Western Digital Corp at JPMorgan Global Technology, Media and Communications Conference Summary

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

Question: Harlan Sur - JP Morgan - Analyst : So it's only been a few months, Irvin, since you took over as Chief Executive Officer for the team, maybe perhaps help us understand what are your top strategic priorities for the company? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 13, 2025 / 7:10PM, WDC.OQ - Western Digital Corp at JPMorgan Global Technology, Media and Communications Conference

Question: Harlan Sur - JP Morgan - Analyst : Perfect. Let's start off with some of the near-term dynamics in the market. Obviously, a lot of tariff and trade-related dynamics out there. On the demand side, you're entering a period of a little bit of uncertainty, right? The team has identified two opposing forces, right, affecting the business, positive demand trends from cloud and hyperscalers on strong CapEx spending intentions this year. On the flip side, the potential for indirect and maybe direct negative impacts of trade and tariffs. We'll discuss the strong cloud spending trends in a moment. But on trade and tariffs, like talk about the potential for direct impacts to the business, also talk also

Question: Harlan Sur - JP Morgan - Analyst : As you mentioned, 75%, 85% of your business is cloud focused, right, with your leadership in the high-capacity nearline hard drives, cloud CapEx spending environment continued strong this year, right? The top four cloud and hyperscalers 40%-plus growth in CapEx, primarily driven by AI and should drive another strong year for the team, as you mentioned, for nearline HDD. That being said, there's been some concern around the potential for some AI compute and storage digestion, right? Has the team seen any recent changes in your forward LTA backlog suggesting a more cautious CapEx spending profile? And are the LTA discussions into next year suggesting continued cloud storage spending growth into calendar '26?

Question: Harlan Sur - JP Morgan - Analyst : So bringing back the strong cloud spending dynamics, right, back to your business of storage. Back in February at your Analyst Day, you outlined a three-year nearline exabyte growth CAGR of about 20%, 25%, which is what interestingly enough, some of the third-party research firms are forecasting for this calendar year. We're at about 23% exabyte growth? Which is consistent with the strong data center CapEx spending trends this year, given your LTAs, strong visibility, does your forward demand pipeline profile also suggests kind of 22%, 24% exabyte shipment growth profile this calendar year or better for the WD team?

Question: Harlan Sur - JP Morgan - Analyst : If nearline exabyte growth is 22%, 23% this calendar year, that would suggest exabyte growth in the second half calendar year, about 15% year-over-year growth. The WD team -- one of the characteristics of the WD team and maybe we'll get to this a little bit later as well has been the extreme discipline on capacity expansion. And in fact, the team has taken out capacity over the past several years, right? But as we think about 15% year-over-year growth in exabytes in calendar second half, I assume you can drive this with areal density improvements and not so much having to put in place new physical capacity. Is that a fair assumption? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 13, 2025 / 7:10PM, WDC.OQ - Western Digital Corp at JPMorgan Global Technology, Media and Communications Conference

Question: Harlan Sur - JP Morgan - Analyst : Let's talk about the impact you brought up a little bit about the impact of artificial intelligence and machine learning, right? Much of the strong cloud CapEx spending growth last year and this year has been to support AI-based compute workloads. But for pre-training, post-training, optimization, inferencing, the data does originate and ultimately gets fed back to these large data lakes that reside on high-capacity HDD, right? The high IOPS portion of the workload is being supported by enterprise SSD, but you still need HDD, right? And you did outline back in the February Analyst Day, the requirements for purpose-built system-level storage and I/O solutions for AI workloads, what is the WD team doing here to take advantage of this trend?

Question: Harlan Sur - JP Morgan - Analyst : Before I -- I'm going to start talking about some of the product road maps with Irving. Before that, though, do we have any questions from the audience? If you do, feel free to raise your hand, and we'll get a mic over to you. Any questions from the audience. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 13, 2025 / 7:10PM, WDC.OQ - Western Digital Corp at JPMorgan Global Technology, Media and Communications Conference Unidentified Participant So with regard to how quickly you expect to grow supply, would you be expecting to kind of be right in the middle of your exabyte growth rate from a demand perspective? Or would you try to kind of come in at the lower end to leave some buffer?

Question: Harlan Sur - JP Morgan - Analyst : It's pretty amazing, right? I think I was just trying to calculate it recently. We cover some of the memory supplies out in the market. And we're coming out of a pretty deep memory-related downturn. But I still calculate and correct me if I'm wrong on this one, I still calculate though, that enterprise SSD price per bid is still about 6 times to 8 times higher than nearline HDD price per bit. Is that about kind of the same range you guys are thinking about?

Question: Harlan Sur - JP Morgan - Analyst : I mean, it's pretty amazing. I mean, that delta has been pretty fixed for so many years now, right? And to your point, it is the areal density innovations of the industry, right? I mean that really continues to drive that gap.

Question: Harlan Sur - JP Morgan - Analyst : Yes, absolutely. On the product road maps, call execution back in February, you talked about ramping to 1 million units per quarter in the second half of this calendar year, right in the 11 platter, 26 terabyte CMR. And you have 32 terabyte UltraSMR drives. You actually drove 800,000 shipments in the March quarter. So you outperformed your target. You're already looking to deliver 1 million-plus units this quarter, the June quarter. So what is driving the better ramp adoption curve? Is it faster call by your customers? Is it better operational execution by the WD team?

Question: Harlan Sur - JP Morgan - Analyst : On the next-gen platforms, right, you're targeting your next-gen ePMR based 28-terabyte CMR, 36-terabyte UltraSMR drives for first half of next year call. I assume you have to launch these programs in the second half of this calendar year to hit your target. Is the team still on track for this? Or is this road map also maybe getting slightly pulled forward a bit as well?

Question: Harlan Sur - JP Morgan - Analyst : On your future generation transition to HAMR-based technology. The team has been working on HAMR now for well over 10 years. You've been able to exploit your current ePMR technology to continue to drive areal density cost per bid, right, which does give the team more time to fully optimize your HAMR technology, plan of record, start call for HAMR second half calendar '26, ramp first half of '27 with 40 terabyte plus capacities. You're also working closely with two of your large customers on HAMR. What's the feedback been like from customers and confidence level on executing to the time lines? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 13, 2025 / 7:10PM, WDC.OQ - Western Digital Corp at JPMorgan Global Technology, Media and Communications Conference

Question: Harlan Sur - JP Morgan - Analyst : Before I turn -- I'm going to start talking about manufacturing and operational execution and financials. Did anybody have any questions for the team? Unidentified Participant How do you perceive the HAMR technology of your main competitor? And once you are live on your technology, do you see any risk of price competition or healthy environment? And maybe a third question on the CapEx. Do you need an additional CapEx to ramp up your HAMR technology or you will convert some current manufacturing capabilities?

Question: Harlan Sur - JP Morgan - Analyst : At the prior Analyst Day back in May of 2022, the team laid out a three to five year target of 31%, 34% gross margins. You fast forward three years and your new targets are greater than 38% gross margins. You're currently sitting at 40% plus gross margins, almost 500 basis points, 700 basis points better gross margin performance versus your prior expectations. Even back in 2022, the mix was already 75% cloud, right? So it seems like much of the better gross margin trajectory is actually operational efficiencies and cost downs and coincidentally or not, I mean you had just joined as Head of Global Operations in 2022. So how much of the strong gross margin performance has actually been driven by operational execution. What on the upside has the team done to drive better efficiencies?

Question: Harlan Sur - JP Morgan - Analyst : Strong growth and operating margin performance more recently in June quarter, guidance, 27%, up margins on 7% sequential revenue growth. Rough math leads me to incremental operating margin fall-through of about 38% to 40% on incremental revenue growth combination of gross margin expansion, leverage on the OpEx. Is that how to kind of think about the op margin expansion on further revenue growth? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 13, 2025 / 7:10PM, WDC.OQ - Western Digital Corp at JPMorgan Global Technology, Media and Communications Conference

Question: Harlan Sur - JP Morgan - Analyst : On uses of capital, the team has targeted to return all excess free cash flow once you hit 1 times, 1.5 times net leverage ratio. You initiated a dividend. It's about a 1% dividend yield. Is there a way to think about future dividend growth maybe in line with your free cash flow growth once you achieve your net leverage target ratio? And then how do we think about the new $2 billion buyback as well?

Question: Harlan Sur - JP Morgan - Analyst : Perfect. Irving, Kris, Ambrish. Thank you very much for the participation today.

Question: Harlan Sur - JP Morgan - Analyst : Appreciate it. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 13, 2025 / 7:10PM, WDC.OQ - Western Digital Corp at JPMorgan Global Technology, Media and Communications Conference