Western Digital Corp at Barclays Global Technology Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Thomas O'Malley - Barclays - Analyst : So revenue split relatively evenly between the two businesses, as we've known, but profitability, you get a view of the Flash business in general. Can you talk about efforts that can be made on the Flash side over the course of the next year where you can see that increasing profitability? Obviously, you have the supply-demand dynamic, which is going to be something out of your control largely. But on that portion of the business, could you just walk us through what are areas where you can do some, I'd say, self-help or areas that you can help improve profitability there? That will be the focus.

Question: Thomas O'Malley - Barclays - Analyst : We can even back it up a little bit from there because I think a great question to follow up with that is, you talked on the earnings call about operating the business separately throughout the quarter and seeing if the processes in place were such that you felt comfortable having the businesses REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 12, 2024 / 5:15PM, WDC.OQ - Western Digital Corp at Barclays Global Technology Conference separate. How has that gone thus far? We're a decent chunk of the way through here. So anything that you would note since the earnings call about that process?

Question: Thomas O'Malley - Barclays - Analyst : Looking at the split there, the Flash side, I think the debate here is what is supply-demand going to look like in 2025? So any comments on the state of the market from a top line perspective? One. And two, to the original question is, clearly, you've gotten a view of operating margins for the first time. What can you do from a self-help perspective to help improve those as well? Because I think that's an area of leverage that people will pay most attention to.

Question: Thomas O'Malley - Barclays - Analyst : Of course, I asked a deep question right away and then you answered my next five questions. So why don't we touch on a couple of --

Question: Thomas O'Malley - Barclays - Analyst : No, very good. So I guess the first question is just on the utilization in the market today. So you obviously have a unique JV that is a little different than people who are just utilizing their own factory. There's a little bit more of a complex arrangement there. But if you were to look at the industry today, can you talk about where you think utilizations are on the core NAND product? Let's just separate eSSD from traditional NAND. Where are the utilizations today? And you talked about rightsizing for potentially some choppiness if that does occur. You're not saying that it is going to occur. But how easy is that for you to do? And do you have the ability to pull back, aka are you already at a low utilization rate or are you close to kind of being fully committed?

Question: Thomas O'Malley - Barclays - Analyst : Okay. So another part that you mentioned that I wanted to hit on was eSSDs, so two things. It's obviously becoming a more substantial portion of your business already. It sounds like you expect that there is room for growth into 2025. How big can that growth factor be is question one? And the second part of that question is, if you look at like the application, there's obviously some return in enterprise demand, which has been muted for a while, but then there's also the AI side of things as well. Where is that demand profile being driven from? And where is Western Digital from a competitive perspective there? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 12, 2024 / 5:15PM, WDC.OQ - Western Digital Corp at Barclays Global Technology Conference

Question: Thomas O'Malley - Barclays - Analyst : When you said this unique intersection and this will be my bridge to the hard disk drive side of seeing both of those worlds, right? So when you look at those two offerings, today, you largely haven't seen that much adoption on the hard disk drive side going to AI. There's a variety of reasons and conversations I've had at this conference where people talk about why that is why it is. But where do you see the long-term storage solutions moving for AI? Is it more on the NAND side? Is it more on the hard disk drive side? Maybe walk through that.

Question: Thomas O'Malley - Barclays - Analyst : I think it's a reasonable way to think about it. I think that the technology development, as you started with, is very key, and I think it's a perfect kind of segue into the hard disk drive side of the business, where I think over the course of at least the better part of 12 months, you guys have seen some technology leadership on the HDD side. Your competitor just announced last week that they had finally gotten qualified at their lead customer to you. I anticipate your answer here, but is there any change in the technology dynamic, given where you were before? I could probably give it to you. But is there any change now that, that is qualified? Now that, that is a working product in the market, does that change your view of the market? And then versus where you previously were on your intersection point of that market with your HAMR technology, has your view of that changed either? A quick update if it's unchanged.

Question: Thomas O'Malley - Barclays - Analyst : And I want to go into the gross margins because it's been great. But in terms of the timing, I'll push just a little more here. Clearly, there was a delay in the original product for your competitor. When you think about when you think the 40-TB HAMR comes to market, do you have a timing for that or is that market-dictated?

Question: Thomas O'Malley - Barclays - Analyst : Yes. I think from a technology road map perspective, I think most would agree you've taken the right approach. I think not to say that there are multiple things that are also helping. I think from a supply perspective, that has been the more near-term positive for you guys where you've changed the dynamic of the industry by slowing spend. Could you talk about in that journey, which has clearly been the better part of a year now, where are you? Do you still have room to turn the dial on pricing with your customers? Is this something that as investors we should expect longer term, we would

Question: Thomas O'Malley - Barclays - Analyst : Well, it sounds like a lot of exciting opportunities across both businesses. I'm sure we'll be talking about them more and more over the next couple of months, but I really appreciate you both being here and spending time on each.

Question: Thomas O'Malley - Barclays - Analyst : Thank you very much.