total Revenue: Total revenue was impacted by the factors described in the section titled "Industry Conditions-Memory and Storage Demand" above.
Total revenue for 2026 increased 256% as compared to 2025 primarily due to increases in sales of both DRAM and NAND products.
•Sales of DRAM products increased 252% primarily due to an approximate 180% increase in average selling prices and a mid-20% range increase in bit shipments.
•Sales of NAND products increased 274% primarily due to an approximate 200% increase in average selling prices and a mid-20% range increase in bit shipments.
Total revenue for 2025 increased 49% as compared to 2024 primarily due to increases in sales of both DRAM and NAND products.
•Sales of DRAM products increased 62% primarily due to a low-40% range increase in average selling prices and a mid-teen percentage increase in bit shipments.
•Sales of NAND products increased 18% primarily due to a high-teen percentage increase in bit shipments.
Consolidated Gross Margin: Our consolidated gross margin has been impacted by the factors described in the section titled "Industry Conditions-Memory and Storage Demand" above. Our consolidated gross margin percentage improved to 81% for 2026 from 40% for 2025 as a result of improvements in margins for both DRAM and NAND products. Margins improved primarily due to increases in average selling prices and also benefited from favorable mix and manufacturing cost reductions due to continued strong execution.
Our consolidated gross margin percentage improved to 40% for 2025 from 22% for 2024 as a result of improvements in margins for both DRAM and NAND products. DRAM margins improved primarily due to increases in average selling prices, an increased mix of higher-margin products, including HBM, and manufacturing cost reductions driven by improvements in product and process technology. NAND margins improved primarily due to manufacturing cost reductions. Our consolidated gross margin for 2024 reflected $987 million of benefit due to lower costs from the sale of inventories written down to their net realizable value in 2023.
Revenue by Business Unit
For the year ended 2026 2025 2024
CMBU
$ 43,085 32 % $ 13,524 36 % $ 3,792 15 %
CDBU
37,592 28 % 7,229 19 % 4,984 20 %
MCBU
36,601 27 % 11,859 32 % 11,667 46 %
AEBU
15,886 12 % 4,753 13 % 4,631 18 %
All other
24 - % 13 - % 37 - %
$ 133,188 $ 37,378 $ 25,111
Percentages of total revenue may not total 100% due to rounding.
Changes in revenue for each business unit for 2026 as compared to 2025 were as follows:
•CMBU revenue increased 219% primarily due to increases in average selling prices and bit shipments.
•CDBU revenue increased 420% primarily due to increases in average selling prices and bit shipments.
•MCBU revenue increased 209% primarily due to increases in average selling prices, partially offset by lower bit shipments as MCBU product supply was redirected to other business units.
•AEBU revenue increased 234% primarily due to increases in average selling prices and bit shipments.
Changes in revenue for each business unit for 2025 as compared to 2024 were as follows:
•CMBU revenue increased 257% primarily due to increases in DRAM bit shipments and average selling prices driven by accelerating AI demand in cloud server markets for HBM, high-capacity dual in-line memory modules ("DIMMS"), and low-power server DRAM. During 2025, CMBU revenue benefited from a shift of our DRAM supply to meet the strong demand in high-value data center markets.
•CDBU revenue increased 45% primarily due to increases in average selling prices for both data center DRAM and NAND and NAND bit shipments due to increased demand for data center SSDs.
•MCBU revenue increased 2% primarily due to increases in DRAM and NAND revenue. Increases in MCBU DRAM sales due to higher average selling prices were partially offset by decreases in bit shipments as MCBU product supply was constrained to meet demand from higher-value segments. Increases in NAND sales due to higher bit shipments were partially offset by decreases in NAND average selling prices.
•AEBU revenue increased 3% primarily due to increases in DRAM and NAND bit shipments, partially offset by declines in average selling prices for both DRAM and NAND as a result of pricing pressure for certain legacy products.
Operating Income (Loss) by Business Unit
For the year ended 2026 2025 2024
CMBU
$ 31,225 72 % $ 6,129 45 % $ 244 6 %
CDBU
29,539 79 % 2,180 30 % 255 5 %
MCBU
29,208 80 % 1,981 17 % (1) - %
AEBU
11,217 71 % 557 12 % 432 9 %
All other
2 8 % (1) (8) % 18 49 %
$ 101,191 $ 10,846 $ 948
Percentages reflect operating income (loss) as a percentage of revenue for each business unit.
Operating income was higher for each business unit in 2026 as compared to 2025 primarily due to increases in average selling prices. Operating income for CMBU, CDBU, and AEBU in 2026 also benefitted from higher bit shipments.
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Changes in operating income or loss for each business unit for 2025 as compared to 2024 were as follows:
•CMBU operating income increased primarily due to higher bit shipments and increases in average selling prices driven by robust AI demand in cloud server markets, particularly for HBM, DIMMs, and low-power server DRAM products. CMBU operating income benefited from a shift of our DRAM supply to meet the strong demand in high-value data center markets. These improvements were partially offset by higher R&D expenses.
•CDBU operating income increased primarily due to increases in data center average selling prices, higher bit shipments, and manufacturing cost reductions.
•MCBU operating income (loss) improved primarily due to increases in DRAM average selling prices, manufacturing cost reductions, and higher NAND bit shipments, partially offset by decreases in NAND average selling prices. MCBU operating income (loss) was also adversely impacted by decreases in DRAM bit shipments as MCBU product supply was constrained to meet demand from higher-value segments.
•AEBU operating income increased primarily due to manufacturing cost reductions and higher bit shipments, partially offset by declines in average selling prices.
Operating Expenses and Other
Research and Development: R&D expenses vary primarily with the number of development and pre-qualification wafers processed and end-product solutions developed, personnel costs, and the cost of advanced equipment dedicated to new product and process development. Because of the lead times necessary to manufacture our products, we typically begin to process wafers before completion of performance and reliability testing. Development of a product is deemed complete when it is qualified through internal reviews and tests for performance, functionality, and reliability. R&D expenses can vary significantly depending on the timing of product qualification and product specifications.
R&D expenses for 2026 increased 49% as compared to 2025 primarily due to increases in employee compensation, including higher variable compensation expense, and higher volumes of development and pre-qualification wafers, as we ramp R&D investments in support of long-term opportunities in memory and storage. R&D expenses for 2025 increased 11% as compared to 2024 primarily due to increases in employee compensation, depreciation expense, and higher volumes of development and pre-qualification wafers.
Selling, General, and Administrative: SG&A expenses for 2026 increased 62% as compared to 2025 primarily due to increases in employee compensation, including higher variable compensation expense, and community investments. SG&A expenses for 2025 increased 7% as compared to 2024 primarily due to increases in employee compensation and professional services.
Interest Income (Expense), Net: Interest income (expense) improved in 2026 as compared to 2025 primarily due to an increase in interest income due to higher cash and investments balances and a decrease in interest expense due to lower debt balances. Interest income (expense) improved in 2025 as compared to 2024 primarily due to decreases in interest expense as a result of increased capitalized interest driven by higher levels of building construction, partially offset by decreases in interest income due to lower interest rates on our cash and investments.
Income Taxes: Our income tax (provision) benefit consisted of the following:
For the year ended 2026 2025 2024
Income before taxes $ 99,671 $ 9,654 $ 1,240
Income tax (provision) benefit (14,761) (1,124) (451)
Effective tax rate 14.8 % 11.6 % 36.4 %
The change in our effective tax rate for 2026 as compared to 2025 was primarily due to the 15% minimum tax Pillar Two Model Rules ("Pillar Two"). Singapore enacted legislation to implement Pillar Two, effective for us in 2026, which largely offsets the benefit from our Singapore tax incentive arrangements. The change in our effective tax rate for 2025 as compared to 2024 was primarily due to changes in profitability.
We operate in a number of jurisdictions outside the United States, including Singapore, where we have tax incentive arrangements. These incentives expire, in whole or in part, at various dates through 2034 and are conditional, in part, upon meeting certain business operations and employment thresholds. Singapore legislation surrounding Pillar Two largely offset our Singapore tax incentive arrangements, resulting in a net benefit from tax incentive arrangements for our tax provision of $2.21 billion (benefiting our diluted earnings per share by $1.93) and $1.05 billion (benefiting our diluted earnings per share by $0.93) for 2026 and 2025, respectively. As a result of the low level of profitability and the jurisdictional mix of income, the benefit from tax incentive arrangements was not material for 2024.
Various tax reforms are being considered in multiple jurisdictions that, if enacted, contain provisions that could materially impact our tax expense. We continue to monitor the potential impact of these various tax reform proposals to our overall global effective tax rate and financial statements.
Other: Further information can be found in the following notes contained in Item 8. Financial Statements and Supplementary Data, Notes to Consolidated Financial Statements:
•Note 9. Debt
•Note 14. Equity Compensation Plans
•Note 17. Other Operating (Income) Expense, Net
•Note 18. Income Taxes
Liquidity and Capital Resources
Our primary source of liquidity is cash generated from operations. We also receive significant funding from government assistance and customer deposits associated with strategic customer agreements. In prior years, we have obtained significant financing from capital markets and financial institutions. Cash generated from operations is highly dependent on selling prices for our products, which can vary significantly from period to period.
Cash and marketable investments totaled $73.45 billion as of September 3, 2026, and $11.94 billion as of August 28, 2025. Our cash and investments consist primarily of bank deposits, money market funds, and liquid investment-grade, fixed-income securities, which are diversified among industries and individual issuers. To mitigate credit risk, we invest in high-credit-quality issuers and, by policy, generally limit the concentration of credit exposure by restricting the amount of investments with any single obligor. To mitigate interest rate risk, we primarily invest in shorter term securities. As of September 3, 2026, $5.12 billion of our cash and marketable investments was held by our foreign subsidiaries.
In 2026, we executed strategic customer agreements with a number of customers. These agreements included binding commitments for specific contractually enforceable volumes over the multi-year contract terms. Strategic customer agreements often include substantial customer deposits that are returned to the customer if the customer meets the minimum purchase commitments. If the customer does not meet the minimum purchase commitments, we may retain all or a portion of the deposit. In connection with these strategic customer agreements, we received cash deposits of $12.75 billion in 2026. Nearly all of the deposits are scheduled to be repaid between 2029 and 2031. Certain strategic customer agreements also include terms requiring our customers to maintain letters of credit with third-party financial institutions. Our right to access such letters of credit is contingent upon the occurrence of specified events of default or breach by our customers. Letters of credit are not recognized as revenue unless an event of default or breach has occurred. The aggregate amount of letters of credit issued, or contractually committed to be issued, by third-party financial institutions was $7 billion as of September 3, 2026. In the event of customer default or breach, our contractual recovery rights may include proceeds from letters of credit, rights to decrement customer deposits and other contractual remedies.
We continuously evaluate alternatives for efficiently funding our capital expenditures and ongoing operations. As of September 3, 2026, $2.00 billion was available to draw under our Revolving Credit Facility. Funding of certain significant capital projects is also supported by the receipt of government incentives. Our incentives are conditioned upon achieving or maintaining certain outcomes and satisfying compliance requirements and are subject to reduction, termination, or clawback.
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To develop new product and process technology, support future growth, achieve operating efficiencies, and maintain product quality, we must continue to invest in manufacturing technologies, facilities and equipment, and R&D. We estimate capital expenditures for property, plant, and equipment, net of proceeds from government incentives, to be approximately $11.5 billion in the first quarter of 2027, approximately $25 billion in the first six months of 2027, and higher in the second half of 2027. Actual amounts for 2027 will vary depending on market conditions and may vary from quarter to quarter due to the timing of expenditures and proceeds from government incentives. As of September 3, 2026, we had purchase obligations of approximately $4.18 billion for the acquisition of property, plant, and equipment, substantially all of which is expected to be paid within one year. For a description of other contractual obligations, such as finance leases, debt, and commitments, see Item 8. Financial Statements and Supplementary Data, Notes to Consolidated Financial Statements, Note 9. Debt as well as Note 10. Commitments.
In addition to the supply capacity we generate through our proprietary product and process technology that increases bit density per wafer, we will need to add new DRAM wafer capacity to support projected memory demand in the second half of the decade and beyond. Following the enactment of the CHIPS Act, we announced plans to invest in leading-edge memory manufacturing sites in Idaho and New York, based on CHIPS Act support through grants and investment tax credits.
As part of this plan, in September 2022, we broke ground on a leading-edge memory manufacturing fab in Boise, Idaho. Construction of the fab began in October 2023, with first DRAM wafer output projected in mid-calendar 2027. In June 2025, in connection with certain amendments to our CHIPS Act agreements, we announced plans for a second leading-edge memory manufacturing fab in Idaho to serve growing market demand fueled by AI. Construction activities for the second Idaho fab began in 2026, and we expect initial wafer output by late calendar 2028.
Our investment plan for New York includes construction of a leading-edge DRAM memory manufacturing site, consisting of up to four fabs to be built over the next 20-plus years, in Clay, New York. In January 2026, we broke ground on our first New York fab. In July 2026, we achieved the first concrete pour for the foundation of that fab, marking the transition from site preparation into vertical construction. We expect initial wafer output in calendar 2030. We expect these new fabs to be key to meeting our requirements for additional wafer capacity, in line with industry demand trends and our objective of maintaining stable bit share.
In 2026, we launched first production starts of our 1α (1-alpha) DDR4 technology in our Manassas, Virginia, fab, which will add to our capability to support the legacy product needs of our customers in auto, industrial, medical, aerospace and defense markets.
In December 2024, we entered into direct funding agreements with the U.S. Department of Commerce for up to $6.1 billion in direct funding pursuant to the CHIPS Act for a planned fab in Boise, Idaho, and two planned fabs in Clay, New York. In June 2025, we entered into amendments to the direct funding agreements to add a second planned fab in Boise, Idaho, and allocate certain award funding to the second planned Idaho fab from the $6.1 billion grants previously awarded under the December 2024 direct funding agreements. The direct funding for up to $6.1 billion remains unchanged. In June 2025, we also entered into a direct funding agreement with the U.S. Department of Commerce for up to $275 million in direct funding to expand and modernize our fab in Manassas, Virginia. The grants under the funding agreements represent total CHIPS Act grants of up to $6.4 billion in connection with our U.S. manufacturing expansion and modernization projects. In addition, we announced plans to bring advanced HBM packaging capabilities to the United States.
In addition to the CHIPS Act direct funding, we receive a 35% investment tax credit on qualified investments in U.S. semiconductor manufacturing under the CHIPS Act. We have also signed a non-binding term sheet with the State of New York that provides for up to $5.5 billion in funding for the planned four-fab facility over the next 20-plus years through a combination of tax credits for qualified capital investments and incentives for eligible new job wages.
In August 2026, we announced the establishment of Micron Research Labs, a long-horizon research institution headquartered in Boise, Idaho, supported by a planned investment of approximately $10 billion over the next decade to advance memory, compute and semiconductor manufacturing technologies.
Outside the United States, we are investing in manufacturing technologies, facilities and equipment, and R&D, and advancing our global back-end assembly and test network. These investments support our product portfolio and extend our ability to meet global market demand in the future. Planned investments and those underway include the following:
•India: Our assembly and test facility in Gujarat commenced commercial shipments and started ramping production in 2026;
•Japan: We broke ground in July 2026 on a new cleanroom project at our Hiroshima manufacturing facility as part of our ongoing modernization efforts to support future DRAM technology transitions, including HBM and other AI-driven memory products. The project will expand available cleanroom space and we expect initial output in late calendar 2028, enhancing our advanced memory manufacturing capabilities and supporting future customer demand;
•Singapore: We broke ground in January 2025 on an HBM advanced packaging facility to meaningfully expand our total advanced packaging capacity beginning in early calendar 2027. In January 2026, we broke ground on an additional advanced wafer fab facility located within our existing NAND manufacturing complex. This facility will provide additional cleanroom space when it becomes operational in the second half of calendar 2028, helping address growing market demand for NAND technology driven by the rapid expansion of AI and data-centric applications; and
•Taiwan: We are modernizing and expanding our existing production capacity for DRAM and HBM products to meet rising market demand. In March 2026, we completed the acquisition of a wafer fabrication facility in Tongluo, Miaoli County, Taiwan, from Powerchip Semiconductor Manufacturing Corporation for cash consideration of $1.8 billion. We expect this site to support meaningful product shipments from the existing fab beginning in mid-calendar 2027. Adding to the existing fab, we have begun construction of a similar-sized second cleanroom at this site.
In certain countries outside of the United States, we receive or expect to receive, government incentives related to our investments. The amounts of these government incentives generally offset a portion of our planned investments and require us to meet certain conditions in order to receive such incentives.
See Item 8. Financial Statements and Supplementary Data, Notes to Consolidated Financial Statements, Note 15. Government Incentives.
In 2018, our Board of Directors has authorized the discretionary repurchase of up to $10 billion of our outstanding common stock through open-market purchases, block trades, privately-negotiated transactions, derivative transactions, and/or pursuant to Rule 10b5-1 trading plans and on October 8, 2026 our Board of Directors authorized an increase in the maximum amount of discretionary repurchases of our outstanding common stock to be made from December 9, 2026 to $35.16 billion. Any repurchases made will be in accordance with our CHIPS Act direct funding agreements. Our stock repurchase program and the new authorization have no expiration date, do not obligate us to acquire any common stock, and are subject to market conditions, restrictions applicable under our CHIPS Act direct funding agreements, and our ongoing determination of the best use of available cash. See Item 8. Financial Statements and Supplementary Data, Notes to Consolidated Financial Statements, Note 12. Equity, as well as Note 15. Government Incentives.
On September 30, 2026, our Board of Directors declared a quarterly dividend of $0.15 per share, payable in cash on October 29, 2026, to shareholders of record as of the close of business on October 14, 2026. The declaration and payment of any future cash dividends are at the discretion and subject to the approval of our Board of Directors. Our Board of Directors' decisions regarding the amount and payment of dividends will depend on many factors, including, but not limited to, our financial condition, results of operations, capital requirements, business conditions, debt service obligations, contractual restrictions, industry practice, legal requirements, regulatory constraints, and other factors that our Board of Directors may deem relevant.
We expect that our cash and investments, cash flows from operations, funding from government incentives, customer deposits under strategic customer agreements, and available financing will be sufficient to meet our requirements at least through the next 12 months and thereafter for the foreseeable future.
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Cash Flows
For the year ended 2026 2025 2024
Net cash provided by operating activities $ 89,675 $ 17,525 $ 8,507
Net cash used for investing activities
(61,641) (14,087) (8,309)
Net cash provided by (used for) financing activities 630 (850) (1,842)
Effect of changes in currency exchange rates on cash, cash equivalents, and restricted cash 81 6 40
Net increase (decrease) in cash, cash equivalents, and restricted cash $ 28,745 $ 2,594 $ (1,604)
Operating Activities: Cash provided by operating activities reflects net income adjusted for certain non-cash items, including depreciation expense, amortization of intangible assets, and stock-based compensation, and the effects of changes in operating assets and liabilities.
The increase in cash provided by operating activities for 2026 as compared to 2025 was primarily due to higher net income in 2026, adjusted for non-cash items, an increase in accounts payable and accrued expenses mostly related to income and other taxes and salaries, wages, and benefits, an increase in other current liabilities resulting mainly from higher consideration payable to customers for pricing adjustments, and an increase in noncurrent liabilities largely due to higher noncurrent income taxes payable related to the implementation of Pillar Two. These increases were partially offset by a significant increase in receivables due to higher revenue in 2026.
The increase in cash provided by operating activities for 2025 as compared to 2024 was primarily due to higher net income in 2025 adjusted for non-cash items, the effect of changes in receivables and accounts payable and accrued expenses, and a decrease in inventory, partially offset by a decrease in other current liabilities.
Investing Activities: For 2026, net cash used for investing activities consisted primarily of $32.88 billion of net outflows from purchases, maturities, and sales of available-for-sale securities, $30.71 billion of expenditures for property, plant, and equipment, and $1.05 billion of purchases of non-marketable equity securities, partially offset by $3.32 billion of proceeds from government incentives to offset capital expenditures.
For 2025, net cash used for investing activities consisted primarily of $15.86 billion of expenditures for property, plant, and equipment and $192 million of net outflows from purchases, maturities, and sales of available-for-sale securities, partially offset by $2.01 billion of proceeds from government incentives to offset capital expenditures.
For 2024, net cash used for investing activities consisted primarily of $8.39 billion of expenditures for property, plant, and equipment and $205 million of net outflows from purchases, maturities, and sales of available-for-sale securities, partially offset by $315 million of proceeds from government incentives to offset capital expenditures.
Financing Activities: For 2026, net cash provided by financing activities consisted primarily of $12.75 billion of proceeds from customer contract liability deposits on strategic customer agreements; partially offset by $10.04 billion of repayments of debt; $1.13 billion for the repurchases of common stock for withholdings on employee equity awards; $650 million for the acquisition of 2.5 million shares of our common stock under our share repurchase authorization; and $610 million for the payments of dividends to shareholders. See Item 8. Financial Statements and Supplementary Data, Notes to Consolidated Financial Statements, Note 16. Revenue and Customer Contract Liabilities and Note 9. Debt.
For 2025, net cash used for financing activities consisted primarily of $4.62 billion of repayments of debt; $522 million for the payments of dividends to shareholders; and $340 million for the repurchases of common stock for withholdings on employee equity awards; partially offset by approximately $4.43 billion of proceeds from the issuance of debt.
For 2024, net cash used for financing activities consisted primarily of $1.90 billion of repayments of debt; $513 million for the payments of dividends to shareholders; $300 million for the acquisition of 3.2 million shares of our common stock under our share repurchase authorization; and $233 million for the repurchases of common stock for withholdings on employee equity awards; partially offset by approximately $1.00 billion of proceeds from the issuance of debt.
Critical Accounting Estimates
The preparation of financial statements and related disclosures in conformity with U.S. GAAP requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, expenses, and related disclosures. Estimates and judgments are based on historical experience, forecasted events, and various other assumptions that we believe to be reasonable under the circumstances. Estimates and judgments may vary under different assumptions or conditions and involve a significant level of uncertainty. We evaluate our estimates and judgments on an ongoing basis. Our management believes the accounting policies below are critical in the portrayal of our financial condition and results of operations and require management's most difficult, subjective, or complex judgments.
Contingencies: We are subject to the possibility of losses from various contingencies. Significant judgment is necessary to estimate the probability and amount of potential losses. An accrual is made when a potential loss is both probable and reasonably estimable. When accounting for the resolution of contingencies, significant judgment may be necessary to determine whether losses pertain to prior, current, or future periods, which affects the timing of recognition in the results of operations.
Government incentives: We receive incentives from governmental entities related to capital expenditures, expenses, and other activities. The government incentives we receive may require that we meet or maintain specified spending levels and other operational metrics and may be subject to reimbursement if such conditions are not met or maintained. Failure to comply with these terms and conditions could result in termination of incentive programs or clawbacks of incentive amounts received.
Government incentives are recognized in the financial statements based on the underlying principal criteria for earning the incentives when there is reasonable assurance that the conditions of the government incentives are met and the incentive will be received. Incentives related to the acquisition or construction of property, plant and equipment are recognized as a reduction in the carrying amounts of the related assets and as a reduction of subsequent depreciation expense over the useful lives of the assets. Incentives related to specific operating activities are offset against the related expense in the period the expense is incurred. For each project, we estimate the total expected project costs and recognize a proportionate benefit as qualified project costs are incurred. As the estimated total expected qualified project cost changes, we adjust our estimate of the recognized proportionate benefit.
Income taxes: We are required to estimate our provision for income taxes and amounts ultimately payable or recoverable in numerous tax jurisdictions around the world. These estimates involve significant judgment and interpretations of regulations and are inherently complex. Resolution of income tax treatments in individual jurisdictions may not be known for many years after completion of the applicable year. We are also required to evaluate the realizability of our deferred tax assets on an ongoing basis in accordance with U.S. GAAP, which requires an assessment of our performance and other relevant factors. Realization of deferred tax assets is dependent on our ability to generate future taxable income. Our income tax provision or benefit is dependent, in part, on our ability to forecast future taxable income in the United States, Japan, Malaysia, and other jurisdictions. Such forecasts are inherently difficult and involve significant judgments including, among others, projecting future average selling prices and sales volumes, manufacturing and overhead costs, levels of capital spending, and other factors that significantly impact our analyses of the amount of net deferred tax assets that are more likely than not to be realized.
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Inventories: Inventories are stated at the lower of cost or net realizable value, with cost being determined on a first-in, first-out ("FIFO") basis. Cost includes depreciation, labor, material, and overhead costs, including product and process technology costs. Determining net realizable value of finished goods and work in process inventories involves significant judgments, including projecting future average selling prices, future sales volumes, and future cost per part. To project average selling prices and sales volumes, we review recent sales volumes, existing customer orders, current contract prices, industry analyses of supply and demand, and general economic trends. To project cost per part, we review trends and historical results and consider known changes in our cost structure as applicable. Actual selling prices may vary significantly from projected prices due to the volatile nature of the semiconductor memory and storage markets. When these analyses reflect estimated net realizable values below our manufacturing costs, we recognize a charge to cost of goods sold in advance of when inventories are actually sold. As a result, the timing of when product costs are charged to costs of goods sold can vary significantly. Differences in future average selling prices used in calculating lower of cost or net realizable value adjustments can result in significant changes in the estimated net realizable value of finished goods and work in process inventories and accordingly the amount of write-down recognized.
U.S. GAAP provides for products to be grouped into categories in order to compare costs to net realizable values. The amount of any inventory write-down can vary significantly depending on the determination of inventory categories. We review the major characteristics of product type and markets in determining the unit of account for which we perform the lower of cost or net realizable value analysis and categorize all inventories (including DRAM, NAND, and other memory) as a single group.
Property, plant, and equipment: We periodically assess the estimated useful lives of our property, plant, and equipment based on technology node transitions, capital spending, and equipment re-use rates. We also review the carrying value of property, plant, and equipment for impairment when events and circumstances indicate that the carrying value of an asset or group of assets may not be recoverable from the estimated future cash flows expected to result from its use and/or disposition. In cases where undiscounted expected future cash flows are less than the carrying value, an impairment loss is recognized equal to the amount by which the carrying value exceeds the estimated fair value of the assets. The estimate of future cash flows involves numerous assumptions which require significant judgment by us, including, but not limited to, future use of the assets for our operations versus sale or disposal of the assets, future selling prices for our products, and future production and sales volumes.
Revenue: We estimate a liability for returns using the expected value method based on historical returns. In addition, we generally offer price protection to our distributors, which is a form of variable consideration that decreases the transaction price. We use the expected value method, based on historical price adjustments and current pricing trends, to estimate the amount of revenue recognized from sales to distributors. Differences between the estimated and actual amounts are recognized as adjustments to revenue.
Recently Adopted Accounting Standards
See Item 8. Financial Statements and Supplementary Data, Notes to Consolidated Financial Statements, Note 2. Recently Adopted Accounting Standards.
Recently Issued Accounting Standards
See Item 8. Financial Statements and Supplementary Data, Notes to Consolidated Financial Statements, Note 3. Recently Issued Accounting Standards.
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