Western Digital Corp at UBS Global Technology and AI Conference Transcript

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

Question: Timothy Arcuri - UBS AG - Analyst : Perfect. Great. So let's just start. Like your biggest competitor, you're enjoying a very favorable pricing environment along with very tight supply. Can you just talk about what's driving that? And how much of it is cyclical? And how much of it do you think is secular?

Question: Timothy Arcuri - UBS AG - Analyst : All of calendar year '27?

Question: Timothy Arcuri - UBS AG - Analyst : And you think that, that's going to continue, Kris?

Question: Timothy Arcuri - UBS AG - Analyst : And can we just talk about the visibility and the way that your customers are actually placing orders? They're -- obviously, you're booked out through '26, it sounds like, and one through '27. Are they getting to the point or is there a risk that they get to the point where they force your hand to start to expand unit capacity because they say, I just don't want to wait 60 weeks for a drive?

Question: Timothy Arcuri - UBS AG - Analyst : And I think you mentioned that there could be more to your ePMR road map even beyond 36T. What is so hard about scaling beyond 36T? And how do you think about stretching that road map to 40T or beyond and marrying that with -- you want to now pull HAMR in a little bit. So how do you think about that?

Question: Timothy Arcuri - UBS AG - Analyst : So do you think you'll have a seamless transition, your 44T Ultra SMR in mid-'26 will lead right into HAMR?

Question: Timothy Arcuri - UBS AG - Analyst : And what went into the decision to pull in qualification for HAMR? Was it more that you saw your competitor had gone through the trials and tribulations and you saw that the customers were adopting HAMR. And so you thought, oh, I better pull that in? LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 02, 2025 / 7:55PM, WDC.OQ - Western Digital Corp at UBS Global Technology and AI Conference

Question: Timothy Arcuri - UBS AG - Analyst : So your average -- and you mentioned this before, but your average capacity per drive is still well below what these higher densities are. Why is that number so far below? And what applications are still on these older smaller drive, less dense drives? And what effort are you making to migrate those to higher capacities?

Question: Timothy Arcuri - UBS AG - Analyst : And can you just sort of double-click on the HAMR road map for us? I know you're pulling in the qualification. But sort of once you do qualify HAMR, where does HAMR go from there?

Question: Timothy Arcuri - UBS AG - Analyst : And customers don't care whether it's on HAMR or it's on --

Question: Timothy Arcuri - UBS AG - Analyst : Is that right?

Question: Timothy Arcuri - UBS AG - Analyst : Degree of fixed pricing. So it's not -- you will -- that will take --

Question: Timothy Arcuri - UBS AG - Analyst : Got it. Okay. And can you talk about your willingness to expand unit capacity? In other words, are your largest customers offering to co-invest in your CapEx to get you to expand unit capacity? Or are they happy with you just moving density higher?

Question: Timothy Arcuri - UBS AG - Analyst : And can you just talk about the interplay between HDD and SSD and whether these extended lead times and is this pushing any demand in nearline over to SSD? LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 02, 2025 / 7:55PM, WDC.OQ - Western Digital Corp at UBS Global Technology and AI Conference

Question: Timothy Arcuri - UBS AG - Analyst : The market's helped too, but. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 02, 2025 / 7:55PM, WDC.OQ - Western Digital Corp at UBS Global Technology and AI Conference

Question: Timothy Arcuri - UBS AG - Analyst : For sure. So can we just talk about there's a third competitor that people don't talk about very often, but they do have a MAMR road map and some of the hyperscalers are talking about trying to keep them alive. So can you just talk about the relative share between you and your main competitor and the third competitor? Do you see that third competitor like withering away? Or do you see the customer trying to keep them alive and maybe they become more of a --

Question: Timothy Arcuri - UBS AG - Analyst : Great. And then on the last quarter's call, you discussed your systems integration and test lab in Rochester. How important is joint development in this lab? And what partners do you work with there?

Question: Timothy Arcuri - UBS AG - Analyst : And I would think that this is going to help to risk mitigate the HAMR ramp as well. Are you -- so are you operating HAMR drives in those facilities? LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 02, 2025 / 7:55PM, WDC.OQ - Western Digital Corp at UBS Global Technology and AI Conference

Question: Timothy Arcuri - UBS AG - Analyst : And is that part of what led -- or was it a particular customer because of what's happening in that location to push you to qualify HAMR a bit earlier?

Question: Timothy Arcuri - UBS AG - Analyst : And Kris, you've expanded gross margin 400 to 500 basis points over the past 12 months, which is obviously great. How much of that comes from better pricing versus better utilization versus other factors?

Question: Timothy Arcuri - UBS AG - Analyst : So where do you think gross margin can go? I mean, obviously, asymptotic gross margin, if the incremental gross margin is 50, then, the asymptotic gross margin is 50. But do your customers care what your gross margin is? Like, do they, if it was above 50, would they start to say, I don't know, this whole, I'm going to finally force your hand and make you expand, unit capacity or how does that all play into it? LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 02, 2025 / 7:55PM, WDC.OQ - Western Digital Corp at UBS Global Technology and AI Conference

Question: Timothy Arcuri - UBS AG - Analyst : There's a point where, I mean, we've seen this movie before where -- I'm just an old school semiconductor guy and whenever you tell these super rich companies that they can't get a product for 60 weeks, they're going to do whatever they have to do to get what they need as fast as they can. So they're going to place orders and they're going to book out into '27, but when push comes to shove, they might not take those drives. And if that were the case, how do you protect against that? Do you look at bookings and is bookings the leading indicator where if there's this big, huge surge of bookings and then it completely falls off, you're like, okay, that's the first indicator of maybe they just placed a bunch of orders just for the sake of getting in the backlog and they might not take the --

Question: Timothy Arcuri - UBS AG - Analyst : And what -- just thinking in the past, what would be the first sign of if X happened, you would begin to worry that maybe demand is faltering? Is it, I mean, is the first order the what the customers are saying about their CapEx? Is it just that simple? LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 02, 2025 / 7:55PM, WDC.OQ - Western Digital Corp at UBS Global Technology and AI Conference

Question: Timothy Arcuri - UBS AG - Analyst : Great. And Kris, I just wanted to ask you about share repo and free cash flow is obviously growing quite nicely. Can we expect to see a more aggressive share repo going forward and -- or does it make sense to maybe pay down debt or substantially raise the dividend as well?

Question: Timothy Arcuri - UBS AG - Analyst : Great. Thank you for the time. We're out of time. Thank you again.