希捷科技 (STX) 2023 Q2 法說會逐字稿

Good day, and welcome to the Seagate Technology Fiscal Second Quarter 2023 Conference Call.

美好的一天，歡迎參加希捷科技 2023 財年第二季度電話會議。

(Operator Instructions)

（操作員說明）

Please note that this event is being recorded. I would now like to turn the conference over to Shanye Hudson, Senior Vice President, Investor Relations and Treasury. Please go ahead.

請注意，此事件正在記錄中。我現在想把會議轉交給負責投資者關係和財政部的高級副總裁 Shanye Hudson。請繼續。

Thank you. Good afternoon, everyone, and welcome to today's call. Joining me are Dave Mosley, Seagate's Chief Executive Officer; and Gianluca Romano, our Chief Financial Officer. We posted our earnings press release and detailed supplemental information for our second quarter fiscal 2023 on the Investors section of our website.

謝謝你。大家下午好，歡迎來到今天的電話會議。加入我的是希捷首席執行官戴夫·莫斯利 (Dave Mosley)；和我們的首席財務官 Gianluca Romano。我們在我們網站的投資者部分發布了 2023 財年第二季度的收益新聞稿和詳細補充信息。

During today's call, we'll refer to GAAP and non-GAAP measures. Non-GAAP figures are reconciled to GAAP figures in the earnings press release posted on our website and included in our Form 8-K that was filed with the SEC. We've not reconciled certain non-GAAP outlook measures because material items that may impact these measures are out of our control and/or cannot easily be predicted. Therefore, a reconciliation to the corresponding GAAP measures is not available without unreasonable efforts.

在今天的電話會議中，我們將提到 GAAP 和非 GAAP 指標。非 GAAP 數據與我們網站上發布的收益新聞稿中的 GAAP 數據進行了核對，並包含在我們向美國證券交易委員會提交的 8-K 表格中。我們沒有調整某些非 GAAP 展望措施，因為可能影響這些措施的重大項目超出我們的控制和/或不容易預測。因此，如果不付出不合理的努力，就無法與相應的 GAAP 措施進行調節。

Before we begin, I'd like to remind you that today's call contains forward-looking statements that reflect management's current views us and assumptions based on information available to us as of today and should not be relied upon as of any subsequent date. Actual results may differ materially from those contained in or implied by these forward-looking statements as they are subject to risks and uncertainties associated with our business.

在我們開始之前，我想提醒您，今天的電話會議包含前瞻性陳述，這些陳述反映了管理層當前對我們的看法以及基於我們截至今天可獲得的信息做出的假設，在以後的任何日期都不應依賴這些陳述。實際結果可能與這些前瞻性陳述中包含或暗示的結果存在重大差異，因為它們受到與我們業務相關的風險和不確定性的影響。

Regarding the matter raised by the proposed charging letter from the U.S. Commerce Department's Bureau of Industry and Security, or BIS, Seagate maintains that it has complied with all relevant export control laws and regulations. We've been cooperating with BIS and engaging in discussions with BIS to seek a resolution. Please note that we won't be addressing questions regarding this matter on today's call, but we'll provide additional updates as appropriate moving forward.

關於美國商務部工業與安全局 (BIS) 擬議的指控信中提出的問題，希捷堅稱其已遵守所有相關的出口管制法律法規。我們一直在與 BIS 合作，並與 BIS 進行討論以尋求解決方案。請注意，我們不會在今天的電話會議上解決有關此事的問題，但我們會在適當的時候提供額外的更新。

To learn more about the risks, uncertainties and other factors that may affect our future business results, please refer to the press release issued today and our SEC filings, including our most recent annual report on Form 10-K and quarterly report on Form 10-Q as well as the supplemental information, all of which may be found on the Investors section of our website. As always, following our prepared remarks, we'll open the call up for questions.

要詳細了解可能影響我們未來業務結果的風險、不確定性和其他因素，請參閱今天發布的新聞稿和我們向美國證券交易委員會提交的文件，包括我們最近的 10-K 表年度報告和 10 表季度報告- Q 以及補充信息，所有這些都可以在我們網站的投資者部分找到。與往常一樣，在我們準備好的評論之後，我們將公開提問。

Let me now turn the call over to you, Dave, for opening remarks.

戴夫，現在讓我把電話轉給你，請你發表開場白。

Thanks, Shanye. Good afternoon, everyone, and thanks for joining us today. Seagate delivered on what we set out to do in the December quarter, and I'm proud of our team's accomplishments amid this tough business environment. Revenue and non-GAAP EPS came in slightly above the midpoint of our guidance range and free cash flow generation increased by more than 50% quarter-over-quarter. We are managing well what is in our control and executed on the actions we outlined on our October call. We retired more than $200 million in debt, strengthening our balance sheet. We lowered operational costs by realizing a meaningful portion of the expected savings from our restructuring efforts. We reduced capital expenditures by more than 40% sequentially while still accelerating the launch and development schedules for new mass capacity products, and we adjusted our factory production output to support strong supply discipline as demand recovers.

謝謝，山野。大家下午好，感謝今天加入我們。希捷在 12 月季度實現了我們的計劃，我為我們團隊在這個艱難的商業環境中取得的成就感到自豪。收入和非 GAAP 每股收益略高於我們指導範圍的中點，自由現金流量環比增長超過 50%。我們正在妥善管理我們在 10 月份電話會議上概述的行動中所控制和執行的內容。我們償還了超過 2 億美元的債務，加強了我們的資產負債表。我們通過重組工作實現預期節省的很大一部分，從而降低了運營成本。我們連續減少了 40% 以上的資本支出，同時仍在加快新的大容量產品的推出和開發計劃，並且我們調整了我們的工廠產量，以在需求恢復時支持強有力的供應紀律。

These actions, we believe, put Seagate on solid footing to weather the near-term industry dynamics while continuing to make the technology investments to meet our customers' evolving needs and thrive over the long term. Relative to market conditions, 3 primary external factors have been impacting our business over the past several months. The COVID-related economic slowdown in China, the work down of nearline HDD inventories among U.S. cloud and global enterprise customers under a more cautious demand environment and macro-related disruptions primarily impacting our consumer-facing markets.

我們相信，這些行動使希捷站穩了腳跟，能夠經受住近期的行業動態，同時繼續進行技術投資，以滿足客戶不斷變化的需求並實現長期發展。相對於市場狀況，在過去幾個月中，3 個主要的外部因素一直在影響我們的業務。中國與 COVID 相關的經濟放緩、美國雲和全球企業客戶在更加謹慎的需求環境下近線 HDD 庫存的減少以及宏觀相關的中斷主要影響了我們面向消費者的市場。

These factors remained at play during the December quarter and weighed heavily on the mass capacity markets, resulting in a 10% sequential decline in mass capacity revenue. Having said that, we are already seeing some encouraging indicators. Within China, we believe first steps toward recovery are being implemented through government policies aimed at improving economic conditions including the faster-than-expected reversal of 0 COVID restrictions and a show of confidence following the policy shift several major banks raised their 2023 outlook for China's GDP.

這些因素在 12 月季度繼續發揮作用，對大容量市場造成沉重壓力，導致大容量收入環比下降 10%。話雖如此，我們已經看到了一些令人鼓舞的指標。在中國，我們認為正在通過旨在改善經濟狀況的政府政策實施複甦的第一步，包括以比預期更快的速度逆轉 0 COVID 限制，以及在政策轉變後表現出信心幾家主要銀行提高了對中國 2023 年的展望國內生產總值。

We expect it will take time for consumers and businesses to work through disruptions related to the COVID policy pivot and for the economy to fully reopen. Based on our customer conversations, we anticipate regional sales into the VIA and nearline markets to remain subdued in the March quarter and gradually improve as the calendar year unfolds. We will continue to monitor demand signals and expect to gain a better picture following the Lunar New Year celebrations.

我們預計消費者和企業需要時間來解決與 COVID 政策支點相關的中斷問題，並且經濟要完全重新開放。根據我們與客戶的對話，我們預計 3 月季度 VIA 和近線市場的區域銷售將保持低迷，並隨著日曆年的展開而逐漸改善。我們將繼續監測需求信號，並期望在農曆新年慶祝活動後獲得更好的前景。

Turning to the U.S. cloud and enterprise markets. Customers have focused on working down the HDD inventory levels that were built up during the pandemic as non-HDD component shortages created inventory imbalances. We believe some progress has been made in recent months supported by an improvement in non-HDD component availability. While inventory adjustments are customer-by-customer event, and ongoing macro uncertainties have led to more cautious near-term buying decisions, we expect nearline sales will improve slightly in the current quarter, particularly for our high-capacity drives.

轉向美國雲和企業市場。由於非 HDD 組件短缺導致庫存失衡，客戶一直專注於降低大流行期間積累的 HDD 庫存水平。我們認為，在非 HDD 組件可用性改善的支持下，最近幾個月已經取得了一些進展。雖然庫存調整是因客戶而異的事件，持續的宏觀不確定性導致近期購買決策更加謹慎，但我們預計本季度的近線銷售將略有改善，尤其是我們的大容量驅動器。

Our view is supported by the ongoing adoption of our 20-plus terabyte family of nearline products, which represented close to 60% of nearline exabytes shipments in the December quarter and is expected to trend even higher in the current quarter. Relative to our products, we are seeing a wider variety of nearline capacity points and configurations being adopted across our customer base, depending on their specific data center architectures, workloads and application needs. Seagate is well equipped to address these individual unique requirements with our deep customer relationships and broad technology portfolio, spanning traditional perpendicular recording technology or PMR drives to performance-oriented dual actuator products to TCO enhancing SMR technology.

我們的觀點得到了我們 20 多 TB 近線產品系列的持續採用的支持，這些產品佔 12 月季度近線 EB 出貨量的近 60%，預計本季度的趨勢會更高。相對於我們的產品，我們看到我們的客戶群正在採用更多種類的近線容量點和配置，具體取決於他們的特定數據中心架構、工作負載和應用程序需求。希捷憑藉我們深厚的客戶關係和廣泛的技術組合，從傳統的垂直記錄技術或 PMR 驅動器到以性能為導向的雙驅動器產品，再到增強 TCO 的 SMR 技術，都具備充分的能力來滿足這些獨特的需求。

In addition to our device portfolio, Seagate's Systems business offers cost-efficient, scalable petabytes solutions for both enterprise and cloud customers. While system sales were down sequentially off of a very strong September quarter, we captured a record number of new customer wins with our Corvault products. Corvault offers features such as self-healing, autonomous drive regeneration, which increases productivity while reducing electronic waste. The momentum that we're seeing across the systems business supports revenue to move higher in fiscal 2023.

除了我們的設備產品組合，希捷的系統業務還為企業和雲客戶提供經濟高效、可擴展的 PB 級解決方案。雖然系統銷售額在非常強勁的 9 月季度連續下降，但我們的 Corvault 產品贏得了創紀錄數量的新客戶。 Corvault 提供自我修復、自動驅動再生等功能，可提高生產率，同時減少電子垃圾。我們在整個系統業務中看到的勢頭支持收入在 2023 財年走高。

Our strong product pipeline is underpinned by the technology advancements we're bringing to market. We are leveraging our technology leadership to scale drive capacities through aerial density gains rather than additional heads and disks. As a result, we can deliver our trademark TCO advantages to customers with attractive margin opportunities for Seagate. Our 20-terabyte product features 2 terabyte per disk capacities and we have started to ramp the volume of 22 terabyte products deployed on 2.2 terabyte per disk capacities. The 20-plus terabyte platform is based on traditional PMR technology. And some customers are choosing to enable SMR technology as an additional feature that slightly increases the drives capacity for certain applications. In the December quarter, about 35% of our nearline exabytes shipments were deployed as SMR drives.

我們強大的產品線以我們推向市場的技術進步為基礎。我們正在利用我們的技術領先地位，通過增加空間密度而不是增加磁頭和磁盤來擴展驅動器容量。因此，我們可以向客戶提供我們標誌性的 TCO 優勢，並為希捷提供有吸引力的利潤機會。我們的 20 TB 產品具有每磁盤 2 TB 的容量，我們已經開始增加部署在每磁盤 2.2 TB 容量上的 22 TB 產品的容量。 20+TB 平台基於傳統的 PMR 技術。一些客戶選擇將 SMR 技術作為一項附加功能來啟用，以略微增加某些應用程序的驅動器容量。在 12 月季度，我們約 35% 的近線 EB 出貨量被部署為 SMR 驅動器。

We are executing plans to deliver another 10% gain in per disk capacity for this PMR platform to offer drives in the mid- to upper 20 terabyte range. However, I'm most excited by the advances we've made on our HAMR technology. It was nearly 4 years ago to the day that I first shared our lab results demonstrating 3 terabyte per disk capacity. And today, we have demonstrated capacities of 5 terabytes per disc in our recording physics labs. In the current market environment, we've been taking advantage of our reduced factory utilization to accelerate cycles of learning around HAMR productization. We are meeting or exceeding all product development milestones and reliability metrics, and we will be shipping prequalification units to key cloud customers in the coming weeks.

我們正在執行計劃，使該 PMR 平台的每個磁盤容量再增加 10%，以提供 20 TB 中到上層範圍的驅動器。然而，我最興奮的是我們在 HAMR 技術上取得的進步。將近 4 年前，直到我第一次分享我們的實驗室結果顯示每個磁盤容量為 3 TB 的那一天。今天，我們在錄音物理實驗室展示了每張光盤 5 TB 的容量。在當前的市場環境中，我們一直在利用我們降低的工廠利用率來加快圍繞 HAMR 產品化的學習週期。我們正在達到或超過所有產品開發里程碑和可靠性指標，我們將在未來幾週內向主要雲客戶運送預認證單元。

As a result of this progress, we now expect to launch our 30-plus terabyte platform in the June quarter, slightly ahead of schedule. The speed of the initial HAMR volume ramp will depend on a number of factors, including product yields and customer qualification time lines. However, we plan to use our systems business to quicken the pace of learning and time to yield. Our tremendous progress reinforces my confidence in HAMR products and our ability to execute. These innovations were only possible through the hard work and dedication of our global team, and I would like to thank them for their many efforts.

由於這一進展，我們現在預計將在 6 月季度推出我們的 30 多 TB 平台，略微提前。初始 HAMR 量的增長速度將取決於許多因素，包括產品產量和客戶資格認證時間線。然而，我們計劃利用我們的系統業務來加快學習的步伐和時間來取得成果。我們的巨大進步增強了我對 HAMR 產品和我們執行能力的信心。這些創新只有通過我們全球團隊的辛勤工作和奉獻才能實現，我要感謝他們所做的許多努力。

Our multi-decade focus on HAMR R&D and our innovation across all facets of dry production have resulted in a development advantage that we believe is measured in years, and we're excited by our collaborations with customers on HAMR capabilities. The technology innovations driving aerial density higher will deliver strong and consistent cost reductions at the highest drive capacities and enable future cost-efficient refreshes of our midrange capacity drives. We believe these products serve as the foundation to expand our margin profile back into and possibly beyond the long-term target range.

我們對 HAMR 研發的數十年專注以及我們在干法生產各個方面的創新帶來了我們認為可以用多年衡量的發展優勢，我們對與客戶在 HAMR 功能方面的合作感到興奮。推動更高天線密度的技術創新將在最高驅動器容量下實現強勁而一致的成本降低，並使我們未來能夠以經濟高效的方式更新我們的中端容量驅動器。我們相信這些產品是將我們的利潤率狀況擴大到甚至可能超出長期目標範圍的基礎。

Wrapping up, Seagate is executing with speed and agility through the near-term macro challenges. We've made meaningful improvements to our cost structure and balance sheet while steadily advancing our product and technology road maps. With signs starting to emerge that market conditions could improve as we progress through the calendar year, Seagate is well positioned with an industry-leading mass capacity portfolio that we believe supports the return to our long-term financial model over time.

總結一下，希捷正在以快速和敏捷的方式應對近期的宏觀挑戰。我們對成本結構和資產負債表進行了有意義的改進，同時穩步推進我們的產品和技術路線圖。隨著日曆年的進展，市場狀況可能會有所改善的跡像開始出現，希捷憑藉行業領先的大容量產品組合處於有利地位，我們相信隨著時間的推移支持我們回歸長期財務模式。

Thanks, and I'll now turn the call over to Gianluca.

謝謝，我現在將電話轉給 Gianluca。

Thank you, Dave. Seagate is navigating through the near-term macroeconomic cross current and executed to plan in the December quarter. We delivered top and bottom line results that came in slightly above the midpoint of our guidance ranges. Revenue of $1.89 billion and non-GAAP earnings of $0.16 per share. Our actions to reduce costs, strengthen the balance sheet and improve long-term profitability are really desired outcomes, including a continuation of positive free cash flow generation without sacrificing investment necessary to extend our technology leadership.

謝謝你，戴夫。希捷正在駕馭近期宏觀經濟的逆流，並在 12 月季度執行計劃。我們交付的頂線和底線結果略高於我們的指導範圍的中點。收入為 18.9 億美元，非 GAAP 每股收益為 0.16 美元。我們降低成本、加強資產負債表和提高長期盈利能力的行動是真正需要的結果，包括在不犧牲擴大我們技術領先地位所需的投資的情況下繼續產生正的自由現金流。

Total hard disk drive shipments were 113 exabytes in the December quarter, down 5% quarter-over-quarter, with HDD revenue declining 6% sequentially to $1.7 billion. Multiple factors led to an expected decline in the mass capacity business, including the inventory correction among cloud and enterprise customers, COVID-related disruption in China and Seagate's own action to reduce production. Mass capacity sales were offset by a slight seasonal improvement in the legacy market. Shipment into mass capacity markets totaled 97 exabytes, down 7% quarter-over-quarter. Of this total, roughly 82% were derived from nearline products shifting to cloud and enterprise OEM customers. Nearline shipments of 80 exabytes were down 6% sequentially and roughly 30% of our recent high. We believe the actions we have taken to quickly adjust our production output have aided customers to start making progress in working down their inventory levels.

十二月季度硬盤驅動器總出貨量為 113 艾字節，環比下降 5%，硬盤驅動器收入環比下降 6% 至 17 億美元。多種因素導致大容量業務的預期下降，包括雲和企業客戶的庫存調整、中國與 COVID 相關的中斷以及希捷自身的減產行動。大容量銷售被傳統市場的輕微季節性改善所抵消。大容量市場的出貨量總計 97 艾字節，環比下降 7%。在這一總數中，大約 82% 來自向雲和企業 OEM 客戶轉移的近線產品。近線出貨量為 80 艾字節，環比下降 6%，較近期高點下降約 30%。我們相信，我們為快速調整產量而採取的行動已幫助客戶開始在降低庫存水平方面取得進展。

The degree of progress vary from customer to customers and notwithstanding the current macroeconomic uncertainties, we would expect it will take a few more months to reach more normalized inventory level across the customer base. On a revenue basis, mass capacity sales were down 10% sequentially to $1.2 billion, reflecting the near line trend that I just described as well as lower demand in the VIA market. As we expected, the prolonged economic slowdown in China continued to impact sales of our VIA products, and we did not see the typical seasonal pickup in sales during the December quarter.

進展程度因客戶而異，儘管當前宏觀經濟存在不確定性，但我們預計還需要幾個月的時間才能在客戶群中達到更正常的庫存水平。在收入基礎上，大容量銷售額環比下降 10% 至 12 億美元，反映了我剛才描述的近線趨勢以及威盛市場的需求下降。正如我們預期的那樣，中國經濟長期放緩繼續影響我們威盛產品的銷售，我們在 12 月季度沒有看到典型的季節性銷售回升。

As Dave mentioned earlier, the Chinese government has taken action to boost the country economy, including the rapid reversal of COVID policy restriction. It will take time for these changes to take effect. And while still early, emerging customer dialogue support these encouraging leading indicators. As a result, we anticipate conditions to gradually improve over the next couple of quarters. Within the legacy market, revenue was $421 million, up 8% sequentially, primarily driven by a seasonal uptick in consumer demand, although a more subdued level compared to prior year.

正如戴夫之前提到的，中國政府已採取行動提振國家經濟，包括迅速取消 COVID 政策限制。這些更改需要時間才能生效。雖然還處於早期階段，但新興的客戶對話支持了這些令人鼓舞的領先指標。因此，我們預計未來幾個季度的情況將逐漸改善。在傳統市場中，收入為 4.21 億美元，環比增長 8%，主要受消費者需求季節性上升的推動，儘管與上一年相比水平有所下降。

Finally, revenue for our non-HDD business was $224 million, down 15% sequentially, reflecting the expected decline in our enterprise system business following a very strong September quarter. Overall, we are making great strides in growing the system business, increasing sales of our branded channel products and building customer momentum with our cohort self-filling technology. While we are continuing to navigate lingering supply constraint for a couple of system components, we expect non-HDD revenue to improve through the remainder of the fiscal year.

最後，我們的非 HDD 業務收入為 2.24 億美元，環比下降 15%，反映出我們的企業系統業務在 9 月季度非常強勁之後的預期下滑。總體而言，我們在發展系統業務、增加品牌渠道產品的銷售額以及通過我們的隊列自我填充技術建立客戶動力方面取得了長足進步。在我們繼續應對幾個系統組件揮之不去的供應限制的同時，我們預計非 HDD 收入將在本財年剩餘時間內有所改善。

Moving to our operational performance. Non-GAAP gross profit in the December quarter was $403 million. Embedded in that figure are the underutilization cost associated with lower production output to support inventory reduction, both as a customer and on our own balance sheet. And utilization cost of $79 million were somewhat higher than we had projected at the onset of the December quarter and translated into a 420 basis point of margin headwind. Accounting for risk costs, non-GAAP gross margin was 21.4%, down from 24.5% in the prior quarter.

轉向我們的運營績效。 12 月季度的非 GAAP 毛利潤為 4.03 億美元。該數字中嵌入了與較低產量相關的未充分利用成本，以支持減少庫存，無論是作為客戶還是在我們自己的資產負債表上。 7900 萬美元的使用成本略高於我們在 12 月季度開始時的預期，轉化為 420 個基點的利潤逆風。考慮到風險成本，非美國通用會計準則毛利率為 21.4%，低於上一季度的 24.5%。

Based on our current outlook, we are planning to begin ramping production output in the March quarter, sometime after the Lunar New Year. Cost and efficiencies associated with restarting and ramping of production are expected to largely offset the benefit of lower underutilization costs for the March quarter. However, as demand recovered in the coming quarters, we expect both gross profit and gross margin to move higher. We significantly reduced non-GAAP operating expenses to $294 million, down $20 million quarter-over-quarter due to savings associated with our restructuring plans and proactive expense management.

根據我們目前的展望，我們計劃在農曆新年後的某個時候，即 3 月季度開始提高產量。與重啟和提高生產相關的成本和效率預計將在很大程度上抵消 3 月季度較低的未充分利用成本帶來的好處。然而，隨著未來幾個季度需求的複蘇，我們預計毛利和毛利率都將走高。由於與我們的重組計劃和積極的費用管理相關的節省，我們將非 GAAP 運營費用大幅減少至 2.94 億美元，環比減少 2000 萬美元。

We expect quarterly non-GAAP OpEx to remain around the $300 million level through the balance of the fiscal year 2023. Based on the diluted share count of approximately 207 million shares, non-GAAP EPS for the December quarter was $0.16. Moving on to the balance sheet and cash flow. We executed planning action to strengthen our balance sheet over the near term. We ended the December quarter with a liquidity level of approximately $2.5 billion, including our revolving credit facilities, flat with the prior quarter.

我們預計，到 2023 財年剩餘時間，季度非 GAAP 運營支出將保持在 3 億美元左右。根據約 2.07 億股的攤薄後股份數，12 月季度的非 GAAP 每股收益為 0.16 美元。轉到資產負債表和現金流量。我們執行了計劃行動以在短期內加強我們的資產負債表。我們在 12 月季度結束時的流動性水平約為 25 億美元，包括我們的循環信貸額度，與上一季度持平。

We believe these levels are sufficient to support our strategic plans and meet customer demand. We drove a significant reduction in inventory to approximately $1.2 billion, down $400 million from the prior quarter, reflecting our effort to work down strategic inventory and finished goods. We expect inventory to remain around this level over the next couple of quarters, but we'll continue to focus on aligning our supply chain and finished good level to the prevailing demand environment.

我們相信這些水平足以支持我們的戰略計劃並滿足客戶需求。我們將庫存大幅減少至約 12 億美元，比上一季度減少 4 億美元，這反映了我們減少戰略庫存和成品的努力。我們預計未來幾個季度庫存將保持在這個水平附近，但我們將繼續專注於調整我們的供應鏈並完成良好的水平以適應當前的需求環境。

We reduced capital expenditures to $79 million, down 41% quarter-over-quarter. CapEx is expected to trend lower through the second half of the fiscal year with total fiscal year expenditure below the long-term target range of 4% to 6% of revenue. Free cash flow generation was $172 million, up 54% sequentially with lower capital expenditure and a $51 million improvement in working capital. We expect free cash flow to remain positive throughout calendar year 2023 and more than sufficient to support our dividend program. We use $145 million for the quarterly dividend. And as previously communicated, we paused our share repurchase program, exiting the quarter with 206 million shares outstanding. We are not currently planning to repurchase any share for the balance of the fiscal year, consistent with our near-term focus on optimizing cash flow through the current macro environment.

我們將資本支出減少至 7900 萬美元，環比下降 41%。資本支出預計在本財年下半年呈下降趨勢，本財年總支出低於收入的 4% 至 6% 的長期目標範圍。自由現金流產生 1.72 億美元，環比增長 54%，資本支出減少，營運資金增加 5100 萬美元。我們預計自由現金流在整個 2023 日曆年都將保持正值，並且足以支持我們的股息計劃。我們使用 1.45 億美元作為季度股息。正如之前所傳達的那樣，我們暫停了我們的股票回購計劃，以 2.06 億股流通股結束了本季度。我們目前不打算在本財政年度的剩餘時間內回購任何股份，這與我們近期通過當前宏觀環境優化現金流的重點一致。

Returning capital to shareholders remains an important aspect of our financial model, and we will assess resuming our program in fiscal 2024, depending on business conditions. We lowered overall debt by approximately $220 million, largely through a debt exchange, requiring minimal cash outlay. Additional, we successfully renegotiated our debt covenants to temporarily increase the leverage ratio to 5x. Our debt balance exiting the quarter was $6 billion, and adjusted EBITDA for the last 12 months totaled $1.6 billion, resulting in a gross debt leverage ratio of 3.8x.

向股東返還資本仍然是我們財務模式的一個重要方面，我們將根據業務狀況評估在 2024 財年恢復我們的計劃。我們將整體債務減少了大約 2.2 億美元，主要是通過債務交換，只需要最少的現金支出。此外，我們成功地重新談判了我們的債務契約，將槓桿率暫時提高到 5 倍。本季度末我們的債務餘額為 60 億美元，過去 12 個月的調整後 EBITDA 總計 16 億美元，總債務槓桿率為 3.8 倍。

Interest expense in the December quarter was $77 million and is expected to be approximately $82 million for the March quarter, reflecting higher interest rate associated with the new debt. We continue to evaluate options related to debt structure and reducing interest expense.

12 月季度的利息支出為 7700 萬美元，預計 3 月季度的利息支出約為 8200 萬美元，反映了與新債務相關的更高利率。我們繼續評估與債務結構和減少利息支出相關的選擇。

Turning to our outlook for the March quarter. The broader macroeconomic and geopolitical uncertainties continue to impact the business environment and shape of recovery. However, as indicated earlier, we are encouraged by the actions being taken to improve economic condition in Asia and the early indication that cloud and enterprise customer inventory levels are trending lower. As a result, we expect March quarter revenue to be in the range of $2 billion, plus or minus $150 million, up about 6% quarter-over-quarter as a midpoint. We project incremental improvement in the mass capacity business from cloud and enterprise customers and higher system sales to offset seasonally decline in the legacy market.

轉向我們對三月份季度的展望。更廣泛的宏觀經濟和地緣政治不確定性繼續影響商業環境和復蘇形態。然而，如前所述，我們為改善亞洲經濟狀況而採取的行動以及雲和企業客戶庫存水平呈下降趨勢的早期跡象感到鼓舞。因此，我們預計 3 月季度收入將在 20 億美元左右，上下浮動 1.5 億美元，作為中點，環比增長約 6%。我們預計來自云和企業客戶的大容量業務將逐步改善，系統銷售額將增加，以抵消傳統市場的季節性下滑。

At the midpoint of our revenue guidance, we expect non-GAAP operating margin to be in the mid- to upper single-digit range, which includes both unutilization costs and inefficiencies associated with the resuming production output. And we expect non-GAAP EPS to be in the range of $0.25 plus or minus $0.20.

在我們收入指引的中點，我們預計非 GAAP 營業利潤率將處於中高個位數範圍內，其中包括未使用成本和與恢復生產相關的低效率。我們預計非 GAAP 每股收益將在 0.25 美元上下浮動 0.20 美元。

I will now turn the call back to Dave for final comments.

我現在將把電話轉回 Dave 以徵求最終意見。

Thanks, Gianluca. Seagate continues to demonstrate resilience in the most dynamic of times. We are executing on what is within our control, generating positive free cash flow and advancing our product road map. As I indicated earlier, we expect mass capacity market conditions to gradually improve as we progress through the calendar year, which supports stronger revenue and profitability in the back half of 2023. Longer term, we remain excited by the secular trends driving demand for mass capacity storage, and Seagate's unique capabilities to capture these future growth opportunities. We are leveraging our aerial density leadership to increase capacity per disk, which we believe enables the most cost-efficient product solutions for mass capacity storage.

謝謝，詹盧卡。希捷在最充滿活力的時代繼續展現韌性。我們正在執行我們控制範圍內的事情，產生積極的自由現金流並推進我們的產品路線圖。正如我之前指出的那樣，我們預計隨著日曆年的推進，大容量市場狀況將逐漸改善，這將支持 2023 年下半年更強勁的收入和盈利能力。從長遠來看，我們仍然對推動大容量需求的長期趨勢感到興奮存儲，以及希捷抓住這些未來增長機會的獨特能力。我們正在利用我們在空中密度方面的領先地位來增加每個磁盤的容量，我們相信這可以為大容量存儲提供最具成本效益的產品解決方案。

We will begin shipping products based on 3-plus terabyte per disk capacities in the coming months, which is up to 35% more than comparable drive capacities available today. Amid a challenging macro and industry backdrop, I'm incredibly proud of the partnerships and hard work from our suppliers, customers and our employees. Earlier this week, we published our fourth annual diversity, equity and inclusion report, which highlights how Seagate aims to build and support its global team. The principles outlined in this report are foundational to Seagate's technology innovations and long-term success. I encourage you to read the report in full on our website. I will conclude by thanking our shareholders for your ongoing support. Our objective remains taking the decisive steps to best position Seagate for long-term value creation. Gianluca and I will now take your questions.

我們將在未來幾個月內開始出貨基於每個磁盤容量超過 3 TB 的產品，這比目前可用的同類驅動器容量高出 35%。在充滿挑戰的宏觀和行業背景下，我為我們的供應商、客戶和員工的合作夥伴關係和辛勤工作感到無比自豪。本週早些時候，我們發布了第四份年度多元化、公平和包容性報告，其中強調了希捷旨在如何建立和支持其全球團隊。本報告中概述的原則是希捷技術創新和長期成功的基礎。我鼓勵您在我們的網站上完整閱讀該報告。最後，我要感謝我們的股東一直以來的支持。我們的目標仍然是採取決定性步驟，使希捷處於最佳位置，從而創造長期價值。 Gianluca 和我現在將回答您的問題。

(Operator Instructions)

（操作員說明）

And our first question today will come from Thomas O'Malley with Barclays.

我們今天的第一個問題將來自巴克萊銀行的 Thomas O'Malley。

My first question is just on the nearline market. You're talking about a slight recovery from a unit perspective in the March quarter, you may refer to exabytes. I guess you could clarify that first? And then can you just talk about what you're seeing there that gives you the confidence that, that's inflecting. In the December quarter, clearly, you saw other mass capacity accelerate pretty robustly based on the numbers you gave. But what are you seeing on the near-line side? And what gives you the confidence that the March and June quarters are going to be sequentially higher?

我的第一個問題只是關於近線市場。你說的是 3 月季度從單位角度來看略有復蘇，你可能指的是艾字節。我想你可以先澄清一下？然後你能不能談談你在那裡看到的東西，讓你有信心，這正在發生變化。很明顯，在 12 月季度，根據您給出的數字，您看到其他大容量產能加速強勁。但是你在近線端看到了什麼？是什麼讓你有信心 3 月和 6 月的季度會依次走高？

Yes. Thanks, Tom. So it's a fairly tricky math, I think, is coming off of the back of last summer, where things were going down, we actually turned off our factories and particularly biased ourselves against the older generation programs, and we're really more biased towards the higher capacity points of the 20 terabytes and so on, right? So there is -- I won't talk about units, but we'll talk about exabytes. We think that there's going to be some exabyte growth and that will flow through into revenue.

是的。謝謝，湯姆。所以這是一個相當棘手的數學，我認為，從去年夏天開始，事情正在惡化，我們實際上關閉了我們的工廠，特別是我們自己對老一代計劃有偏見，我們真的更偏向於20 TB 等更高的容量點，對嗎？因此，我不會談論單位，但我們會談論艾字節。我們認為將會有一些艾字節的增長，這將轉化為收入。

It's still a fairly low time right now, historically, of course, but we are seeing traction, and we are having discussions with customers about what exactly they need. I think the way I think about the CSPs is there's very different business models across the CSPs. And even within each CSP, there's different application spaces and workloads and therefore, inventory, I'd say it that way. So it's fairly tricky. But what we really want to do is make sure that we're not building too much of the old products and really biasing towards the new products.

當然，從歷史上看，現在仍然是一個相當低的時間，但我們看到了牽引力，我們正在與客戶討論他們到底需要什麼。我認為我對 CSP 的看法是 CSP 之間的商業模式非常不同。即使在每個 CSP 中，也有不同的應用程序空間和工作負載，因此，庫存，我會這樣說。所以這相當棘手。但我們真正想做的是確保我們不會構建太多舊產品，而是真正偏向於新產品。

I think to the extent that we have good visibility into the stuff that the CSPs are actually building through then that's what gets us the confidence towards a recovery in the second half of the calendar year.

我認為，在一定程度上，我們對 CSP 實際構建的內容有很好的了解，這讓我們對日曆年下半年的複蘇充滿信心。

And then my second one is for Gianluca. You described, I think, $79 million of underutilization cost in the December quarter. When you look at the midpoint, kind of where guidance is, I'm getting gross margins slightly up, but you would expect with a better revenue, maybe a little more leverage. Can you just talk -- you talked about some costs associated with ramping up the factory post Lunar New Year. Would those costs kind of offset the comedown in underutilization costs? Just walk me through the puts and takes there, so I understand the gross margin implication?

然後我的第二個是給 Gianluca 的。我認為，您描述了 12 月季度 7900 萬美元的未充分利用成本。當您查看中點時，即指導的位置，我的毛利率略有上升，但您會期望收入更高，槓桿率可能更高。你能不能談談——你談到了與農曆新年後工廠擴建相關的一些成本。這些成本會抵消未充分利用成本的下降嗎？只需引導我完成看跌期權並拿到那裡，這樣我就能理解毛利率的影響？

Thank you, Tom. Yes, the March quarter is a bit complicated from a cost standpoint because we are starting the quarter with a fairly low level of production, so we will generate underutilization cost for the month of January and maybe also a little bit of February. After that, we will start ramping production. That is a good news. But for who is familiar with manufacturing, and they know that ramping production has some inefficiencies. Now you need to restart the line, you need to recalibrate the equipment, you have some additional scrap, lower yield. So the first few weeks of a reramp have some costs associated. So when we put the 2 costs together, right now, we are assuming to come out fairly similar in terms of additional onetime cost of what we had in December. The improving in the gross margin, of course, is coming from the higher revenue and a little bit better level of production.

謝謝你，湯姆。是的，從成本的角度來看，3 月季度有點複雜，因為我們以相當低的生產水平開始本季度，因此我們將在 1 月份產生未充分利用的成本，也可能在 2 月份產生一點點成本。之後，我們將開始提高產量。這是個好消息。但是對於熟悉製造業的人來說，他們知道提高產量會導致效率低下。現在你需要重新啟動生產線，你需要重新校准設備，你有一些額外的廢料，較低的產量。因此，重新調整的前幾週會產生一些相關成本。因此，當我們將 2 項成本放在一起時，現在，我們假設在 12 月份的額外一次性成本方面非常相似。當然，毛利率的提高來自更高的收入和更好的生產水平。

And our next question will come from Krish Sankar with Cowen.

我們的下一個問題將來自 Krish Sankar 和 Cowen。

This is Eddy for Krish. Congrats on the strong results. (technical difficulty) is more short-term. First, your (technical difficulty) HDD standby shipment is now (technical difficulty) year-over-year in Q2 well below the structural growth rate of 30%. At what point do you expect year-over-year growth to be above this?

這是 Krish 的 Eddy。祝賀你取得了優異的成績。 （技術難度）更短期。首先，你們的（技術難度）硬盤備用出貨量現在（技術難度）第二季度同比遠低於 30% 的結構增長率。您預計在什麼時候同比增長會高於這個水平？

Sorry, Eddy, you're breaking up just a little bit. Could you repeat your question, give another try?

對不起，艾迪，你有點分手了。你能重複你的問題，再試一次嗎？

Your (technical difficulty) were down nearly 30% year-over-year in Q4. At what point do you expect that growth rate to turn positive year-over-year?

您的（技術難度）在第四季度同比下降了近 30%。您預計增長率將在什麼時候轉為正值？

I think I understood, and we'll go for here. The underutilization charges are the ones that are hurting us the most, I'll say, relative to turning off our factories and things like that. From my perspective, we're going to -- we took down the factories intentionally to make sure that we did not build too much of the old stuff. So say 16 terabytes or 18 terabytes that where people are still consuming and then we're focused more on 20s and 22s and 24s and 30s and so on and so forth, like we talked about in the script. And that fills back up the factory. So I think that's the answer. You get more exabytes out and it's a better financial return as well. I think that answers your question.

我想我明白了，我們就到這裡吧。未充分利用費用是對我們傷害最大的費用，我會說，相對於關閉我們的工廠和類似的事情。從我的角度來看，我們將有意拆除工廠，以確保我們不會建造太多舊東西。所以說人們仍在消費的 16 TB 或 18 TB，然後我們更多地關注 20s 和 22s 以及 24s 和 30s 等等，就像我們在腳本中談到的那樣。這填滿了工廠。所以我認為這就是答案。你得到更多的艾字節，這也是一個更好的財務回報。我認為這回答了你的問題。

(technical difficulty) when we should expect our manufacturing yields to become close to corporate average, is second half of calendar '23 reasonable?

（技術難度）當我們應該期望我們的製造產量接近公司平均水平時，23 年下半年是否合理？

Yes. I won't speculate on that right now other than I'll say that we're now in a position on HAMR that, that's exactly the problem we're working. No longer is it a question of whether or not the technology is viable, the products are out of the oven. And from our perspective, this is what we do really well as well, which has ramped high-volume production. We've got everybody in the team focused on it, and we'll get there as fast as we possibly can.

是的。我現在不會對此進行推測，只是我會說我們現在在 HAMR 上處於一個位置，這正是我們正在解決的問題。不再是技術是否可行的問題，產品已經出爐了。從我們的角度來看，這也是我們真正做得很好的地方，它提高了大批量生產。我們讓團隊中的每個人都專注於此，我們將盡快到達那裡。

And our next question will come from Erik Woodring with Morgan Stanley.

我們的下一個問題將來自摩根士丹利的 Erik Woodring。

Dave, just for you, great to see continued confidence in the June HAMR launch. I'd love to know just kind of what the feedback is that you're getting from prospective customers. Clearly, we're in a more cautious macro environment. We've heard the term like optimizing cloud spend more often. And so is this a technology and a capacity size that they're really pushing for now despite the slowdown that we're seeing in the market? Or are there other factors driving the timing of the launch? I would just love if you could unpackage that question.

戴夫，只為你，很高興看到對 6 月 HAMR 發布的持續信心。我很想知道您從潛在客戶那裡得到的反饋是什麼。顯然，我們處於更加謹慎的宏觀環境中。我們更經常聽到像優化雲支出這樣的術語。那麼，儘管我們在市場上看到了放緩，但他們現在真正推動的是一項技術和容量規模嗎？還是有其他因素推動了發佈時間？如果你能解開那個問題，我會很高興。

Yes. Thanks, Erik. I would say that the onus is really on us. It's a control of ours to make sure that we can drive the transition exactly to Eddy's question about get the yields up and get the production capability to where we want it. I like to think that somebody making a decision to build out a data center would much rather have a drive with 3x terabytes instead of 2x terabytes. And because that's such a great TCO proposition for them over the long haul. We have deep customer relationships, obviously, on this front. This is not a surprise to them. The results that we're showing in our labs are not a surprise either. So they're very well connected with us on it.

是的。謝謝，埃里克。我會說責任真的在我們身上。這是我們的控制權，以確保我們能夠準確地推動過渡到 Eddy 關於提高產量並將生產能力提高到我們想要的水平的問題。我喜歡認為，決定構建數據中心的人寧願擁有 3 兆兆字節而不是 2 兆兆字節的驅動器。因為從長遠來看，這對他們來說是一個非常好的 TCO 提議。顯然，在這方面，我們擁有深厚的客戶關係。這對他們來說並不奇怪。我們在實驗室中展示的結果也不足為奇。所以他們在這方面與我們有很好的聯繫。

Where their spending profile might be muted, say, in the first half of this year because of all the issues that CSPs are going through, and they've shared some of those with us and they're the tough problems themselves, I do think that the secular demand for mass capacity in those data centers is still going to be huge. And we want to make sure that we're staging the absolute best value proposition for us and them for when we get there. So it's really ours to go drive.

由於 CSP 正在經歷的所有問題，他們的支出概況可能會在今年上半年被削弱，他們已經與我們分享了其中的一些問題，我認為他們本身就是棘手的問題這些數據中心對大容量的長期需求仍然很大。我們希望確保我們在到達那裡時為我們和他們展示絕對最佳的價值主張。所以開車真的是我們的事了。

Super. That's really helpful. And then Dave or Gianluca, I'm not sure. Can you just remind us exactly how we should think about the potential margin impact of launching HAMR and ramping that platform just as we think about, again, in the next 12 months? And that's it for me.

極好的。這真的很有幫助。然後是 Dave 還是 Gianluca，我不確定。您能否準確地提醒我們，在未來 12 個月內，我們應該如何考慮啟動 HAMR 和擴大該平台的潛在利潤影響？對我來說就是這樣。

Yes. Thanks, Erik. I'll pass it over to Gianluca in a second, but it really does come down to yields and scrap. I mean, we're going to be targeting most of this at the highest capacity points, although there are opportunities in lower capacity points if we can take disks and heads out of already existing platforms in the 20s or teens, then we'll go do it. And we have to go work that through qualifications with our customers. That's how we get margin oxygen, if you will, back into the system. And that yields, scrap, our ability to go through the cycles inside of our factory that those are the relevant parameters.

是的。謝謝，埃里克。我會在一秒鐘內將它傳遞給 Gianluca，但它確實歸結為產量和報廢。我的意思是，我們將把大部分目標放在最高容量點，儘管如果我們可以在 20 多歲或十幾歲時從現有平台中取出磁盤和磁頭，那麼在較低容量點也有機會，然後我們會去做吧。我們必須通過與客戶的資格認證來開展工作。如果你願意的話，這就是我們如何讓邊際氧氣回到系統中。這就是產量、廢料、我們在工廠內部進行循環的能力，這些都是相關參數。

Yes, HAMR is new products. So we need to go through a little bit of the learning curve, something different from what we have done in the last several years. But as Dave said, Seagate is very good in the operation, in manufacturing. And therefore, we are very confident now we can have very good results, results at a certain point will be similar to the PMR, but exactly when it's a bit difficult to say right now. So we are going step by step. But we are actually growing faster than what we were expecting. And as Dave said, we are ready for launching the product in the June quarter, but is a little bit before what we were discussing just 3 months ago.

是的，HAMR 是新產品。因此，我們需要經歷一些學習曲線，這與過去幾年我們所做的有所不同。但正如戴夫所說，希捷在運營和製造方面非常出色。因此，我們現在非常有信心我們可以取得非常好的結果，在某一點上的結果將與 PMR 相似，但現在很難說具體是什麼時候。所以我們一步一步來。但實際上我們的增長速度比我們預期的要快。正如 Dave 所說，我們已準備好在 6 月季度推出該產品，但比我們 3 個月前討論的內容早了一點。

Yes, I think the data coming out of just to pile on a little bit, the data coming out of the labs is really good, really encouraging. And to stave off some other comments or something that -- I would say that there's -- while there's added features in a HAMR drive versus [garden variety] PMR drive, even PMR drives are fairly complicated themselves. There's no tectonic shift that causes major cost resets or things like that. There's things we have to go work, and that's what we do really well. We've worked these kinds of things over time to make sure we can stage other technology transitions, and we're all over this. We've been planning this for a long time.

是的，我認為來自實驗室的數據只是積累了一點，來自實驗室的數據非常好，非常令人鼓舞。為了避免其他一些評論或其他一些東西——我想說的是——雖然 HAMR 驅動器與 [一般] PMR 驅動器相比有一些附加功能，但即使是 PMR 驅動器本身也相當複雜。沒有導致重大成本重置或類似事情的構造轉變。有些事情我們必須去做，而這正是我們做得很好的事情。隨著時間的推移，我們一直在做這些事情，以確保我們可以進行其他技術轉型，我們已經完成了這一切。我們已經計劃了很長時間。

And our next question will come from Karl Ackerman with BNP Paribas.

我們的下一個問題將來自法國巴黎銀行的卡爾阿克曼。

Yes. Two questions, if I may. As it relates to the March quarter guide, it's great to see an improvement in revenue in March because seasonality is usually down a few points. But of course, nothing is seasonal at this point in time. But I guess, as it relates to that, you spoke about improvement within nearline. And so 2-part questions to that. I guess, are cloud customers increasing their LTA baseline orders today going into March? And then second, are you beginning to see cloud customers procure orders for HAMR, would say, new or existing LTAs because I'm also curious how you look for signposts regarding the uplift of HAMR demand in anticipation of your launch?

是的。兩個問題，如果可以的話。由於與 3 月季度指南相關，很高興看到 3 月收入有所改善，因為季節性通常會下降幾個百分點。但當然，此時沒有什麼是季節性的。但我想，與此相關的是，您談到了近線內的改進。所以由兩部分組成的問題。我想，雲客戶今天是否會增加他們的 LTA 基線訂單進入 3 月？其次，您是否開始看到雲客戶為 HAMR 採購訂單，比如新的或現有的 LTA，因為我也很好奇您如何尋找有關 HAMR 需求提升的路標以期待您的發布？

It's a really interesting question, Karl. Let me try it this way. Usually, when supply is behind demand considerably, then you're having LTA discussions. But I think in the case of this, obviously, our suppliers have got challenges, we've got challenges. Even our customers have challenges. So I think it's really an entire supply chain that needs to co-plan together. And we've -- demand is low right now. There's plenty of supply. But I think we're all very mindful of cash and mindful of the financial outcomes that we want.

這是一個非常有趣的問題，卡爾。讓我試試這個方法。通常，當供應大大落後於需求時，就會進行 LTA 討論。但我認為在這種情況下，顯然，我們的供應商面臨挑戰，我們也面臨挑戰。甚至我們的客戶也面臨挑戰。所以我認為這確實是一個需要共同規劃的整個供應鏈。而且我們 - 現在需求很低。貨源充足。但我認為我們都非常注意現金並註意我們想要的財務結果。

Indeed, we are having LTA discussions still. The levels of the LTAs may not be reminiscent of what they were when you had demand far above supply. But I think the predictability is what we need to keep our factories running, to keep our people employed, getting paid and actually keeping the reinvestment so that we're out there with the right products and the right costs in those right times. Specifically to your HAMR question, I would say the answer is no at this point, but I think we could get there soon where we say HAMR is -- this is the volume ramp of HAMR at this customer, and then that becomes part of the LTA, but we're not there yet.

事實上，我們仍在進行 LTA 討論。 LTA 的水平可能不會讓人想起需求遠高於供應時的水平。但我認為可預測性是我們保持工廠運轉、保持員工就業、獲得報酬和實際保持再投資所需要的，這樣我們才能在正確的時間以正確的產品和正確的成本上市。具體到你的 HAMR 問題，我會說目前答案是否定的，但我認為我們可以很快到達我們說 HAMR 的地方 - 這是該客戶的 HAMR 的數量增長，然後成為一部分LTA，但我們還沒有。

We will have to go through the call. And then after the call, we start discussing about volumes with customers and eventually doing LTAs.

我們將不得不通過電話。然後在電話會議之後，我們開始與客戶討論數量並最終進行 LTA。

Understood. If I may ask 1 more. I was under the impression your SMR drives were closer to 25% of your mix, you're suggesting it's close to 35% of your mix today, which is quite impressive. So I'm hoping you could discuss what sequential improvement you've seen in SMR drives this quarter and whether you are seeing better economics within this area of mass capacity?

明白了。如果我可以再問 1。我的印像是您的 SMR 驅動器接近您組合的 25%，您暗示它今天接近您組合的 35%，這非常令人印象深刻。所以我希望您能討論本季度您在 SMR 驅動器中看到的連續改進，以及您是否在這個大容量領域看到更好的經濟性？

Yes, thanks. I think there's a lot of confusion in the space on this, so let me try this. We've been shipping SMR since I think 2014, into the cloud. We also have shipped hundreds of millions of SMR drives on the client side. So SMR is a great technology add. If you can adopt it for very specific cloud applications, it can be quite complex. And so some places, people choose not to do it. Redeployment of drives, for example, from application becomes limited or there's a lot of inertia around it if you try to do that. So we have great SMR solutions. We've been working on this for years and years and years. If customers ask and if their applications desire, then we'll go there for them.

是啊謝謝。我認為這方面的空間存在很多混亂，所以讓我試試這個。我認為自 2014 年以來，我們一直在將 SMR 運送到雲端。我們還在客戶端出貨了數億個 SMR 驅動器。所以SMR是一個很棒的技術補充。如果您可以將它用於非常具體的雲應用程序，它可能會非常複雜。所以有些地方，人們選擇不這樣做。例如，從應用程序重新部署驅動器會受到限制，或者如果您嘗試這樣做，就會有很多慣性。所以我們有很棒的 SMR 解決方案。我們多年來一直致力於此。如果客戶詢問並且他們的應用程序需要，那麼我們會為他們去那裡。

And so I really look at this as a customer by customer, sometimes application by application, specific ask for, say, a business unit or something like that, and we just react to it. And that's I don't think there's any big shift towards more SMR out of the Seagate portfolio. I think there are customers who, over time, were adopting more SMR, so that may be part of the reason for the trend that you talked about. But it's not something that's, I'll say, deliberately being pushed on our front. We look at it more as just to solve the problem for the customer.

所以我真的把它看作一個客戶一個客戶，有時一個應用一個應用，具體要求，比如說，一個業務部門或類似的東西，我們只是對此做出反應。這就是我認為希捷產品組合中沒有任何向更多 SMR 的重大轉變。我認為隨著時間的推移，有些客戶正在採用更多的 SMR，因此這可能是您談到的趨勢的部分原因。但這不是我要說的故意被推到我們面前的東西。我們更多地把它看成只是為客戶解決問題。

Yes, I would say on a quarterly basis, the percentage change based on the mix of our customers. So depending in which quarter, one customer can be a bit higher than another one. We can have a bit more SMR or less. But for us, as Dave said, we have both, it is actually a fairly easy way for us to convert the PMR into an SMR. So just a matter of where the demand is in the specific quarter.

是的，我會按季度說，百分比變化基於我們客戶的組合。因此，根據哪個季度，一個客戶可能會比另一個客戶高一點。我們可以擁有更多或更少的 SMR。但對我們來說，正如 Dave 所說，我們兩者都有，這實際上是我們將 PMR 轉換為 SMR 的一種相當簡單的方法。因此，這只是特定季度需求的問題。

And our next question will come from Aaron Rakers with Wells Fargo.

我們的下一個問題將來自富國銀行的 Aaron Rakers。

Yes, 2 if I can as well. I guess the first question, you mentioned, obviously, in the numbers that you're shipping about 30% below what was the peak level seen a year or so ago. As we think about the efforts that you've made on rationalizing your production capacity, is there any way to gauge how we could think about what kind of fully utilization looks like on an exabytes ship basis as we move forward? Just trying to think about the trajectory based on that number relative to gross margin? What's kind of the capacity footprint that you guys have normalized to now?

是的，2 如果我也可以。我想第一個問題，你提到的，很明顯，你的出貨量比大約一年前的峰值水平低 30%。當我們考慮您在合理化生產能力方面所做的努力時，是否有任何方法可以衡量我們如何在我們前進的過程中考慮在 EB 船的基礎上是什麼樣的充分利用？只是想根據這個數字相對於毛利率來思考軌跡？你們現在標準化的容量足跡是什麼樣的？

Yes. Aaron, I think there's a couple of different answers to that question. Obviously, from an equipment perspective, all the equipment is still there. As a matter of fact, as we go through transitions to say, 2.2 terabyte per disk or 2.4 terabyte per disk to a 3 terabyte per disk, we get a lot more efficient out of our parts that we have accessible to us and out of that same equipment. Some penalties with process content, but generally speaking, our capacity footprint goes up.

是的。亞倫，我認為這個問題有幾個不同的答案。很顯然，從裝備的角度來說，所有的裝備都還在。事實上，當我們經歷過渡時說，從每個磁盤 2.2 TB 或每個磁盤 2.4 TB 到每個磁盤 3 TB，我們從我們可以訪問的部分中獲得了更多的效率相同的設備。過程內容有一些懲罰，但總的來說，我們的容量足跡會增加。

In the current -- to directly answer your question in the current state, we did have to scale back in our factories, and that will take just a little bit of time, not a lot of time to scale back up because that's about people. It's been a tremendously painful time for our people, for the people in the supply chain for the people and the customers for that matter. So I would say that our theoretical capacity is still as high as it is, but we can't react on a dime to go get there. We need to plan for it. And once pass, we did 165 exabytes, we could get back there fairly (technical difficulty) all the technology transitions we can also go beyond.

在當前——在當前狀態下直接回答你的問題，我們確實必須縮減工廠規模，這只需要一點時間，而不是很多時間來擴大規模，因為這是關於人的。對於我們的員工、供應鏈中的員工和客戶來說，這是一個非常痛苦的時期。所以我想說我們的理論能力仍然和現在一樣高，但我們不能在一毛錢上做出反應去到達那裡。我們需要為此做好計劃。一旦通過，我們完成了 165 艾字節，我們可以公平地回到那裡（技術難度）我們也可以超越的所有技術轉換。

Yes, yes. That's helpful. And then as a quick follow-up. I think last quarter with the headcount reduction effort, you had talked about I think it was getting to realizing the annualized expense savings of about $110 million starting in this current quarter. How do we think about the effect of that on a net basis in this current fiscal quarter?

是的是的。這很有幫助。然後作為快速跟進。我認為上個季度通過裁員工作，你曾談到我認為從本季度開始實現每年約 1.1 億美元的費用節省。我們如何看待當前財政季度淨額的影響？

Yes. We realized a big part of that saving already starting in the December quarter, as we were discussing beginning of November, the majority of our restructuring actually happened at the beginning of November. So we had basically 2 full months out of the 3 where we could take the benefit of the cost reduction. And now in OpEx, but always few other items that impact the cost of the quarter. In the script, I said we expect this quarter and even next quarter to still be around the $300 million.

是的。當我們討論 11 月初時，我們意識到大部分節省已經從 12 月季度開始，我們的大部分重組實際上發生在 11 月初。因此，在 3 個月中，我們基本上有 2 個月的時間可以從成本降低中獲益。現在在 OpEx 中，但總是很少有其他項目會影響該季度的成本。在劇本中，我說我們預計這個季度甚至下個季度仍然在 3 億美元左右。

And our next question will come from Thomas Arcuri with UBS.

我們的下一個問題將來自瑞銀的 Thomas Arcuri。

This is Jason on for Tim from UBS. I have a couple of questions. So the first question is on December quarter. Sorry if I missed, but I see that there's about $100 million purchase order cancellation fees in December quarter. Could you guys help us understand what that line item really is? And also, would there be any possibility of this repeating in a similar magnitude next couple of quarters if demand remains weak? And I have a follow-up.

我是來自瑞銀的 Jason for Tim。我有一些問題。所以第一個問題是關於 12 月季度。對不起，如果我錯過了，但我看到 12 月季度有大約 1 億美元的採購訂單取消費。你們能幫我們理解這個訂單項到底是什麼嗎？而且，如果需求仍然疲軟，未來幾個季度是否有可能以類似的幅度重複這種情況？我有一個後續行動。

Yes. That is related to our reduction in production. Of course, we had some commitment with some of our suppliers. But of course, we want to comply with. So on those cases, we had to stay for take-or-pay products that we didn't need, and we decided not to take based on our focus on reducing our own inventory on top of reducing customer inventory. I think we have taken all those liabilities into the December quarter. So I don't expect at this point those liability to come back in the March quarter.

是的。這與我們減產有關。當然，我們與一些供應商有一些承諾。但當然，我們要遵守。因此，在這些情況下，我們不得不保留我們不需要的照付不議產品，並且我們決定不採取基於我們在減少客戶庫存之上減少我們自己的庫存的重點。我認為我們已將所有這些負債計入 12 月季度。因此，我預計目前這些負債不會在 3 月季度恢復。

Got it. Yes. My second question is on your debt paydown schedule and cash level. So on the back of your recent debt exchange, how are you guys thinking about the pace and magnitude of debt paydown in the next few quarters? And in light of that, how can we think about the new cash level you guys are comfortable operating under going forward?

知道了。是的。我的第二個問題是關於你的債務償還時間表和現金水平。那麼在你們最近的債務交換的背後，你們如何看待未來幾個季度債務償還的速度和規模？有鑑於此，我們如何考慮你們在未來舒適運營的新現金水平？

Yes, we are generating still a fairly strong free cash flow. In the December quarter, we generated $170 million, I think this quarter will be higher than that. We have a note that will mature at the beginning of June that we want to repay and we will not refinance, that is about $540 million. So we will use our cash. We have actions going on to optimize our cash between now and June. But I would say, right now, our focus is actually on reducing the debt and reducing the full amount of those notes.

是的，我們仍在產生相當強勁的自由現金流。在 12 月季度，我們產生了 1.7 億美元，我認為這個季度會更高。我們有一張將於 6 月初到期的票據，我們要償還，我們不會再融資，大約是 5.4 億美元。所以我們將使用我們的現金。從現在到 6 月，我們正在採取行動優化我們的現金。但我想說，現在，我們的重點實際上是減少債務並減少這些票據的總量。

And our next question will come from Sidney Ho with Deutsche Bank.

我們的下一個問題將來自德意志銀行的 Sidney Ho。

Congrats on pulling in the launch schedule of HAMR drives. A couple of questions here. How are you thinking about the adoption of HAMR drives in the back half of the year into '24? Is it more broad-based? Or is it focused on a few customers -- and I know it's early, but do you expect -- when do you expect unit or exabyte crossover for HAMR drives? And lastly, on this subject, just to be clear, are you planning to dual track with PMR products in the 30-terabyte range? And then I have a follow-up question.

祝賀 HAMR 驅動器的啟動計劃。這裡有幾個問題。您如何考慮在下半年進入 24 世紀採用 HAMR 驅動器？它的基礎更廣泛嗎？或者它是否專注於少數客戶——我知道這還早，但你期待——你什麼時候期待 HAMR 驅動器的單元或艾字節交叉？最後，關於這個主題，需要說明的是，您是否計劃在 30 TB 範圍內雙軌使用 PMR 產品？然後我有一個後續問題。

I appreciate all the positive momentum that's going on. It really -- there's a lot of people inside of our company and outside of our company that deserve accolades here making this technology work, believed in it for the last 20 years and so on. And I think it's great that the world is going to be able to double the capacity points and things like that over time. I've got a lot of confidence based on where we sit right now. We're not talking about exactly what the schedule is going to be, but we're going to be as aggressive as we possibly can.

我感謝正在發生的所有積極勢頭。真的——我們公司內外有很多人值得讚揚，他們使這項技術發揮作用，在過去 20 年裡一直相信它等等。而且我認為隨著時間的推移，世界能夠將容量點和類似的東西加倍是很棒的。基於我們現在的位置，我很有信心。我們並不是在談論確切的時間表，但我們將盡可能地積極進取。

Specifically to your question, I think the first drives will probably go out into a couple of different channels (inaudible) we control like we've talked about maybe using our systems business in the prepared remarks. And then some big customers are -- want to be early adopters so that they understand the technology and what to take. It's -- I would say at the highest capacity point, the integration always the trickiest because these are things that the world has never seen before.

具體到你的問題，我認為第一批驅動可能會進入我們控制的幾個不同渠道（聽不清），就像我們在準備好的評論中談到的可能使用我們的系統業務一樣。然後一些大客戶 - 想成為早期採用者，以便他們了解技術和採取什麼措施。這是 - 我會說在最高容量點，集成總是最棘手的，因為這些是世界以前從未見過的東西。

To the extent we can turn around and make cheaper capacity points that are midrange like 20s or 16s or whatever they happen to be because we have fewer heads and disks in them. That's a great answer for us as well, and we'll get working on that. So I don't think the once we get out the heads and disks, I think we'll be able to find homes for them, and we're going to be very, very aggressive on the ramp over the next few years.

在某種程度上，我們可以轉身製造更便宜的中檔容量點，如 20s 或 16s 或任何它們恰好是因為我們有更少的磁頭和磁盤。這對我們來說也是一個很好的答案，我們會著手解決這個問題。所以我不認為一旦我們拿出磁頭和磁盤，我認為我們就能為他們找到家，而且在接下來的幾年裡我們將非常、非常積極地在斜坡上。

Okay. Maybe a follow-up question. You and your competitors have both been quite rational in terms of production cuts in this down cycle. Curious if you're seeing any less rational behavior in terms of pricing given the high level of inventory in the channel and the customers in the December quarter, but more importantly, going forward, do you think the pricing environment will still be okay?

好的。也許是一個後續問題。在這個下行週期中，您和您的競爭對手在減產方面都非常理性。考慮到 12 月季度渠道和客戶的高水平庫存，您是否會在定價方面看到任何不那麼理性的行為，但更重要的是，展望未來，您認為定價環境仍然可以嗎？

Yes, I do think the way to control the long-term outcome, the best is to cut your production and make sure you're not pushing out too much of the wrong stuff. I'm encouraged to see the way that the industry is actually behaving on that front. I don't -- to your point, I don't look at things like market share in any individual deals as long-term trends at this point in time. I think it's more just what discipline does the industry have. And I do think that over the long haul, especially for Seagate, I can speak, having the ability to go add a better value proposition, lower our costs and so on and so forth. I think we use that to think about how do we get back into our margin range or beyond.

是的，我確實認為控制長期結果的方法，最好的辦法是削減你的產量，並確保你不會推出太多錯誤的東西。我很高興看到該行業在這方面的實際表現方式。我不——就你的觀點而言，我不認為任何個別交易中的市場份額之類的東西是目前的長期趨勢。我認為更重要的是這個行業有什麼樣的紀律。而且我確實認為，從長遠來看，特別是對於希捷，我可以說，有能力增加更好的價值主張，降低我們的成本等等。我認為我們用它來思考我們如何回到我們的保證金範圍或超出範圍。

And our next question will come from Vijay Rakesh with Mizuho.

我們的下一個問題將來自 Vijay Rakesh 和 Mizuho。

Great quarter and a good control on the inventory side. Just a quick question on how you see broad inventories in the channel. Like if you look at China and U.S. enterprise hyperscale, any thoughts on where inventories are, broadly?

偉大的季度和良好的庫存控制。只是一個關於您如何看待渠道中廣泛庫存的快速問題。比如說，如果你看看中國和美國的超大規模企業，你有沒有想過庫存在哪裡？

Yes. I think we said that we -- from our vantage point, the inventories of hyperscalers generally went down in the directions, the right directions, and we were encouraged by it. I mean, obviously, we'd like to see it faster because we'd like to ramp our factories back up quicker. I think it would help us. And then, of course, our owned inventory, what we were able to do by not putting anything out, especially the legacy capacity points, I'll say, in the nearline space, we're not putting anything else out into the market that's encouraging as well. I think from a distribution weeks on hand, it's high, but not super high historically.

是的。我想我們說過我們 - 從我們的優勢來看，超大規模的庫存通常朝著正確的方向下降，我們對此感到鼓舞。我的意思是，很明顯，我們希望更快地看到它，因為我們希望我們的工廠更快地恢復生產。我認為這會對我們有所幫助。然後，當然，我們擁有的庫存，我們可以通過不投放任何東西來做到這一點，特別是遺留容量點，我會說，在近線空間，我們沒有將任何其他東西投放到市場上也令人鼓舞。我認為從手頭的發行週來看，它很高，但從歷史上看並不是特別高。

And you all know that depending on how you're measuring it 4 weeks or 13 weeks, it could be -- it's really based on a baseline. And I think that, that baseline now has become this macroeconomic reality. I do think that as we started to see some kind of macroeconomic recovery in certain geos, Europe, Asia and so on. The absolute value of the inventory is not super high. And so it's not a whole lot of weeks on hand. And I think there, again, we could react to that. So I'm not super worried about the inventory there.

你們都知道，取決於你如何衡量 4 週或 13 週，它可能是——它實際上是基於基線。我認為，該基線現在已成為宏觀經濟現實。我確實認為，隨著我們開始在某些地區、歐洲、亞洲等地看到某種宏觀經濟復甦。存貨的絕對值並不是特別高。因此，手頭的時間並不多。我認為我們可以再次對此做出反應。所以我不太擔心那裡的庫存。

Great. And you mentioned HAMR ramping here. Good to see that. As you exit the year, any thoughts on what that mix would be of your mass capacity on nearline of revenues or units?

偉大的。你在這裡提到了 HAMR 的提升。很高興看到這一點。當你結束這一年時，有沒有想過你的收入或單位的近線的大量容量的組合是什麼？

Yes. We haven't really talked about it. I think this year, it will probably still be relatively low. And then the faster we can get the yields in scrap and all the costs that we can control down on the heads and media then the faster we will be accelerating. I think that will happen in calendar year '24 and calendar year '25 will just continue to accelerate. The highest capacity points will be addressed, but also these midrange capacity points. And how successful we are with all that stuff we'll determine how broadly we can penetrate all those different individual markets.

是的。我們還沒有真正談論過它。我想今年可能還是比較低的。然後我們越快地獲得廢料產量以及我們可以控制的所有成本在磁頭和媒體上，我們就會加速得越快。我認為這將在 24 日曆年發生，而 25 日曆年將繼續加速。將解決最高容量點，還有這些中等容量點。我們在所有這些方面的成功程度決定了我們能夠在多廣的範圍內滲透所有這些不同的個體市場。

And our next question will come from Ananda Baruah with Loop Capital.

我們的下一個問題將來自 Loop Capital 的 Ananda Baruah。

Two quick ones, if I could. Just going back to Aaron's question, Dave and Gianluca on the utilization. So Dave, you said you're 30% below peak, your gross margins are actually down 30% from that same peak. Is that a coincidence because pricing has been stable? Or is it really sort of that simple? And then I guess the ramp back up, your kind of higher cap drives sort of takes up, takes in more capacity. And so is it really as simple as on sort of the ramp back up sort of the same indexing on capacity ship is like a little bit more of a slope up shift, just given the mix? And I have a quick follow-up after that.

兩個快速的，如果可以的話。回到 Aaron 的問題，Dave 和 Gianluca 關於利用率的問題。所以戴夫，你說你比峰值低 30%，你的毛利率實際上比同一個峰值下降了 30%。這是巧合嗎，因為定價一直很穩定？或者它真的有那麼簡單嗎？然後我猜斜坡回升，你的那種更高容量的驅動器有點佔用，佔用更多容量。因此，它是否真的像某種斜坡備份一樣簡單，在運力船上的相同索引有點像斜坡向上移動，只是給出了組合？之後我會進行快速跟進。

Well, I would say, for sure, the majority of the gross margin decline is coming from the underutilization charges. So the lower level of production that we have. Last quarter, we're discussing it a bit about some price pressure in the low-capacity drive. But we have seen a little bit in the quarter of December. But in general, especially considering that we see a fairly strong down cycle, we are -- in terms of pricing stability, we see this as a positive. And we expect as soon as we are back into the same level of production and same level of revenue we had a year ago, we think our gross margin will be at the same level or even better.

好吧，我可以肯定地說，毛利率下降的大部分來自未充分利用的費用。所以我們的生產水平較低。上個季度，我們討論了一些關於低容量驅動器價格壓力的問題。但我們在 12 月的這個季度看到了一點點。但總的來說，特別是考慮到我們看到一個相當強勁的下行週期，我們 - 在定價穩定性方面，我們認為這是積極的。我們預計，一旦我們恢復到與一年前相同的生產水平和收入水平，我們認為我們的毛利率將達到相同水平甚至更高。

Yes, Gianluca, is it -- can we kind of model the gross margin more or less calibrated with what you see capacity increases to be going forward?

是的，Gianluca，是嗎 - 我們能否根據您看到的未來產能增長或多或少地對毛利率進行建模？

I would say capacity mix, of course.

當然，我會說容量組合。

Okay. Cool. And then just a real quick follow-up. $300 million OpEx through the June quarter, how do you want us to think about modeling out past that, the puts and takes?

好的。涼爽的。然後只是一個真正的快速跟進。截至 6 月季度的運營支出為 3 億美元，您希望我們如何考慮過去的模型，即投入和投入？

But we are trying to discuss about the next fiscal year, but I would say part of the lower OpEx is coming from variable compensation that is very low in the current fiscal year. So you will have to think about adding some cost for variable compensation in the fiscal '24.

但我們正試圖討論下一個財政年度，但我想說，較低的運營支出部分來自當前財政年度非常低的可變薪酬。因此，您將不得不考慮在 24 財年中為可變薪酬增加一些成本。

Yes. I think Ananda, we reacted, obviously, very early on some of this when we saw it. And I think we're going to be asking the same kinds of questions throughout the course of this year, what's the new trajectory, the new normal, if you can, when some of the normal demand cycle comes back, where is the world from an economics perspective and we'll address factory footprint and things like that when those times come.

是的。我認為 Ananda，很明顯，當我們看到它時，我們很早就對其中的一些做出了反應。而且我認為我們將在今年全年問同樣的問題，新軌跡是什麼，新常態是什麼，如果可以的話，當一些正常的需求週期回來時，世界從哪裡來從經濟學的角度來看，當那個時候到來時，我們將解決工廠足蹟之類的問題。

And our next question will come from Wamsi Mohan with Bank of America.

我們的下一個問題將來自美國銀行的 Wamsi Mohan。

I apologize jumping across calls if this has already been answered. But I'm wondering if you could talk a little bit about the trajectory that you see in exabyte growth. It's kind of been a little bit all over the place given so many moving pieces with both demand slowdown as well as inventory and if you could maybe calibrate for calendar '23, that would be great?

如果已經有人回答，我很抱歉跳過電話。但我想知道您是否可以談談您在 EB 增長中看到的軌跡。考慮到需求放緩和庫存都有如此多的移動部件，它有點到處都是，如果你可以為日曆 '23 進行校準，那會很棒嗎？

Yes. I think it depends, Wamsi, on -- if you -- where you have reached at too. I think we've taken a big step down, of course, and then we could talk way back on the 30% growth. I don't -- I think it's a little too early to tell that. But we do think that by the fact that we're putting out 24 terabytes and 30 terabytes and so on and so forth, that's going to help the exabyte growth substantially. I think a couple of years ago, we were at 80-some percent from nearline drive. So that was reflective of not only high -- great value proposition from one capacity point to another, say, maybe 25% bump in capacity point, but also the fact that a lot of people are investing at the time. I do think that the demand side for data is still there. There's AI, machine learning, a lot of new applications coming.

是的。 Wamsi，我認為這取決於——如果你——你也達到了哪裡。當然，我認為我們已經邁出了一大步，然後我們可以談論 30% 的增長。我不——我認為現在說這個還為時過早。但我們確實認為，由於我們推出了 24 TB 和 30 TB 等等，這將大大有助於艾字節的增長。我認為幾年前，我們的近線驅動器達到了 80% 左右。因此，這不僅反映了從一個容量點到另一個容量點的高價值主張，比如容量點可能增加 25%，而且還反映了當時很多人正在投資的事實。我確實認為數據的需求方仍然存在。有人工智能、機器學習，許多新的應用程序即將到來。

I think we're going through something that's fairly temporary where people are just getting their legs underneath them and then they'll figure out what their investment profiles are and our job is to go put a better value proposition from an exabyte perspective out there in front of them to kind of incentivize that. So we do think the back half of this year gets better from an exabyte perspective. I don't -- maybe a little early to tell exactly what the number is.

我認為我們正在經歷一些相當暫時的事情，人們只是把他們的腿放在他們下面，然後他們會弄清楚他們的投資概況是什麼，我們的工作是從 EB 的角度提出更好的價值主張在他們面前有點激勵。因此，我們確實認為從艾字節的角度來看，今年下半年會有所好轉。我不知道 - 可能有點早，無法確切地說出這個數字是多少。

And maybe you already covered this, but if you wouldn't mind, if you have covered it, then we don't need to go in. But I was wondering if you could address if there's anything abnormal that you're seeing within pricing in the competitive environment, is there especially within the channel, anything that you're seeing that might be abnormal? And when do you think if there is something when that would normalize?

也許你已經涵蓋了這一點，但如果你不介意，如果你已經涵蓋了它，那麼我們就不需要進去了。但我想知道你是否可以解決你在定價中看到的任何異常情況在競爭激烈的環境中，尤其是在渠道內部，你看到的任何東西可能是不正常的嗎？你認為什麼時候會正常化？

At a macro level, no, I think everybody is seeing about the same demand environment. People are reacting fairly similarly, making sure they're preserving their cash, not building things that they're uncertain of going out into the market. And so I think the industry has actually done a pretty good job of scaling way back over the last 3, 4, 5 months on our production capacity. It's very, very painful for ourselves and our suppliers, of course. But -- and our customers, I think I said this earlier, our customers understand that. But at a macro level, I don't see that. I don't see people building too much of the wrong stuff and trying to get into the market. Maybe little pockets, but again, big picture, I don't think that's super relevant.

在宏觀層面上，不，我認為每個人都看到了相同的需求環境。人們的反應非常相似，確保他們保留現金，而不是建造他們不確定是否會進入市場的東西。因此，我認為該行業在過去 3、4、5 個月的生產能力方面實際上做得很好。當然，這對我們自己和我們的供應商來說非常非常痛苦。但是——我們的客戶，我想我之前說過，我們的客戶明白這一點。但在宏觀層面上，我看不到這一點。我沒有看到人們製造太多錯誤的東西並試圖進入市場。也許是小口袋，但再一次，大局觀，我認為這不是超級相關。

And our next question will come from Kurt Swartz with Evercore ISI.

我們的下一個問題將來自 Evercore ISI 的 Kurt Swartz。

Maybe just first, within the context of recent export restrictions and macro headwinds in China. I'm curious if you have -- if you can share any color on your TAM assumptions for the VIA market, both in the near term and longer term, which I believe you previously said the longer-term market outlook remains intact, but just curious on those dynamics?

也許只是首先，在中國最近的出口限制和宏觀逆風的背景下。我很好奇你是否有 - 如果你可以分享你對 VIA 市場的 TAM 假設的任何顏色，無論是在短期還是長期，我相信你之前說過長期市場前景保持不變，但只是對那些動態感到好奇？

Yes, I'll start and I'll let Gianluca speak as well. I think the VIA market is changing quite a bit globally. There's a lot of applications. A few years ago, we would have talked about surveillance, now there's a lot of applications about consumer behavior and inventory management. A lot of people are worried about inventory. And so -- the people are using all these new, say, smart edge applications in a very creative way. So globally, it's an exciting market.

是的，我會開始，我也會讓 Gianluca 發言。我認為威盛市場在全球範圍內發生了很大變化。有很多應用程序。幾年前，我們會談論監控，現在有很多關於消費者行為和庫存管理的應用。很多人擔心庫存。因此——人們正在以一種非常有創意的方式使用所有這些新的，比如說，智能邊緣應用程序。所以在全球範圍內，這是一個令人興奮的市場。

I think the drivers in China, in particular, over time that's been very muted for the last year, and we were kind of waiting for a recovery. And I think the recovery just hasn't come. I think it will recover, but it's going to be slow. And I think there's new opportunities around the world in various geos as well happening.

我認為中國的司機，尤其是隨著時間的推移，去年一直非常低調，我們有點在等待復甦。我認為複蘇還沒有到來。我認為它會恢復，但會很慢。而且我認為世界各地的不同地域也都在出現新的機會。

In the very short term, we see possibly decline in the March quarter, mainly because of seasonality. March is always the quarter where we have the lower revenue from VIA and from some of the legacy markets also. So not a lot of increase in the short term. But in our view, the rest of the calendar year, we should see sequential improvement. And VIA is an important segment for us. And in a segment that is also generally generating a very good gross margin.

在很短的時間內，我們認為 3 月季度可能會下降，這主要是因為季節性。 3 月始終是我們從 VIA 和一些傳統市場獲得較低收入的季度。所以短期內漲幅不會很大。但我們認為，在日曆年的剩餘時間裡，我們應該會看到環比改善。威盛對我們來說是一個重要的部分。在一個通常也產生非常好的毛利率的細分市場中。

Great. That's very helpful. And then maybe just a follow-up. Within the context of the operating margin target that you outlined last year, 18% to 22%, assuming this is still the right framework, can you just walk us through some of the levers and the time line for reaching that range and maybe thoughts on medium- to longer-term OpEx growth or intensity within that context?

偉大的。這很有幫助。然後也許只是一個後續行動。在你去年概述的 18% 到 22% 的營業利潤率目標的背景下，假設這仍然是正確的框架，你能否向我們介紹一些槓桿和達到該範圍的時間線，以及可能的想法在此背景下的中長期運營支出增長或強度？

Yes. I think to find the long-term demand, we're still kind of assessing that. So I won't be -- I won't predict it just yet. But I will say that this is management team's goal to get back in those models as fast as we possibly can. Obviously, demand is the fundamental driver to that. We've made operational improvements by cost reductions. And we've, unfortunately, had to cut some things that we're working on. So there is a reason to suggest that we have a little bit more oxygen than we had going into this thing. But I think fundamentally, it will still be the demand driver. And one of the reasons we're trying to transition products as aggressively as we can is because we think we intercept that demand with a better value proposition that comes back to us faster, but we also go off and work our own internal operational metrics and then we get the best cost at the time, and that helps as well.

是的。我認為要找到長期需求，我們仍在進行評估。所以我不會——我現在還不會預測。但我要說的是，管理團隊的目標是盡快恢復這些模型。顯然，需求是其中的根本驅動力。我們通過降低成本改進了運營。不幸的是，我們不得不削減一些我們正在做的事情。所以有理由表明我們擁有的氧氣比進入這件事時多一點。但我認為從根本上講，它仍將是需求驅動力。我們嘗試盡可能積極地轉換產品的原因之一是因為我們認為我們用更好的價值主張來攔截需求，這些價值主張會更快地返回給我們，但我們也開始研究我們自己的內部運營指標和然後我們得到當時最好的成本，這也有幫助。

And our next question will come from Ashley Ellis with Credit Suisse.

我們的下一個問題將來自瑞士信貸的 Ashley Ellis。

Gianluca, could you discuss how you're thinking about working capital for the second half of the year? Our inventory days came down pretty substantially. Obviously, if you took production down. But they're still above the year ago levels. And then as you launch HAMR, is there anything we should consider within that number? And then I have a follow-up.

Gianluca，你能談談你對下半年營運資金的看法嗎？我們的庫存天數大幅下降。顯然，如果你停止生產。但它們仍高於一年前的水平。然後，當您啟動 HAMR 時，在這個數字內有什麼我們應該考慮的嗎？然後我有一個後續行動。

Yes. In the December quarter, our working capital was positive by about $50 million. We decreased our inventory by a lot, but we also paid a lot to our suppliers. So I think that is part of the positive working capital that will actually impact the March quarter. And after that, probably is fairly stable for at least a couple of quarters.

是的。在 12 月季度，我們的營運資金為正數約 5000 萬美元。我們減少了很多庫存，但我們也向供應商支付了很多費用。所以我認為這是實際影響三月份季度的積極營運資金的一部分。在那之後，可能至少在幾個季度內相當穩定。

Okay. And then, Dave, you kind of touched on this in a prior question, but AI has become a much more common topic in the last few weeks. And I'm wondering how Seagate thinks about that opportunity, not just from data creation, but your product lineup? And is this coming up in customer conversations? Is it something that they're asking for your help on?

好的。然後，戴夫，你在之前的一個問題中提到過這個問題，但在過去幾周里，人工智能已經成為一個更常見的話題。我想知道 Seagate 如何看待這個機會，不僅是數據創建，還有您的產品陣容？這會出現在客戶對話中嗎？他們是在尋求你的幫助嗎？

Yes. Thanks, Ashley. So it's underneath all of the demand for data growth that we see, I think this is one of the big trends that we're watching because it affects not only what's going on in the cloud, but it also affects what's happening at the edge. And so that -- I do think that over the long haul, we're very bullish on this. If you think about it, early days of AI they were training models and things like that, that needed access to big data sets. But I think as time goes on, big data sets have to be very real time to make decisions that are relevant in the moment. And sometimes they need to be kept at the edge because you have a lot of video data, for example, at the edge to make good decisions on consumer behavior or inventory, like I talked about before, all these new applications that are coming. So our customers are quite excited about it.

是的。謝謝，艾希禮。因此，在我們看到的所有數據增長需求之下，我認為這是我們正在關注的大趨勢之一，因為它不僅會影響雲中發生的事情，還會影響邊緣發生的事情。因此——我確實認為從長遠來看，我們對此非常看好。如果你仔細想想，人工智能的早期是訓練模型之類的東西，需要訪問大數據集。但我認為隨著時間的推移，大數據集必須非常實時才能做出與當下相關的決策。有時它們需要保持在邊緣，因為你有大量的視頻數據，例如，在邊緣對消費者行為或庫存做出正確的決策，就像我之前談到的，所有這些即將到來的新應用程序。所以我們的客戶對此非常興奮。

The good news, and I've been saying this for the last couple of years is that I see a lot of innovation that's happening on that front because of the unsure footing that a lot of people have in the macro condition, people aren't really leaning into it, but I really look forward to the days that they are and these applications come online because I think it's going to contribute a lot to the data growth.

好消息，過去幾年我一直在說，我看到在這方面發生了很多創新，因為很多人在宏觀條件下的立足點不確定，人們並沒有真的很喜歡它，但我真的很期待它們和這些應用程序上線的日子，因為我認為這將為數據增長做出很大貢獻。

And our next question will come from Tristan Gerra with Baird.

我們的下一個問題將來自 Baird 的 Tristan Gerra。

Just following up on some of the questions on pricing. I understand that controlling production is a way to get back over time to your utilization rates and gross margin target. But is the price decline in NAND that we've seen recently impacting some of the pricing that you're looking at for HDDs? Or is there basically a possibility of share shift toward demand given the pricing that NAND is undertaking currently? And how do you react to that?

只是跟進一些關於定價的問題。我知道控制生產是一種隨著時間的推移恢復到您的利用率和毛利率目標的方法。但是，我們最近看到的 NAND 價格下跌是否會影響您正在尋找的 HDD 的某些定價？還是考慮到 NAND 目前正在進行的定價，基本上有可能將份額轉向需求？你對此有何反應？

Tristan, I think that back in the day that the legacy markets went through some transitions because of this. There may be some happening in the consumer markets, that's relatively small. The impact is relatively small. I think we still have a pretty good value proposition in the consumer markets as well, in the mass capacity markets not really. I mean I think the people running big mass capacity rigs either they understand both technologies and they use both technologies. They're not really making a trade-off of one versus the other. I think NAND, we can all see that the business is tough over there. I think everybody is in tough shape and I feel for some of those guys because the world needs their technology, I think we need their technology as well to make sure that they do their part in the layers they're relevant in, but I don't think it affects mass capacity long term.

特里斯坦，我認為在過去，傳統市場因此經歷了一些轉變。消費市場可能會發生一些變化，但相對較小。影響相對較小。我認為我們在消費市場也有很好的價值主張，但在大容量市場並非如此。我的意思是，我認為運行大容量鑽機的人要么了解這兩種技術，要么使用這兩種技術。他們並沒有真正在兩者之間做出權衡。我覺得NAND，我們都看得出來那邊的生意不好。我認為每個人都處於艱難狀態，我對其中一些人感到同情，因為世界需要他們的技術，我認為我們也需要他們的技術以確保他們在相關的層面上發揮自己的作用，但我不'認為它會長期影響大容量。

And this will conclude our question-and-answer session. I'd like to turn the conference back over to management for any closing remarks.

這將結束我們的問答環節。我想將會議轉回管理層聽取任何閉幕詞。

Thanks, Cole. As you heard today, Seagate is acting with speed and agility to manage through a tough near-term market environment. At the same time, we're executing our strong mass capacity product road map that makes us well positioned to enhance customers' value and Seagate's financial performance. I'd just like to close by thanking all of our stakeholders for their ongoing support, and thanks for joining us today.

謝謝，科爾。正如您今天所聽到的那樣，希捷正在迅速而敏捷地採取行動，以應對艱難的短期市場環境。與此同時，我們正在執行強大的大容量產品路線圖，這使我們能夠很好地提升客戶價值和希捷的財務業績。最後，我想感謝所有利益相關者的持續支持，並感謝今天加入我們。

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

會議現已結束。感謝您參加今天的演講。您現在可以斷開連接。