Seagate Technology — Call Transcript 2026

All right. Good morning, everyone. I'm Krish Sankar from TD Cowen. I'm the analyst covering Seagate, where we are fortunate enough to have Gianluca Romano, the CFO, and also Shianne Hudson from the IR team here. Seagate, obviously, as you know, one of the leaders in hard drives. Gianluca Romano, thank you very much for your time. While I'm on it, I'll also tell every investor on this, like, you know, please do vote for TD Cowen in Extel and Institutional Investor. Anyways, with that, let's start. I think, Gianluca Romano, I think what is kinda interesting is that I think there seems to have been some confusion last week, where some folks assumed that there was capacity addition. I think, you know, can you just clarify what's going on? I think what has been pretty, like, you know, consistent with what you have spoken in the past is mid-20% exabyte growth, probably not real unit capacity additions. Has anything changed or is still that the narrative today? Thank you, Krish. Always nice to meet with you. Before we start, let me say that I will be making four forward-looking statements today, and you can learn more about the risks associated with those statements on our website. Short answer to your question is no. We are not adding any unit capacity. We think our technology roadmap is really strong, so we can generate the exabyte that we need through technology transition, you know, going from fourth-generation HAMR, second-generation HAMR. We already discussed at our earning release about third-generation HAMR that is 5 TB per disk, a 50-TB drive that we will start qualifying at the end of next calendar year. Our roadmap is really good. We think we generate about 25% increase in exabyte year-over-year through technology roadmap, we don't need more units. Good. What about head capacity addition? Is that a slightly different story compared to units, or? Not really. I would say, you know, we produce heads and media. The heads to read and write the data, and the media is the disk. We also buy a lot of other components externally. The technology is in those two components as the media. Depending how you assemble the drive, you know, if you have a 5-disk drive or 8-disk drive or a 10-disk drive, for the same number of units, you can need a little bit different number of heads or media. Depend how where the mix is going. Generally, I would say our focus is keeping the units very stable. Of course, increase the exabyte that we generate through this changing mix, changing technology, and transition, you know, every 18 months, 24 months to a new generation of HAMR that give us, in this case, you know, from first-generation HAMR to second-generation HAMR, give us more than 30% increase in exabyte. From the second to the third, another 25%. So. We can grow through technology. We don't need more units. Got it. Also along that same path, you know, when you look at it, clearly, demand is strong. I think last time you spoke about kind of, if I remember right, kinda sold out for all of 2027. Is that still the case? What is your visibility into 2028 and how to think about some of the LTAs that you assigned? Yeah. We have, two different kind of agreements, you know. For the next four to five quarters, we have orders. An order has a specific product, specific volume, specific price, and time to deliver the product. We always want to cover the next four to five quarters because this is a time we need to produce an hard disk drive. You know, to produce an HAMR hard disk drive, you need about three quarters. We want, you know, three, four, five quarters that are fully defined. When we start the product in our manufacturing, we know exactly who will buy it and at what price. After that, we have LTAs that are agreement-based on exabyte. To you know, for our customers, it's very important to know what kind of storage they can get two years out in time, three years out in time, even longer because they need to plan their new data centers. The price is less important. The mix is less important. They don't even know what product they will be qualified, you know, three years out in time. They want to know how many exabytes we will allocate to them so they know, you know, how many data centers they can build. We have agreement on exabyte. When we arrive into that, you know, four to five quarters range, we translate the exabyte LTA into an order. At that point, they know what is the product that they are qualified. We know how much we can ramp up that product. We have usually, we have a list of products that they buy, not only one. We define the price, and we define exactly when we ship. Historically, if I remember right, the pricing was negotiated on a quarterly basis, but now has it changed to an annual basis? Yeah. It's depending from the customer and the duration of the orders, it's, you know, three, four, five quarters. Gotcha. you know, the other interesting thing, I remember, is that, you know, in the past, you mentioned that 70% of hard drive demand comes from new data center openings. How do you track that? Obviously, there are a lot of things that go into a new data center opening. Obviously, they have to deal with, like, you know, permitting process, power supply, things like that. How much visibility do you get? In that build-out process, where do you come in? Are you, like, a late-stage purchase from a data center, build-out standpoint, early, requalified? Yeah. We have two major segments, you know, Data Center and Edge. Data Center today is probably 80% of our revenue. It's growing. It's grown a lot in the last two or three years. In particular, public cloud is the sub-subsegment inside Data Center that is growing the fastest. We are already 80% of revenue, more than that in terms of exabyte. We see this trend continuing. You know, Data Center is growing faster than any other segment. We also see a good demand on the Edge. Today and the Edge is where we compete with NAND. Low-capacity drives, you know, two TB, four TB, eight TB drive, small. Because NAND price is so high, you know, that it's a good opportunity for hard disk to increase price. We don't have purchase order in that segment. We can be more, you know, we can increase price faster. Demand is also higher. Again, it's not the majority of our business, only 20% of our revenue. Data center, much more structure. We have, you know, those, purchase order in place. We have a price is defined. Price is increasing, but it's a different kind of, trajectory. In the data center, as you know, we don't really compete with NAND. The NAND price has no influence on our demand. NAND is used to run the application on the compute side. A hard disk is used for storage. Very different applications. Gotcha. I mean, it kinda makes sense because I think hard drives is probably up to 2% of a data center CAPEX, while NAND plus DRAM is probably up to 40% now with the price increase. You're not the problem child, you know, they think that memory is the memory price increase, i.e., DRAM/NAND price increase, slowing down data center build-out? So far, probably not much. I would say what we try to do is not to be the main problem. Yeah. We don't want to be the component that is limiting the development of the data center. You know, in the past, you have seen the power being, you know, the bottleneck, probably still the bottleneck, the GPUs, you know, that were a bottleneck. Possibly, DRAM is becoming the bottleneck. We are always number, you know, two, three, or four in the list. You know, it's a good place to be. You know, we still have our power in the negotiation, but we are not limiting their development. We are not a problem for our customers. You know, the other thing that kinda noticed is compared to last year, I think last quarter, which is obvious from your numbers and your competitors' numbers, the pricing is getting better or, you know, a little more better than historically. Historically, it was, like, more, like, mid to high single digits. Now it looks like it will be low double digit. Obviously, it is still not the problem insurance. You could probably even increase pricing further and not be an issue. What is the thought process behind price increase, and how sustainable is this run rate over the next couple of years? Well, we know it's sustainable because we already have PO in places. We as we said at our earnings release, we see not only this quarter, but, you know, we guided more precisely. We also discussed about the next four quarters. We said every quarter, you will see revenue increase, and you will see profitability increase. Of course, a good part of that improvement is coming from pricing. We are executing a very good strategy that is not being super aggressive with price but be very, very consistent. Every quarter, you see that price up. Every quarter, you see that exabyte up, not units, but exabyte up. Revenue is growing, very well, and profitability is growing extremely well. Mm-hmm. The other thing that is kinda interesting, when you look at last year, I would say the inflection for hard drives really started when you started seeing videos, AI videos and things like that. Today, how do you see that? Is that still a big trend, or is it, like, more data retention? What is the driver today and into next year for the next leg of, like, hard drive demand? Yeah. I would say there are different drivers, you know. I would say the positive part for hard disk is that on storage, on hard disk, you don't need a different mix, different kind of hard disk depending from what kind of data you want to store. It's a good simplification for us in terms of what we have to produce and what we have to generate. I would say video AI is huge. retention, you know, started probably two years ago. When companies and people were starting to use AI, the first things we all did is stop deleting data. If you want to have a good result from running AI, you need to have a lot of data. The data retention already started two years ago. Then you started to have AI generating data itself as an application. The beauty for us in terms of data generation and data storage is AI is very quick. It generates a lot of more data than humans. You know, it works 24/7. Every day, no problem. It generates data that you need even as a step through the final result. Everything that AI generates gets stored and then gets used again to generate something else until you arrive to the final result. A lot of benefit from AI. It's not the only application. You know, of course, robotics is becoming more and more a data generation application. You know, AI robotics will be another one, that is just starting today. Autonomous driving. You know, you go to San Francisco, you go to Phoenix, Arizona, you see a lot of cars that are autonomous driving. They generate a lot of data every day. All that data is stored every day for compliance and to learn how to better drive the car in the city. When you see that expanding through all the city in the U.S. and outside the U.S., that is an incredible volume of data that will get stored. You know, today, like you said, the majority of your demand is coming from hyperscalers. Is there an argument to be made that hard drive really benefits only from hyperscaler or cloud demand? Let's just assume in the future, we go to an enterprise AI world with, like, inference. If there's gonna be more on-prem deployment, would hard drives benefit, or are you going to more a cloud play rather than an on-prem play? As I said before, we see demand in both segments, in the data center and at the edge. I would say it depends how AI will continue to evolve. You know, AI today uses a lot of the public cloud. It's concentrating in the public cloud. The Neocloud are compute. They don't have storage. You know, they take the storage from a big public cloud, an hard disk. They move into an NAND, into the Neocloud data center, run the application, and store back in the hard disk in the public cloud. They basically outsource or complement the compute part of a public cloud. If they want to become more independent from the public cloud and run their compute for other customers, they will have to build storage. At that point, we will sell hard disk even to the Neocloud. At the edge, it's the same, you know, or on-prem. If you have a company that doesn't want to use a public cloud for many reasons, you know, efficiency cost or security of the information, the structure is the same. It's just smaller. Storage is hard disk, and then when they run the compute, they move the data into an NAND, run it, and send it back. It's just smaller, but same concept. Now, when we go to the edge, that will be interesting. You know, it's probably not happening, you know, tomorrow or the day after. When you go longer, you will have for example, autonomous driving. We require a lot of edge storage and fast compute. For sure, you will have, you know, a, a good application for the DRAM and the NAND part of the business. They will also start parking data for a while until they send to the public cloud. That can be hard disk. We will see. I think there are a lot of opportunities for hard disk even at the edge. Would you consider your VIA China business? Is it kind of, like, similar to edge, or is it different? VIA is a bit different. I would say there are two parts of VIA. The video and image application, first of all, there are, you know, the cameras that are connected to a storage. That storage is usually an hard disk. It can be depending how big is the security that you're having. It can be 4 TB, 8 TB, 10 TB. Usually, it's a mid-cap hard disk, not a huge. The company that are providing the surveillance, they also offer storage. If you are a building like this one, you know, you have all the camera, you record everything, and then you say, "Okay," or you delete or you store somewhere. You can store with the same company that is providing you the service of surveillance. In that case, they buy big drives. They buy 20 TB, 30 TB, 40 TB because they are actually offering a simplified cloud. There are not a lot of applications. There are some applications related to the surveillance, but not a lot of applications, but a lot of storage because the data is kept until they run the application, and then they decide what to do with the data. Gotcha. Interesting. I'm just about to see if anyone in the audience had a question. If not, I'll chug along. You know, the other thing, like, when you look at your business, I think historically, your cost downs are probably, like, high single digits, 10%. Now it's more, like, low double digits, mid-teens. The cost downs are actually better than historical. Is that purely a function of moving to HAMR, or do you think there is a lot more room for this cost decline to improve, or do you think there's, like, a once-in-a-lifetime step down because of HAMR? Now we should think about more, like, 10% longer term. I would say if you look at the product, the product cost going from first-generation HAMR 30 TB drive to second-generation HAMR 40 TB drive, the unit cost is fairly similar. You have 10 TB more. You have actually a fairly huge decline in terms of cost per TB. When you look at the entire company, the entire P&L, it doesn't depend only from the last product. You know, we sell from 2 TB drive to 40 TB drive. The cost in the period depends how this mix moves up. It's not only the last product, you know, with the time, moving more and more into HAMR, especially at the beginning of the technology where you increase, you know, 33% going from first-generation to second. Is a good you know, it's a good improvement of our cost decline. When you go from 40 TB to 50 TB, in percentage, that is 25%. It's still the same similar unit cost. You add the same 10 TB, but in percentage, it's a bit lower. Depending how you calculate. I would say, of course, HAMR is advantageous for the cost. Every period is different. Every quarter is different depending on how many PMR we are still selling and what is, you know, the segment in that specific quarter that is getting more volume. It's not so linear. I would say HAMR, longer term, will be, of course, the way to reduce cost in the industry. Otherwise, with the old technology, with PMR technology, you continue to add one disk and two add, one disk and two add until you have space in the box. The cost per unit goes up because you need to increase the bill of material. With HAMR, you keep the 10 disks, 20 heads, from 30 TB drive, 40 TB drive, 50 TB drive. The bill of material remains consistent. Of course, the components are not the same, so there is an increase on some of those components. The unit cost is fairly similar. Are there any pressures on that? Because, you know, one of the things is, like, for example, you get glass from Hoya or someone, but they also have increasing demand from the optics and photonics folks. Is there any disproportionate pricing where other sectors are actually willing to pay a premium causing, you know, your cost to go up because you had to probably match that to secure those components? Well, no. Supply chain, of course, is very important. As I said before, we buy a lot of components. We buy electronics. We buy memories that, as you know, are fairly expensive today. We buy a lot of other mechanical components. You know, of course, every year is different. You know, there are years with higher inflation, years with lower inflation, years where there is a shortage of one component, so you need to spend more. You know, my discussion is keeping those at the same level. You have this clearly, you know, strong reduction in cost per TB. As I said before, every period is different. You know, right now, we have memories, you know, costing more for sure. You cannot compare. It's not because of the technology. It's because of the components. You need to adjust your estimate based on how you see those components, cost evolving, yes. Gotcha. I think, you know, clearly, the demand is very strong. You're doing these cost downs. You're already at, like, 50% plus gross margin. I think people always speculated that it's a rational duopoly, so you should be at 65% gross margin. It seems like there's a path to get there easily, maybe exceed, but I think realistically, get to mid-60% gross margin. From your view, I mean, I'm not looking for guidance, but is that a fair assumption given the trajectory of demand and trajectory of your cost downs? I would say it's an assumption of continuing to improve is very fair. You know, we actually said that, just a few weeks ago. We said, you know, there are this quarter plus other four of improvement. You know, this quarter, we are guiding at the gross margin that is about 50%. If we continue to improve, we continue to improve. We will go but we don't have a gross margin target. It's not a number that when we achieve, we just say, "Okay, this is enough." We stop there. We like how we run this strategy. We have done it for 12 consecutive quarters. This is the 13th. We have other four that we know are coming, and we will continue to do that. One day, we will say, Okay, this is the result that we have achieved. We don't see an end at this point yet. Gotcha. You know, the other interesting thing is you know, you said early on you're not adding unit capacity. You're still growing exabytes 25%-30%. At that CAGR, your hyperscaler customers are not pressuring you to add more capacity. They are happy with the 25%-30%. I don't know if they're happy. I think there is pressure to do more. Their unconstrained demand is for sure higher. Every year, there is some components that get short. You know, right now, it's DRAM probably is short, and, you know, power is still short. From that unconstrained demand, you need to go from what they can really build. Right. It's our assumption. It's not their assumption. Our assumption is if we increase exabyte by, you know, about 25%, we will not be the component that is getting. Right. The development of the data center. Well, we could be wrong, but we think 25% is good enough not to become the top of the list problem. Gotcha. I mean, the reason I’m asking is it seems like, you know, you’re doing 25% or 30% exabyte growth, slowly increasing pricing more than before, but your customers are not pushing back, so they seem to be okay. In other words, if you go to, like, say, 35% exabyte growth, you’re not the bottleneck. You know, your hyperscaler customer will still be constrained. The marginal benefit is not much for you or them for you to go to, like, higher exabyte growth, right? I would say so far, this strategy has worked very well. We more than double our revenue. We more than double our profitability. There's no reason to change. I think as this strategy is giving us a great result, our focus is to continue to execute the same strategy for a long time. You know, we have already done 12, 13 quarters. It's already fairly long. We don't see this ending. We have another four quarters coming. We will have more later because, you know, we see the exabyte that our customers are demanding for year two and year three and year four is actually way higher than what we you know, what we have in our plan. Right. Also, I think your own forecast is that I think probably next month or so, I think 40% of exabytes would be from HAMR. Maybe a year from now, 70% of your exabytes would be on HAMR. Is that still the plan? Are we or do you think that HAMR percentage is going to be higher than expected? Well, we are ramping HAMR well, especially because the second-generation HAMR was qualified a little bit earlier than what we were thinking, you know, with the two major cloud customers. Of course, the % depends also from how much we produce on the old technology. Not to achieve those %, it would be very easy just, you know, not producing a lot of PMR, and you have a lot of HAMR. Depends. You know, we are trying to optimize exabyte. To optimize exabyte, we produce a lot of both, you know, HAMR and PMR. Let's see. You know, it's I think, first priority is to achieve this 25% exabyte increase. You know, you as you said, in the past, we were able to do more. That's more is probably coming more from PMR than HAMR. Now we are ramping more HAMR. I you know, HAMR is ramping very well. I think we will be, you know, around those percentages, but depends every quarter how we manage the two technologies. Gotcha. you know, I think if you do the math, you're probably going to generate close to, like, $3 billion of free cash flow this year. I mean, after the dividend payment, you're about $4 billion in debt. How would you prioritize the free cash flow? Is it, like, to mainly pay it on debt? Would you consider repurchases at the stock price, or do you think you probably need more supply chain preparedness for the ramp that it probably makes sense to invest more in your own business? I would say longer term, we have as we have done in the past, our free cash flow is always focused on shareholder return, you know, between dividend and share buyback. In the short term, we have reduced our debt, you know, going from about $6 billion to now a little bit less than $4 billion. Now we can go lower. You know, we still have a little bit of the convertible, to buyback. We did something recently. You know, we will do the remaining pro possibly next quarter and maybe reduce debt even lower. Now longer after we have reduced the debt, you know, the free cash flow mainly will go to shareholders. Gotcha. Gotcha. Is there any like, do you see, like, you know, in the past, like, you mentioned that I think heads or media takes, like, a year to bring it online. Even if you decide to add capacity today, you're probably looking at least a year before that becomes useful exabytes into the marketplace. Is that still the same, or do you think there is, like, more tightening potential in the supply chain where lead times can come shorter than today? Well, I would say the cycle time of a wafer where we produce heads is about, you know, nine months, let's say, six to nine months depending from which technology, which product. If you need to build capacity like a greenfield, well, that takes more than a year. I would say possibly at least two years because, you know, you need to build the factory and then, you know, get the tools and qualify the tools. It's long, long term, yeah. I mean, if you decide to add capacity, would greenfield make the most sense, or it'd be more existing brownfield? Well, right now, we have not looked into that because, you know, we don't think we need to add units. I would say if we arrive at that point, in time of a certain decision, we will see what is the best solution. Again, in our plan, we don't have an increase of the number of factories that we have. One other thing, you know, you spoke about cost reduction. You know, when I look at your footprint, you know, in manufacturing between the heads, the wafers, the media, everything, you're in, like, Singapore, Ireland, U.S. Is there a consolidation angle in this to help get the, you know, cost reduction, or do you think the footprint stays the way it is? I think it will stay because we do different type of manufacturing in different locations. Singapore, we produce the disk. We don't have any other site producing the disk. Malaysia, we produce the substrate. We don't have any other place where we produce a substrate. China, Thailand, we do assembly and final test. Again, you know, China is used for our Chinese customers. Thailand is used for everyone else in the world. Probably the only two factories that are similar are the one U.S. and Northern Ireland, where in both places, we produce heads. Because we need that level of volume, I don't see any reason to change that. Gotcha. You're close to running out of time. Just want to see if anyone had any quick question. If not, I'll try to squeeze one more in. You know, double-digit exabyte like, you know, mid-20% exabyte growth, and, you know, clearly, like, pricing is pretty robust. I'm just wondering, like, you know, there is an expectation that, you know, we should see double-digit growth in revenue-wise even in 2027 and beyond. If the current demand scenario continues, let's just linearly extrapolate it, is it a fair assumption that the revenue growth should be double-digit because? Yeah. No, at earnings release, Dave, the CEO, said we expect revenue to grow for the next several years at least 20%. He said at least, so probably will be more than that. All right. I think, Gianluca Romano, thank you very much for your insights. Thank you. Always fun having you. Thank you. Thank you very much.

Speaker 2: All right. Good morning, everyone. I'm Krish Sankar from TD Cowen. I'm the analyst covering Seagate, where we are fortunate enough to have Gianluca Romano, the CFO, and also Shianne Hudson from the IR team here. Seagate, obviously, as you know, one of the leaders in hard drives. Gianluca Romano, thank you very much for your time. While I'm on it, I'll also tell every investor on this, like, you know, please do vote for TD Cowen in Extel and Institutional Investor. Anyways, with that, let's start. I think, Gianluca Romano, I think what is kinda interesting is that I think there seems to have been some confusion last week, where some folks assumed that there was capacity addition. I think, you know, can you just clarify what's going on? All right. all right Good morning, everyone. good morning everyone I'm Krish Sankar from TD Cowen. i'm krish sankar from td cowen I'm the analyst covering Seagate, where we are fortunate enough to have Gianluca Romano, the CFO, and also Shianne Hudson from the IR team here. i'm the analyst covering seagate where we are fortunate enough to have gianluca romano the cfo and also shianne hudson from the ir team here Seagate, obviously, as you know, one of the leaders in hard drives. seagate obviously as you know one of the leaders in hard drives Gianluca Romano, thank you very much for your time. gianluca romano thank you very much for your time While I'm on it, I'll also tell every investor on this, like, you know, please do vote for TD Cowen in Extel and Institutional Investor. while i'm on it i'll also tell every investor on this like you know please do vote for td cowen in extel and institutional investor Anyways, with that, let's start. anyways with that let's start I think, Gianluca Romano, I think what is kinda interesting is that I think there seems to have been some confusion last week, where some folks assumed that there was capacity addition. i think gianluca romano i think what is kinda interesting is that i think there seems to have been some confusion last week where some folks assumed that there was capacity addition I think, you know, can you just clarify what's going on? i think you know can you just clarify what's going on I think what has been pretty, like, you know, consistent with what you have spoken in the past is mid-20% exabyte growth, probably not real unit capacity additions. Has anything changed or is still that the narrative today? I think what has been pretty, like, you know, consistent with what you have spoken in the past is mid-20% exabyte growth, probably not real unit capacity additions. i think what has been pretty like you know consistent with what you have spoken in the past is mid-20% exabyte growth probably not real unit capacity additions Has anything changed or is still that the narrative today? has anything changed or is still that the narrative today

Speaker 1: Thank you, Krish. Always nice to meet with you. Before we start, let me say that I will be making four forward-looking statements today, and you can learn more about the risks associated with those statements on our website. Short answer to your question is no. We are not adding any unit capacity. We think our technology roadmap is really strong, so we can generate the exabyte that we need through technology transition, you know, going from fourth-generation HAMR, second-generation HAMR. We already discussed at our earning release about third-generation HAMR that is 5 TB per disk, a 50-TB drive that we will start qualifying at the end of next calendar year. Our roadmap is really good. We think we generate about 25% increase in exabyte year-over-year through technology roadmap, we don't need more units. Thank you, Krish. thank you krish Always nice to meet with you. always nice to meet with you Before we start, let me say that I will be making four forward-looking statements today, and you can learn more about the risks associated with those statements on our website. before we start let me say that i will be making four forward-looking statements today and you can learn more about the risks associated with those statements on our website Short answer to your question is no. short answer to your question is no We are not adding any unit capacity. we are not adding any unit capacity We think our technology roadmap is really strong, so we can generate the exabyte that we need through technology transition, you know, going from fourth-generation HAMR, second-generation HAMR. we think our technology roadmap is really strong so we can generate the exabyte that we need through technology transition you know going from fourth-generation hamr second-generation hamr We already discussed at our earning release about third-generation HAMR that is 5 TB per disk, a 50-TB drive that we will start qualifying at the end of next calendar year. we already discussed at our earning release about third-generation hamr that is 5 tb per disk a 50-tb drive that we will start qualifying at the end of next calendar year Our roadmap is really good. our roadmap is really good We think we generate about 25% increase in exabyte year-over-year through technology roadmap, we don't need more units. we think we generate about 25% increase in exabyte year-over-year through technology roadmap we don't need more units

Speaker 2: Good. What about head capacity addition? Is that a slightly different story compared to units, or? Good. good What about head capacity addition? what about head capacity addition Is that a slightly different story compared to units, or? is that a slightly different story compared to units or

Speaker 1: Not really. I would say, you know, we produce heads and media. The heads to read and write the data, and the media is the disk. We also buy a lot of other components externally. The technology is in those two components as the media. Depending how you assemble the drive, you know, if you have a 5-disk drive or 8-disk drive or a 10-disk drive, for the same number of units, you can need a little bit different number of heads or media. Depend how where the mix is going. Generally, I would say our focus is keeping the units very stable. Not really. not really I would say, you know, we produce heads and media. i would say you know we produce heads and media The heads to read and write the data, and the media is the disk. the heads to read and write the data and the media is the disk We also buy a lot of other components externally. we also buy a lot of other components externally The technology is in those two components as the media. the technology is in those two components as the media Depending how you assemble the drive, you know, if you have a 5-disk drive or 8-disk drive or a 10-disk drive, for the same number of units, you can need a little bit different number of heads or media. depending how you assemble the drive you know if you have a 5-disk drive or 8-disk drive or a 10-disk drive for the same number of units you can need a little bit different number of heads or media Depend how where the mix is going. depend how where the mix is going Generally, I would say our focus is keeping the units very stable. generally i would say our focus is keeping the units very stable Of course, increase the exabyte that we generate through this changing mix, changing technology, and transition, you know, every 18 months, 24 months to a new generation of HAMR that give us, in this case, you know, from first-generation HAMR to second-generation HAMR, give us more than 30% increase in exabyte. From the second to the third, another 25%. So. Of course, increase the exabyte that we generate through this changing mix, changing technology, and transition, you know, every 18 months, 24 months to a new generation of HAMR that give us, in this case, you know, from first-generation HAMR to second-generation HAMR, give us more than 30% increase in exabyte. of course increase the exabyte that we generate through this changing mix changing technology and transition you know every 18 months 24 months to a new generation of hamr that give us in this case you know from first-generation hamr to second-generation hamr give us more than 30% increase in exabyte From the second to the third, another 25%. from the second to the third another 25% So. so We can grow through technology. We don't need more units. We can grow through technology. we can grow through technology We don't need more units. we don't need more units

Speaker 2: Got it. Also along that same path, you know, when you look at it, clearly, demand is strong. I think last time you spoke about kind of, if I remember right, kinda sold out for all of 2027. Is that still the case? What is your visibility into 2028 and how to think about some of the LTAs that you assigned? Got it. got it Also along that same path, you know, when you look at it, clearly, demand is strong. also along that same path you know when you look at it clearly demand is strong I think last time you spoke about kind of, if I remember right, kinda sold out for all of 2027. i think last time you spoke about kind of if i remember right kinda sold out for all of 2027 Is that still the case? is that still the case What is your visibility into 2028 and how to think about some of the LTAs that you assigned? what is your visibility into 2028 and how to think about some of the ltas that you assigned

Speaker 1: Yeah. We have, two different kind of agreements, you know. For the next four to five quarters, we have orders. An order has a specific product, specific volume, specific price, and time to deliver the product. We always want to cover the next four to five quarters because this is a time we need to produce an hard disk drive. You know, to produce an HAMR hard disk drive, you need about three quarters. We want, you know, three, four, five quarters that are fully defined. When we start the product in our manufacturing, we know exactly who will buy it and at what price. After that, we have LTAs that are agreement-based on exabyte. Yeah. yeah We have, two different kind of agreements, you know. we have two different kind of agreements you know For the next four to five quarters, we have orders. for the next four to five quarters we have orders An order has a specific product, specific volume, specific price, and time to deliver the product. an order has a specific product specific volume specific price and time to deliver the product We always want to cover the next four to five quarters because this is a time we need to produce an hard disk drive. we always want to cover the next four to five quarters because this is a time we need to produce an hard disk drive You know, to produce an HAMR hard disk drive, you need about three quarters. you know to produce an hamr hard disk drive you need about three quarters We want, you know, three, four, five quarters that are fully defined. we want you know three four five quarters that are fully defined When we start the product in our manufacturing, we know exactly who will buy it and at what price. when we start the product in our manufacturing we know exactly who will buy it and at what price After that, we have LTAs that are agreement-based on exabyte. after that we have ltas that are agreement-based on exabyte To you know, for our customers, it's very important to know what kind of storage they can get two years out in time, three years out in time, even longer because they need to plan their new data centers. The price is less important. The mix is less important. They don't even know what product they will be qualified, you know, three years out in time. They want to know how many exabytes we will allocate to them so they know, you know, how many data centers they can build. We have agreement on exabyte. When we arrive into that, you know, four to five quarters range, we translate the exabyte LTA into an order. At that point, they know what is the product that they are qualified. We know how much we can ramp up that product. To you know, for our customers, it's very important to know what kind of storage they can get two years out in time, three years out in time, even longer because they need to plan their new data centers. to you know for our customers it's very important to know what kind of storage they can get two years out in time three years out in time even longer because they need to plan their new data centers The price is less important. the price is less important The mix is less important. the mix is less important They don't even know what product they will be qualified, you know, three years out in time. they don't even know what product they will be qualified you know three years out in time They want to know how many exabytes we will allocate to them so they know, you know, how many data centers they can build. they want to know how many exabytes we will allocate to them so they know you know how many data centers they can build We have agreement on exabyte. we have agreement on exabyte When we arrive into that, you know, four to five quarters range, we translate the exabyte LTA into an order. when we arrive into that you know four to five quarters range we translate the exabyte lta into an order At that point, they know what is the product that they are qualified. at that point they know what is the product that they are qualified We know how much we can ramp up that product. we know how much we can ramp up that product We have usually, we have a list of products that they buy, not only one. We define the price, and we define exactly when we ship. We have usually, we have a list of products that they buy, not only one. we have usually we have a list of products that they buy not only one We define the price, and we define exactly when we ship. we define the price and we define exactly when we ship

Speaker 2: Historically, if I remember right, the pricing was negotiated on a quarterly basis, but now has it changed to an annual basis? Historically, if I remember right, the pricing was negotiated on a quarterly basis, but now has it changed to an annual basis? historically if i remember right the pricing was negotiated on a quarterly basis but now has it changed to an annual basis

Speaker 1: Yeah. It's depending from the customer and the duration of the orders, it's, you know, three, four, five quarters. Yeah. yeah It's depending from the customer and the duration of the orders, it's, you know, three, four, five quarters. it's depending from the customer and the duration of the orders it's you know three four five quarters

Speaker 2: Gotcha. you know, the other interesting thing, I remember, is that, you know, in the past, you mentioned that 70% of hard drive demand comes from new data center openings. How do you track that? Obviously, there are a lot of things that go into a new data center opening. Obviously, they have to deal with, like, you know, permitting process, power supply, things like that. How much visibility do you get? In that build-out process, where do you come in? Are you, like, a late-stage purchase from a data center, build-out standpoint, early, requalified? Gotcha. you know, the other interesting thing, I remember, is that, you know, in the past, you mentioned that 70% of hard drive demand comes from new data center openings. gotcha you know the other interesting thing i remember is that you know in the past you mentioned that 70% of hard drive demand comes from new data center openings How do you track that? how do you track that Obviously, there are a lot of things that go into a new data center opening. obviously there are a lot of things that go into a new data center opening Obviously, they have to deal with, like, you know, permitting process, power supply, things like that. obviously they have to deal with like you know permitting process power supply things like that How much visibility do you get? how much visibility do you get In that build-out process, where do you come in? in that build-out process where do you come in Are you, like, a late-stage purchase from a data center, build-out standpoint, early, requalified? are you like a late-stage purchase from a data center build-out standpoint early requalified

Speaker 1: Yeah. We have two major segments, you know, Data Center and Edge. Data Center today is probably 80% of our revenue. It's growing. It's grown a lot in the last two or three years. In particular, public cloud is the sub-subsegment inside Data Center that is growing the fastest. We are already 80% of revenue, more than that in terms of exabyte. We see this trend continuing. You know, Data Center is growing faster than any other segment. We also see a good demand on the Edge. Today and the Edge is where we compete with NAND. Low-capacity drives, you know, two TB, four TB, eight TB drive, small. Because NAND price is so high, you know, that it's a good opportunity for hard disk to increase price. We don't have purchase order in that segment. Yeah. yeah We have two major segments, you know, Data Center and Edge. we have two major segments you know data center and edge Data Center today is probably 80% of our revenue. data center today is probably 80% of our revenue It's growing. it's growing It's grown a lot in the last two or three years. it's grown a lot in the last two or three years In particular, public cloud is the sub-subsegment inside Data Center that is growing the fastest. in particular public cloud is the sub-subsegment inside data center that is growing the fastest We are already 80% of revenue, more than that in terms of exabyte. we are already 80% of revenue more than that in terms of exabyte We see this trend continuing. we see this trend continuing You know, Data Center is growing faster than any other segment. you know data center is growing faster than any other segment We also see a good demand on the Edge. we also see a good demand on the edge Today and the Edge is where we compete with NAND. today and the edge is where we compete with nand Low-capacity drives, you know, two TB, four TB, eight TB drive, small. low-capacity drives you know two tb four tb eight tb drive small Because NAND price is so high, you know, that it's a good opportunity for hard disk to increase price. because nand price is so high you know that it's a good opportunity for hard disk to increase price We don't have purchase order in that segment. we don't have purchase order in that segment We can be more, you know, we can increase price faster. Demand is also higher. Again, it's not the majority of our business, only 20% of our revenue. Data center, much more structure. We have, you know, those, purchase order in place. We have a price is defined. Price is increasing, but it's a different kind of, trajectory. In the data center, as you know, we don't really compete with NAND. The NAND price has no influence on our demand. NAND is used to run the application on the compute side. A hard disk is used for storage. Very different applications. We can be more, you know, we can increase price faster. we can be more you know we can increase price faster Demand is also higher. demand is also higher Again, it's not the majority of our business, only 20% of our revenue. again it's not the majority of our business only 20% of our revenue Data center, much more structure. data center much more structure We have, you know, those, purchase order in place. we have you know those purchase order in place We have a price is defined. we have a price is defined Price is increasing, but it's a different kind of, trajectory. price is increasing but it's a different kind of trajectory In the data center, as you know, we don't really compete with NAND. in the data center as you know we don't really compete with nand The NAND price has no influence on our demand. the nand price has no influence on our demand NAND is used to run the application on the compute side. nand is used to run the application on the compute side A hard disk is used for storage. a hard disk is used for storage Very different applications. very different applications

Speaker 2: Gotcha. I mean, it kinda makes sense because I think hard drives is probably up to 2% of a data center CAPEX, while NAND plus DRAM is probably up to 40% now with the price increase. You're not the problem child, you know, they think that memory is the memory price increase, i.e., DRAM/NAND price increase, slowing down data center build-out? Gotcha. gotcha I mean, it kinda makes sense because I think hard drives is probably up to 2% of a data center CAPEX, while NAND plus DRAM is probably up to 40% now with the price increase. i mean it kinda makes sense because i think hard drives is probably up to 2% of a data center capex while nand plus dram is probably up to 40% now with the price increase You're not the problem child, you know, they think that memory is the memory price increase, i.e., DRAM/NAND price increase, slowing down data center build-out? you're not the problem child you know they think that memory is the memory price increase i.e dram/nand price increase slowing down data center build-out

Speaker 1: So far, probably not much. I would say what we try to do is not to be the main problem. So far, probably not much. so far probably not much I would say what we try to do is not to be the main problem. i would say what we try to do is not to be the main problem

Speaker 2: Yeah. Yeah. yeah

Speaker 1: We don't want to be the component that is limiting the development of the data center. You know, in the past, you have seen the power being, you know, the bottleneck, probably still the bottleneck, the GPUs, you know, that were a bottleneck. Possibly, DRAM is becoming the bottleneck. We are always number, you know, two, three, or four in the list. You know, it's a good place to be. You know, we still have our power in the negotiation, but we are not limiting their development. We are not a problem for our customers. We don't want to be the component that is limiting the development of the data center. we don't want to be the component that is limiting the development of the data center You know, in the past, you have seen the power being, you know, the bottleneck, probably still the bottleneck, the GPUs, you know, that were a bottleneck. you know in the past you have seen the power being you know the bottleneck probably still the bottleneck the gpus you know that were a bottleneck Possibly, DRAM is becoming the bottleneck. possibly dram is becoming the bottleneck We are always number, you know, two, three, or four in the list. we are always number you know two three or four in the list You know, it's a good place to be. you know it's a good place to be You know, we still have our power in the negotiation, but we are not limiting their development. you know we still have our power in the negotiation but we are not limiting their development We are not a problem for our customers. we are not a problem for our customers

Speaker 2: You know, the other thing that kinda noticed is compared to last year, I think last quarter, which is obvious from your numbers and your competitors' numbers, the pricing is getting better or, you know, a little more better than historically. Historically, it was, like, more, like, mid to high single digits. Now it looks like it will be low double digit. Obviously, it is still not the problem insurance. You could probably even increase pricing further and not be an issue. What is the thought process behind price increase, and how sustainable is this run rate over the next couple of years? You know, the other thing that kinda noticed is compared to last year, I think last quarter, which is obvious from your numbers and your competitors' numbers, the pricing is getting better or, you know, a little more better than historically. you know the other thing that kinda noticed is compared to last year i think last quarter which is obvious from your numbers and your competitors' numbers the pricing is getting better or you know a little more better than historically Historically, it was, like, more, like, mid to high single digits. historically it was like more like mid to high single digits Now it looks like it will be low double digit. now it looks like it will be low double digit Obviously, it is still not the problem insurance. obviously it is still not the problem insurance You could probably even increase pricing further and not be an issue. you could probably even increase pricing further and not be an issue What is the thought process behind price increase, and how sustainable is this run rate over the next couple of years? what is the thought process behind price increase and how sustainable is this run rate over the next couple of years

Speaker 1: Well, we know it's sustainable because we already have PO in places. We as we said at our earnings release, we see not only this quarter, but, you know, we guided more precisely. We also discussed about the next four quarters. We said every quarter, you will see revenue increase, and you will see profitability increase. Of course, a good part of that improvement is coming from pricing. We are executing a very good strategy that is not being super aggressive with price but be very, very consistent. Every quarter, you see that price up. Every quarter, you see that exabyte up, not units, but exabyte up. Revenue is growing, very well, and profitability is growing extremely well. Well, we know it's sustainable because we already have PO in places. well we know it's sustainable because we already have po in places We as we said at our earnings release, we see not only this quarter, but, you know, we guided more precisely. we as we said at our earnings release we see not only this quarter but you know we guided more precisely We also discussed about the next four quarters. we also discussed about the next four quarters We said every quarter, you will see revenue increase, and you will see profitability increase. we said every quarter you will see revenue increase and you will see profitability increase Of course, a good part of that improvement is coming from pricing. of course a good part of that improvement is coming from pricing We are executing a very good strategy that is not being super aggressive with price but be very, very consistent. we are executing a very good strategy that is not being super aggressive with price but be very very consistent Every quarter, you see that price up. every quarter you see that price up Every quarter, you see that exabyte up, not units, but exabyte up. every quarter you see that exabyte up not units but exabyte up Revenue is growing, very well, and profitability is growing extremely well. revenue is growing very well and profitability is growing extremely well

Speaker 2: Mm-hmm. The other thing that is kinda interesting, when you look at last year, I would say the inflection for hard drives really started when you started seeing videos, AI videos and things like that. Today, how do you see that? Is that still a big trend, or is it, like, more data retention? What is the driver today and into next year for the next leg of, like, hard drive demand? Mm-hmm. mm-hmm The other thing that is kinda interesting, when you look at last year, I would say the inflection for hard drives really started when you started seeing videos, AI videos and things like that. the other thing that is kinda interesting when you look at last year i would say the inflection for hard drives really started when you started seeing videos ai videos and things like that Today, how do you see that? today how do you see that Is that still a big trend, or is it, like, more data retention? is that still a big trend or is it like more data retention What is the driver today and into next year for the next leg of, like, hard drive demand? what is the driver today and into next year for the next leg of like hard drive demand

Speaker 1: Yeah. I would say there are different drivers, you know. I would say the positive part for hard disk is that on storage, on hard disk, you don't need a different mix, different kind of hard disk depending from what kind of data you want to store. It's a good simplification for us in terms of what we have to produce and what we have to generate. I would say video AI is huge. retention, you know, started probably two years ago. When companies and people were starting to use AI, the first things we all did is stop deleting data. If you want to have a good result from running AI, you need to have a lot of data. Yeah. yeah I would say there are different drivers, you know. i would say there are different drivers you know I would say the positive part for hard disk is that on storage, on hard disk, you don't need a different mix, different kind of hard disk depending from what kind of data you want to store. i would say the positive part for hard disk is that on storage on hard disk you don't need a different mix different kind of hard disk depending from what kind of data you want to store It's a good simplification for us in terms of what we have to produce and what we have to generate. it's a good simplification for us in terms of what we have to produce and what we have to generate I would say video AI is huge. retention, you know, started probably two years ago. i would say video ai is huge retention you know started probably two years ago When companies and people were starting to use AI, the first things we all did is stop deleting data. when companies and people were starting to use ai the first things we all did is stop deleting data If you want to have a good result from running AI, you need to have a lot of data. if you want to have a good result from running ai you need to have a lot of data The data retention already started two years ago. Then you started to have AI generating data itself as an application. The beauty for us in terms of data generation and data storage is AI is very quick. It generates a lot of more data than humans. You know, it works 24/7. Every day, no problem. It generates data that you need even as a step through the final result. Everything that AI generates gets stored and then gets used again to generate something else until you arrive to the final result. A lot of benefit from AI. It's not the only application. You know, of course, robotics is becoming more and more a data generation application. You know, AI robotics will be another one, that is just starting today. Autonomous driving. The data retention already started two years ago. the data retention already started two years ago Then you started to have AI generating data itself as an application. then you started to have ai generating data itself as an application The beauty for us in terms of data generation and data storage is AI is very quick. the beauty for us in terms of data generation and data storage is ai is very quick It generates a lot of more data than humans. it generates a lot of more data than humans You know, it works 24/7. you know it works 24/7 Every day, no problem. every day no problem It generates data that you need even as a step through the final result. it generates data that you need even as a step through the final result Everything that AI generates gets stored and then gets used again to generate something else until you arrive to the final result. everything that ai generates gets stored and then gets used again to generate something else until you arrive to the final result A lot of benefit from AI. a lot of benefit from ai It's not the only application. it's not the only application You know, of course, robotics is becoming more and more a data generation application. you know of course robotics is becoming more and more a data generation application You know, AI robotics will be another one, that is just starting today. you know ai robotics will be another one that is just starting today Autonomous driving. autonomous driving You know, you go to San Francisco, you go to Phoenix, Arizona, you see a lot of cars that are autonomous driving. They generate a lot of data every day. All that data is stored every day for compliance and to learn how to better drive the car in the city. When you see that expanding through all the city in the U.S. and outside the U.S., that is an incredible volume of data that will get stored. You know, you go to San Francisco, you go to Phoenix, Arizona, you see a lot of cars that are autonomous driving. you know you go to san francisco you go to phoenix arizona you see a lot of cars that are autonomous driving They generate a lot of data every day. they generate a lot of data every day All that data is stored every day for compliance and to learn how to better drive the car in the city. all that data is stored every day for compliance and to learn how to better drive the car in the city When you see that expanding through all the city in the U.S. and outside the U.S., that is an incredible volume of data that will get stored. when you see that expanding through all the city in the u.s and outside the u.s that is an incredible volume of data that will get stored

Speaker 2: You know, today, like you said, the majority of your demand is coming from hyperscalers. Is there an argument to be made that hard drive really benefits only from hyperscaler or cloud demand? Let's just assume in the future, we go to an enterprise AI world with, like, inference. If there's gonna be more on-prem deployment, would hard drives benefit, or are you going to more a cloud play rather than an on-prem play? You know, today, like you said, the majority of your demand is coming from hyperscalers. you know today like you said the majority of your demand is coming from hyperscalers Is there an argument to be made that hard drive really benefits only from hyperscaler or cloud demand? is there an argument to be made that hard drive really benefits only from hyperscaler or cloud demand Let's just assume in the future, we go to an enterprise AI world with, like, inference. let's just assume in the future we go to an enterprise ai world with like inference If there's gonna be more on-prem deployment, would hard drives benefit, or are you going to more a cloud play rather than an on-prem play? if there's gonna be more on-prem deployment would hard drives benefit or are you going to more a cloud play rather than an on-prem play

Speaker 1: As I said before, we see demand in both segments, in the data center and at the edge. I would say it depends how AI will continue to evolve. You know, AI today uses a lot of the public cloud. It's concentrating in the public cloud. The Neocloud are compute. They don't have storage. You know, they take the storage from a big public cloud, an hard disk. They move into an NAND, into the Neocloud data center, run the application, and store back in the hard disk in the public cloud. They basically outsource or complement the compute part of a public cloud. If they want to become more independent from the public cloud and run their compute for other customers, they will have to build storage. At that point, we will sell hard disk even to the Neocloud. As I said before, we see demand in both segments, in the data center and at the edge. as i said before we see demand in both segments in the data center and at the edge I would say it depends how AI will continue to evolve. i would say it depends how ai will continue to evolve You know, AI today uses a lot of the public cloud. you know ai today uses a lot of the public cloud It's concentrating in the public cloud. it's concentrating in the public cloud The Neocloud are compute. the neocloud are compute They don't have storage. they don't have storage You know, they take the storage from a big public cloud, an hard disk. you know they take the storage from a big public cloud an hard disk They move into an NAND, into the Neocloud data center, run the application, and store back in the hard disk in the public cloud. they move into an nand into the neocloud data center run the application and store back in the hard disk in the public cloud They basically outsource or complement the compute part of a public cloud. they basically outsource or complement the compute part of a public cloud If they want to become more independent from the public cloud and run their compute for other customers, they will have to build storage. if they want to become more independent from the public cloud and run their compute for other customers they will have to build storage At that point, we will sell hard disk even to the Neocloud. at that point we will sell hard disk even to the neocloud At the edge, it's the same, you know, or on-prem. If you have a company that doesn't want to use a public cloud for many reasons, you know, efficiency cost or security of the information, the structure is the same. It's just smaller. Storage is hard disk, and then when they run the compute, they move the data into an NAND, run it, and send it back. It's just smaller, but same concept. Now, when we go to the edge, that will be interesting. You know, it's probably not happening, you know, tomorrow or the day after. When you go longer, you will have for example, autonomous driving. We require a lot of edge storage and fast compute. For sure, you will have, you know, a, a good application for the DRAM and the NAND part of the business. At the edge, it's the same, you know, or on-prem. at the edge it's the same you know or on-prem If you have a company that doesn't want to use a public cloud for many reasons, you know, efficiency cost or security of the information, the structure is the same. if you have a company that doesn't want to use a public cloud for many reasons you know efficiency cost or security of the information the structure is the same It's just smaller. it's just smaller Storage is hard disk, and then when they run the compute, they move the data into an NAND, run it, and send it back. storage is hard disk and then when they run the compute they move the data into an nand run it and send it back It's just smaller, but same concept. it's just smaller but same concept Now, when we go to the edge, that will be interesting. now when we go to the edge that will be interesting You know, it's probably not happening, you know, tomorrow or the day after. you know it's probably not happening you know tomorrow or the day after When you go longer, you will have for example, autonomous driving. when you go longer you will have for example autonomous driving We require a lot of edge storage and fast compute. we require a lot of edge storage and fast compute For sure, you will have, you know, a, a good application for the DRAM and the NAND part of the business. for sure you will have you know a a good application for the dram and the nand part of the business They will also start parking data for a while until they send to the public cloud. That can be hard disk. We will see. I think there are a lot of opportunities for hard disk even at the edge. They will also start parking data for a while until they send to the public cloud. they will also start parking data for a while until they send to the public cloud That can be hard disk. that can be hard disk We will see. we will see I think there are a lot of opportunities for hard disk even at the edge. i think there are a lot of opportunities for hard disk even at the edge

Speaker 2: Would you consider your VIA China business? Is it kind of, like, similar to edge, or is it different? Would you consider your VIA China business? would you consider your via china business Is it kind of, like, similar to edge, or is it different? is it kind of like similar to edge or is it different

Speaker 1: VIA is a bit different. I would say there are two parts of VIA. The video and image application, first of all, there are, you know, the cameras that are connected to a storage. That storage is usually an hard disk. It can be depending how big is the security that you're having. It can be 4 TB, 8 TB, 10 TB. Usually, it's a mid-cap hard disk, not a huge. The company that are providing the surveillance, they also offer storage. If you are a building like this one, you know, you have all the camera, you record everything, and then you say, "Okay," or you delete or you store somewhere. You can store with the same company that is providing you the service of surveillance. In that case, they buy big drives. VIA is a bit different. via is a bit different I would say there are two parts of VIA. i would say there are two parts of via The video and image application, first of all, there are, you know, the cameras that are connected to a storage. the video and image application first of all there are you know the cameras that are connected to a storage That storage is usually an hard disk. that storage is usually an hard disk It can be depending how big is the security that you're having. it can be depending how big is the security that you're having It can be 4 TB, 8 TB, 10 TB. it can be 4 tb 8 tb 10 tb Usually, it's a mid-cap hard disk, not a huge. usually it's a mid-cap hard disk not a huge The company that are providing the surveillance, they also offer storage. the company that are providing the surveillance they also offer storage If you are a building like this one, you know, you have all the camera, you record everything, and then you say, "Okay," or you delete or you store somewhere. if you are a building like this one you know you have all the camera you record everything and then you say "okay," or you delete or you store somewhere You can store with the same company that is providing you the service of surveillance. you can store with the same company that is providing you the service of surveillance In that case, they buy big drives. in that case they buy big drives They buy 20 TB, 30 TB, 40 TB because they are actually offering a simplified cloud. There are not a lot of applications. There are some applications related to the surveillance, but not a lot of applications, but a lot of storage because the data is kept until they run the application, and then they decide what to do with the data. They buy 20 TB, 30 TB, 40 TB because they are actually offering a simplified cloud. they buy 20 tb 30 tb 40 tb because they are actually offering a simplified cloud There are not a lot of applications. there are not a lot of applications There are some applications related to the surveillance, but not a lot of applications, but a lot of storage because the data is kept until they run the application, and then they decide what to do with the data. there are some applications related to the surveillance but not a lot of applications but a lot of storage because the data is kept until they run the application and then they decide what to do with the data

Speaker 2: Gotcha. Interesting. I'm just about to see if anyone in the audience had a question. If not, I'll chug along. You know, the other thing, like, when you look at your business, I think historically, your cost downs are probably, like, high single digits, 10%. Now it's more, like, low double digits, mid-teens. The cost downs are actually better than historical. Is that purely a function of moving to HAMR, or do you think there is a lot more room for this cost decline to improve, or do you think there's, like, a once-in-a-lifetime step down because of HAMR? Now we should think about more, like, 10% longer term. Gotcha. gotcha Interesting. interesting I'm just about to see if anyone in the audience had a question. i'm just about to see if anyone in the audience had a question If not, I'll chug along. if not i'll chug along You know, the other thing, like, when you look at your business, I think historically, your cost downs are probably, like, high single digits, 10%. you know the other thing like when you look at your business i think historically your cost downs are probably like high single digits 10% Now it's more, like, low double digits, mid-teens. now it's more like low double digits mid-teens The cost downs are actually better than historical. the cost downs are actually better than historical Is that purely a function of moving to HAMR, or do you think there is a lot more room for this cost decline to improve, or do you think there's, like, a once-in-a-lifetime step down because of HAMR? is that purely a function of moving to hamr or do you think there is a lot more room for this cost decline to improve or do you think there's like a once-in-a-lifetime step down because of hamr Now we should think about more, like, 10% longer term. now we should think about more like 10% longer term

Speaker 1: I would say if you look at the product, the product cost going from first-generation HAMR 30 TB drive to second-generation HAMR 40 TB drive, the unit cost is fairly similar. You have 10 TB more. You have actually a fairly huge decline in terms of cost per TB. When you look at the entire company, the entire P&L, it doesn't depend only from the last product. You know, we sell from 2 TB drive to 40 TB drive. The cost in the period depends how this mix moves up. It's not only the last product, you know, with the time, moving more and more into HAMR, especially at the beginning of the technology where you increase, you know, 33% going from first-generation to second. Is a good you know, it's a good improvement of our cost decline. I would say if you look at the product, the product cost going from first-generation HAMR 30 TB drive to second-generation HAMR 40 TB drive, the unit cost is fairly similar. i would say if you look at the product the product cost going from first-generation hamr 30 tb drive to second-generation hamr 40 tb drive the unit cost is fairly similar You have 10 TB more. you have 10 tb more You have actually a fairly huge decline in terms of cost per TB. you have actually a fairly huge decline in terms of cost per tb When you look at the entire company, the entire P&L, it doesn't depend only from the last product. when you look at the entire company the entire p&l it doesn't depend only from the last product You know, we sell from 2 TB drive to 40 TB drive. you know we sell from 2 tb drive to 40 tb drive The cost in the period depends how this mix moves up. the cost in the period depends how this mix moves up It's not only the last product, you know, with the time, moving more and more into HAMR, especially at the beginning of the technology where you increase, you know, 33% going from first-generation to second. it's not only the last product you know with the time moving more and more into hamr especially at the beginning of the technology where you increase you know 33% going from first-generation to second Is a good you know, it's a good improvement of our cost decline. is a good you know it's a good improvement of our cost decline When you go from 40 TB to 50 TB, in percentage, that is 25%. It's still the same similar unit cost. You add the same 10 TB, but in percentage, it's a bit lower. Depending how you calculate. I would say, of course, HAMR is advantageous for the cost. Every period is different. Every quarter is different depending on how many PMR we are still selling and what is, you know, the segment in that specific quarter that is getting more volume. It's not so linear. I would say HAMR, longer term, will be, of course, the way to reduce cost in the industry. Otherwise, with the old technology, with PMR technology, you continue to add one disk and two add, one disk and two add until you have space in the box. When you go from 40 TB to 50 TB, in percentage, that is 25%. when you go from 40 tb to 50 tb in percentage that is 25% It's still the same similar unit cost. it's still the same similar unit cost You add the same 10 TB, but in percentage, it's a bit lower. you add the same 10 tb but in percentage it's a bit lower Depending how you calculate. depending how you calculate I would say, of course, HAMR is advantageous for the cost. i would say of course hamr is advantageous for the cost Every period is different. every period is different Every quarter is different depending on how many PMR we are still selling and what is, you know, the segment in that specific quarter that is getting more volume. every quarter is different depending on how many pmr we are still selling and what is you know the segment in that specific quarter that is getting more volume It's not so linear. it's not so linear I would say HAMR, longer term, will be, of course, the way to reduce cost in the industry. i would say hamr longer term will be of course the way to reduce cost in the industry Otherwise, with the old technology, with PMR technology, you continue to add one disk and two add, one disk and two add until you have space in the box. otherwise with the old technology with pmr technology you continue to add one disk and two add one disk and two add until you have space in the box The cost per unit goes up because you need to increase the bill of material. With HAMR, you keep the 10 disks, 20 heads, from 30 TB drive, 40 TB drive, 50 TB drive. The bill of material remains consistent. Of course, the components are not the same, so there is an increase on some of those components. The unit cost is fairly similar. The cost per unit goes up because you need to increase the bill of material. the cost per unit goes up because you need to increase the bill of material With HAMR, you keep the 10 disks, 20 heads, from 30 TB drive, 40 TB drive, 50 TB drive. with hamr you keep the 10 disks 20 heads from 30 tb drive 40 tb drive 50 tb drive The bill of material remains consistent. the bill of material remains consistent Of course, the components are not the same, so there is an increase on some of those components. of course the components are not the same so there is an increase on some of those components The unit cost is fairly similar. the unit cost is fairly similar

Speaker 2: Are there any pressures on that? Because, you know, one of the things is, like, for example, you get glass from Hoya or someone, but they also have increasing demand from the optics and photonics folks. Is there any disproportionate pricing where other sectors are actually willing to pay a premium causing, you know, your cost to go up because you had to probably match that to secure those components? Are there any pressures on that? are there any pressures on that Because, you know, one of the things is, like, for example, you get glass from Hoya or someone, but they also have increasing demand from the optics and photonics folks. because you know one of the things is like for example you get glass from hoya or someone but they also have increasing demand from the optics and photonics folks Is there any disproportionate pricing where other sectors are actually willing to pay a premium causing, you know, your cost to go up because you had to probably match that to secure those components? is there any disproportionate pricing where other sectors are actually willing to pay a premium causing you know your cost to go up because you had to probably match that to secure those components

Speaker 1: Well, no. Supply chain, of course, is very important. As I said before, we buy a lot of components. We buy electronics. We buy memories that, as you know, are fairly expensive today. We buy a lot of other mechanical components. You know, of course, every year is different. You know, there are years with higher inflation, years with lower inflation, years where there is a shortage of one component, so you need to spend more. You know, my discussion is keeping those at the same level. You have this clearly, you know, strong reduction in cost per TB. As I said before, every period is different. You know, right now, we have memories, you know, costing more for sure. You cannot compare. It's not because of the technology. It's because of the components. Well, no. well no Supply chain, of course, is very important. supply chain of course is very important As I said before, we buy a lot of components. as i said before we buy a lot of components We buy electronics. we buy electronics We buy memories that, as you know, are fairly expensive today. we buy memories that as you know are fairly expensive today We buy a lot of other mechanical components. we buy a lot of other mechanical components You know, of course, every year is different. you know of course every year is different You know, there are years with higher inflation, years with lower inflation, years where there is a shortage of one component, so you need to spend more. you know there are years with higher inflation years with lower inflation years where there is a shortage of one component so you need to spend more You know, my discussion is keeping those at the same level. you know my discussion is keeping those at the same level You have this clearly, you know, strong reduction in cost per TB. you have this clearly you know strong reduction in cost per tb As I said before, every period is different. as i said before every period is different You know, right now, we have memories, you know, costing more for sure. you know right now we have memories you know costing more for sure You cannot compare. you cannot compare It's not because of the technology. it's not because of the technology It's because of the components. it's because of the components You need to adjust your estimate based on how you see those components, cost evolving, yes. You need to adjust your estimate based on how you see those components, cost evolving, yes. you need to adjust your estimate based on how you see those components cost evolving yes

Speaker 2: Gotcha. I think, you know, clearly, the demand is very strong. You're doing these cost downs. You're already at, like, 50% plus gross margin. I think people always speculated that it's a rational duopoly, so you should be at 65% gross margin. It seems like there's a path to get there easily, maybe exceed, but I think realistically, get to mid-60% gross margin. From your view, I mean, I'm not looking for guidance, but is that a fair assumption given the trajectory of demand and trajectory of your cost downs? Gotcha. gotcha I think, you know, clearly, the demand is very strong. i think you know clearly the demand is very strong You're doing these cost downs. you're doing these cost downs You're already at, like, 50% plus gross margin. you're already at like 50% plus gross margin I think people always speculated that it's a rational duopoly, so you should be at 65% gross margin. i think people always speculated that it's a rational duopoly so you should be at 65% gross margin It seems like there's a path to get there easily, maybe exceed, but I think realistically, get to mid-60% gross margin. it seems like there's a path to get there easily maybe exceed but i think realistically get to mid-60% gross margin From your view, I mean, I'm not looking for guidance, but is that a fair assumption given the trajectory of demand and trajectory of your cost downs? from your view i mean i'm not looking for guidance but is that a fair assumption given the trajectory of demand and trajectory of your cost downs

Speaker 1: I would say it's an assumption of continuing to improve is very fair. You know, we actually said that, just a few weeks ago. We said, you know, there are this quarter plus other four of improvement. You know, this quarter, we are guiding at the gross margin that is about 50%. If we continue to improve, we continue to improve. We will go but we don't have a gross margin target. It's not a number that when we achieve, we just say, "Okay, this is enough." We stop there. We like how we run this strategy. We have done it for 12 consecutive quarters. This is the 13th. We have other four that we know are coming, and we will continue to do that. I would say it's an assumption of continuing to improve is very fair. i would say it's an assumption of continuing to improve is very fair You know, we actually said that, just a few weeks ago. you know we actually said that just a few weeks ago We said, you know, there are this quarter plus other four of improvement. we said you know there are this quarter plus other four of improvement You know, this quarter, we are guiding at the gross margin that is about 50%. you know this quarter we are guiding at the gross margin that is about 50% If we continue to improve, we continue to improve. if we continue to improve we continue to improve We will go but we don't have a gross margin target. we will go but we don't have a gross margin target It's not a number that when we achieve, we just say, "Okay, this is enough." We stop there. it's not a number that when we achieve we just say "okay this is enough." we stop there We like how we run this strategy. we like how we run this strategy We have done it for 12 consecutive quarters. we have done it for 12 consecutive quarters This is the 13th. this is the 13th We have other four that we know are coming, and we will continue to do that. we have other four that we know are coming and we will continue to do that One day, we will say, Okay, this is the result that we have achieved. We don't see an end at this point yet. One day, we will say, Okay, this is the result that we have achieved. one day we will say okay this is the result that we have achieved We don't see an end at this point yet. we don't see an end at this point yet

Speaker 2: Gotcha. You know, the other interesting thing is you know, you said early on you're not adding unit capacity. You're still growing exabytes 25%-30%. At that CAGR, your hyperscaler customers are not pressuring you to add more capacity. They are happy with the 25%-30%. Gotcha. gotcha You know, the other interesting thing is you know, you said early on you're not adding unit capacity. you know the other interesting thing is you know you said early on you're not adding unit capacity You're still growing exabytes 25%-30%. you're still growing exabytes 25%-30% At that CAGR, your hyperscaler customers are not pressuring you to add more capacity. at that cagr your hyperscaler customers are not pressuring you to add more capacity They are happy with the 25%-30%. they are happy with the 25%-30%

Speaker 1: I don't know if they're happy. I think there is pressure to do more. Their unconstrained demand is for sure higher. Every year, there is some components that get short. You know, right now, it's DRAM probably is short, and, you know, power is still short. From that unconstrained demand, you need to go from what they can really build. I don't know if they're happy. i don't know if they're happy I think there is pressure to do more. i think there is pressure to do more Their unconstrained demand is for sure higher. their unconstrained demand is for sure higher Every year, there is some components that get short. every year there is some components that get short You know, right now, it's DRAM probably is short, and, you know, power is still short. you know right now it's dram probably is short and you know power is still short From that unconstrained demand, you need to go from what they can really build. from that unconstrained demand you need to go from what they can really build

Speaker 2: Right. Right. right

Speaker 1: It's our assumption. It's not their assumption. Our assumption is if we increase exabyte by, you know, about 25%, we will not be the component that is getting. It's our assumption. it's our assumption It's not their assumption. it's not their assumption Our assumption is if we increase exabyte by, you know, about 25%, we will not be the component that is getting. our assumption is if we increase exabyte by you know about 25% we will not be the component that is getting

Speaker 2: Right. Right. right

Speaker 1: The development of the data center. Well, we could be wrong, but we think 25% is good enough not to become the top of the list problem. The development of the data center. the development of the data center Well, we could be wrong, but we think 25% is good enough not to become the top of the list problem. well we could be wrong but we think 25% is good enough not to become the top of the list problem

Speaker 2: Gotcha. I mean, the reason I’m asking is it seems like, you know, you’re doing 25% or 30% exabyte growth, slowly increasing pricing more than before, but your customers are not pushing back, so they seem to be okay. In other words, if you go to, like, say, 35% exabyte growth, you’re not the bottleneck. You know, your hyperscaler customer will still be constrained. The marginal benefit is not much for you or them for you to go to, like, higher exabyte growth, right? Gotcha. gotcha I mean, the reason I’m asking is it seems like, you know, you’re doing 25% or 30% exabyte growth, slowly increasing pricing more than before, but your customers are not pushing back, so they seem to be okay. i mean the reason i’m asking is it seems like you know you’re doing 25% or 30% exabyte growth slowly increasing pricing more than before but your customers are not pushing back so they seem to be okay In other words, if you go to, like, say, 35% exabyte growth, you’re not the bottleneck. in other words if you go to like say 35% exabyte growth you’re not the bottleneck You know, your hyperscaler customer will still be constrained. you know your hyperscaler customer will still be constrained The marginal benefit is not much for you or them for you to go to, like, higher exabyte growth, right? the marginal benefit is not much for you or them for you to go to like higher exabyte growth right

Speaker 1: I would say so far, this strategy has worked very well. We more than double our revenue. We more than double our profitability. There's no reason to change. I think as this strategy is giving us a great result, our focus is to continue to execute the same strategy for a long time. You know, we have already done 12, 13 quarters. It's already fairly long. We don't see this ending. We have another four quarters coming. We will have more later because, you know, we see the exabyte that our customers are demanding for year two and year three and year four is actually way higher than what we you know, what we have in our plan. I would say so far, this strategy has worked very well. i would say so far this strategy has worked very well We more than double our revenue. we more than double our revenue We more than double our profitability. we more than double our profitability There's no reason to change. there's no reason to change I think as this strategy is giving us a great result, our focus is to continue to execute the same strategy for a long time. i think as this strategy is giving us a great result our focus is to continue to execute the same strategy for a long time You know, we have already done 12, 13 quarters. you know we have already done 12 13 quarters It's already fairly long. it's already fairly long We don't see this ending. we don't see this ending We have another four quarters coming. we have another four quarters coming We will have more later because, you know, we see the exabyte that our customers are demanding for year two and year three and year four is actually way higher than what we you know, what we have in our plan. we will have more later because you know we see the exabyte that our customers are demanding for year two and year three and year four is actually way higher than what we you know what we have in our plan

Speaker 2: Right. Also, I think your own forecast is that I think probably next month or so, I think 40% of exabytes would be from HAMR. Maybe a year from now, 70% of your exabytes would be on HAMR. Is that still the plan? Are we or do you think that HAMR percentage is going to be higher than expected? Right. right Also, I think your own forecast is that I think probably next month or so, I think 40% of exabytes would be from HAMR. also i think your own forecast is that i think probably next month or so i think 40% of exabytes would be from hamr Maybe a year from now, 70% of your exabytes would be on HAMR. maybe a year from now 70% of your exabytes would be on hamr Is that still the plan? is that still the plan Are we or do you think that HAMR percentage is going to be higher than expected? are we or do you think that hamr percentage is going to be higher than expected

Speaker 1: Well, we are ramping HAMR well, especially because the second-generation HAMR was qualified a little bit earlier than what we were thinking, you know, with the two major cloud customers. Of course, the % depends also from how much we produce on the old technology. Not to achieve those %, it would be very easy just, you know, not producing a lot of PMR, and you have a lot of HAMR. Depends. You know, we are trying to optimize exabyte. To optimize exabyte, we produce a lot of both, you know, HAMR and PMR. Let's see. You know, it's I think, first priority is to achieve this 25% exabyte increase. You know, you as you said, in the past, we were able to do more. That's more is probably coming more from PMR than HAMR. Now we are ramping more HAMR. Well, we are ramping HAMR well, especially because the second-generation HAMR was qualified a little bit earlier than what we were thinking, you know, with the two major cloud customers. well we are ramping hamr well especially because the second-generation hamr was qualified a little bit earlier than what we were thinking you know with the two major cloud customers Of course, the % depends also from how much we produce on the old technology. of course the % depends also from how much we produce on the old technology Not to achieve those %, it would be very easy just, you know, not producing a lot of PMR, and you have a lot of HAMR. not to achieve those % it would be very easy just you know not producing a lot of pmr and you have a lot of hamr Depends. depends You know, we are trying to optimize exabyte. you know we are trying to optimize exabyte To optimize exabyte, we produce a lot of both, you know, HAMR and PMR. to optimize exabyte we produce a lot of both you know hamr and pmr Let's see. let's see You know, it's I think, first priority is to achieve this 25% exabyte increase. you know it's i think first priority is to achieve this 25% exabyte increase You know, you as you said, in the past, we were able to do more. you know you as you said in the past we were able to do more That's more is probably coming more from PMR than HAMR. that's more is probably coming more from pmr than hamr Now we are ramping more HAMR. now we are ramping more hamr I you know, HAMR is ramping very well. I think we will be, you know, around those percentages, but depends every quarter how we manage the two technologies. I you know, HAMR is ramping very well. i you know hamr is ramping very well I think we will be, you know, around those percentages, but depends every quarter how we manage the two technologies. i think we will be you know around those percentages but depends every quarter how we manage the two technologies

Speaker 2: Gotcha. you know, I think if you do the math, you're probably going to generate close to, like, $3 billion of free cash flow this year. I mean, after the dividend payment, you're about $4 billion in debt. How would you prioritize the free cash flow? Is it, like, to mainly pay it on debt? Would you consider repurchases at the stock price, or do you think you probably need more supply chain preparedness for the ramp that it probably makes sense to invest more in your own business? Gotcha. you know, I think if you do the math, you're probably going to generate close to, like, $3 billion of free cash flow this year. gotcha you know i think if you do the math you're probably going to generate close to like $3 billion of free cash flow this year I mean, after the dividend payment, you're about $4 billion in debt. i mean after the dividend payment you're about $4 billion in debt How would you prioritize the free cash flow? how would you prioritize the free cash flow Is it, like, to mainly pay it on debt? is it like to mainly pay it on debt Would you consider repurchases at the stock price, or do you think you probably need more supply chain preparedness for the ramp that it probably makes sense to invest more in your own business? would you consider repurchases at the stock price or do you think you probably need more supply chain preparedness for the ramp that it probably makes sense to invest more in your own business

Speaker 1: I would say longer term, we have as we have done in the past, our free cash flow is always focused on shareholder return, you know, between dividend and share buyback. In the short term, we have reduced our debt, you know, going from about $6 billion to now a little bit less than $4 billion. Now we can go lower. You know, we still have a little bit of the convertible, to buyback. We did something recently. You know, we will do the remaining pro possibly next quarter and maybe reduce debt even lower. Now longer after we have reduced the debt, you know, the free cash flow mainly will go to shareholders. I would say longer term, we have as we have done in the past, our free cash flow is always focused on shareholder return, you know, between dividend and share buyback. i would say longer term we have as we have done in the past our free cash flow is always focused on shareholder return you know between dividend and share buyback In the short term, we have reduced our debt, you know, going from about $6 billion to now a little bit less than $4 billion. in the short term we have reduced our debt you know going from about $6 billion to now a little bit less than $4 billion Now we can go lower. now we can go lower You know, we still have a little bit of the convertible, to buyback. you know we still have a little bit of the convertible to buyback We did something recently. we did something recently You know, we will do the remaining pro possibly next quarter and maybe reduce debt even lower. you know we will do the remaining pro possibly next quarter and maybe reduce debt even lower Now longer after we have reduced the debt, you know, the free cash flow mainly will go to shareholders. now longer after we have reduced the debt you know the free cash flow mainly will go to shareholders

Speaker 2: Gotcha. Gotcha. Is there any like, do you see, like, you know, in the past, like, you mentioned that I think heads or media takes, like, a year to bring it online. Even if you decide to add capacity today, you're probably looking at least a year before that becomes useful exabytes into the marketplace. Is that still the same, or do you think there is, like, more tightening potential in the supply chain where lead times can come shorter than today? Gotcha. gotcha Gotcha. gotcha Is there any like, do you see, like, you know, in the past, like, you mentioned that I think heads or media takes, like, a year to bring it online. is there any like do you see like you know in the past like you mentioned that i think heads or media takes like a year to bring it online Even if you decide to add capacity today, you're probably looking at least a year before that becomes useful exabytes into the marketplace. even if you decide to add capacity today you're probably looking at least a year before that becomes useful exabytes into the marketplace Is that still the same, or do you think there is, like, more tightening potential in the supply chain where lead times can come shorter than today? is that still the same or do you think there is like more tightening potential in the supply chain where lead times can come shorter than today

Speaker 1: Well, I would say the cycle time of a wafer where we produce heads is about, you know, nine months, let's say, six to nine months depending from which technology, which product. If you need to build capacity like a greenfield, well, that takes more than a year. I would say possibly at least two years because, you know, you need to build the factory and then, you know, get the tools and qualify the tools. It's long, long term, yeah. Well, I would say the cycle time of a wafer where we produce heads is about, you know, nine months, let's say, six to nine months depending from which technology, which product. well i would say the cycle time of a wafer where we produce heads is about you know nine months let's say six to nine months depending from which technology which product If you need to build capacity like a greenfield, well, that takes more than a year. if you need to build capacity like a greenfield well that takes more than a year I would say possibly at least two years because, you know, you need to build the factory and then, you know, get the tools and qualify the tools. i would say possibly at least two years because you know you need to build the factory and then you know get the tools and qualify the tools It's long, long term, yeah. it's long long term yeah

Speaker 2: I mean, if you decide to add capacity, would greenfield make the most sense, or it'd be more existing brownfield? I mean, if you decide to add capacity, would greenfield make the most sense, or it'd be more existing brownfield? i mean if you decide to add capacity would greenfield make the most sense or it'd be more existing brownfield

Speaker 1: Well, right now, we have not looked into that because, you know, we don't think we need to add units. I would say if we arrive at that point, in time of a certain decision, we will see what is the best solution. Again, in our plan, we don't have an increase of the number of factories that we have. Well, right now, we have not looked into that because, you know, we don't think we need to add units. well right now we have not looked into that because you know we don't think we need to add units I would say if we arrive at that point, in time of a certain decision, we will see what is the best solution. i would say if we arrive at that point in time of a certain decision we will see what is the best solution Again, in our plan, we don't have an increase of the number of factories that we have. again in our plan we don't have an increase of the number of factories that we have

Speaker 2: One other thing, you know, you spoke about cost reduction. You know, when I look at your footprint, you know, in manufacturing between the heads, the wafers, the media, everything, you're in, like, Singapore, Ireland, U.S. Is there a consolidation angle in this to help get the, you know, cost reduction, or do you think the footprint stays the way it is? One other thing, you know, you spoke about cost reduction. one other thing you know you spoke about cost reduction You know, when I look at your footprint, you know, in manufacturing between the heads, the wafers, the media, everything, you're in, like, Singapore, Ireland, U.S. you know when i look at your footprint you know in manufacturing between the heads the wafers the media everything you're in like singapore ireland u.s Is there a consolidation angle in this to help get the, you know, cost reduction, or do you think the footprint stays the way it is? is there a consolidation angle in this to help get the you know cost reduction or do you think the footprint stays the way it is

Speaker 1: I think it will stay because we do different type of manufacturing in different locations. Singapore, we produce the disk. We don't have any other site producing the disk. Malaysia, we produce the substrate. We don't have any other place where we produce a substrate. China, Thailand, we do assembly and final test. Again, you know, China is used for our Chinese customers. Thailand is used for everyone else in the world. Probably the only two factories that are similar are the one U.S. and Northern Ireland, where in both places, we produce heads. Because we need that level of volume, I don't see any reason to change that. I think it will stay because we do different type of manufacturing in different locations. i think it will stay because we do different type of manufacturing in different locations Singapore, we produce the disk. singapore we produce the disk We don't have any other site producing the disk. we don't have any other site producing the disk Malaysia, we produce the substrate. malaysia we produce the substrate We don't have any other place where we produce a substrate. we don't have any other place where we produce a substrate China, Thailand, we do assembly and final test. china thailand we do assembly and final test Again, you know, China is used for our Chinese customers. again you know china is used for our chinese customers Thailand is used for everyone else in the world. thailand is used for everyone else in the world Probably the only two factories that are similar are the one U.S. and Northern Ireland, where in both places, we produce heads. probably the only two factories that are similar are the one u.s and northern ireland where in both places we produce heads Because we need that level of volume, I don't see any reason to change that. because we need that level of volume i don't see any reason to change that

Speaker 2: Gotcha. You're close to running out of time. Just want to see if anyone had any quick question. If not, I'll try to squeeze one more in. You know, double-digit exabyte like, you know, mid-20% exabyte growth, and, you know, clearly, like, pricing is pretty robust. I'm just wondering, like, you know, there is an expectation that, you know, we should see double-digit growth in revenue-wise even in 2027 and beyond. If the current demand scenario continues, let's just linearly extrapolate it, is it a fair assumption that the revenue growth should be double-digit because? Gotcha. gotcha You're close to running out of time. you're close to running out of time Just want to see if anyone had any quick question. just want to see if anyone had any quick question If not, I'll try to squeeze one more in. if not i'll try to squeeze one more in You know, double-digit exabyte like, you know, mid-20% exabyte growth, and, you know, clearly, like, pricing is pretty robust. you know double-digit exabyte like you know mid-20% exabyte growth and you know clearly like pricing is pretty robust I'm just wondering, like, you know, there is an expectation that, you know, we should see double-digit growth in revenue-wise even in 2027 and beyond. i'm just wondering like you know there is an expectation that you know we should see double-digit growth in revenue-wise even in 2027 and beyond If the current demand scenario continues, let's just linearly extrapolate it, is it a fair assumption that the revenue growth should be double-digit because? if the current demand scenario continues let's just linearly extrapolate it is it a fair assumption that the revenue growth should be double-digit because

Speaker 1: Yeah. No, at earnings release, Dave, the CEO, said we expect revenue to grow for the next several years at least 20%. He said at least, so probably will be more than that. Yeah. yeah No, at earnings release, Dave, the CEO, said we expect revenue to grow for the next several years at least 20%. no at earnings release dave the ceo said we expect revenue to grow for the next several years at least 20% He said at least, so probably will be more than that. he said at least so probably will be more than that

Speaker 2: All right. I think, Gianluca Romano, thank you very much for your insights. All right. all right I think, Gianluca Romano, thank you very much for your insights. i think gianluca romano thank you very much for your insights

Speaker 1: Thank you. Thank you. thank you

Speaker 2: Always fun having you. Thank you. Always fun having you. always fun having you Thank you. thank you

Speaker 1: Thank you very much. Thank you very much. thank you very much