威騰電子 (WDC) 2023 Q1 法說會逐字稿

Good day, and welcome to the Western Digital First Quarter Fiscal 2023 Earnings Conference Call. (Operator Instructions) Please note, this event is being recorded. I would now like to turn the conference over to Peter Andrew. Please go ahead.

美好的一天，歡迎參加西部數據 2023 財年第一季度收益電話會議。 （操作員說明）請注意，此事件正在記錄中。我現在想把會議交給彼得安德魯。請繼續。

Thank you, and good morning, everyone. Joining me today are David Goeckeler, Chief Executive Officer; and Wissam Jabre, Chief Financial Officer. Before we begin, let me remind everyone that today's discussion contains forward-looking statements, including product portfolio expectations, business plans and performance, demand and market trends, and financial outlook based on management's current assumptions and expectations, and as such, does include risks and uncertainties.

謝謝大家，大家早上好。今天加入我的是首席執行官 David Goeckeler；和首席財務官 Wissam Jabre。在開始之前，讓我提醒大家，今天的討論包含前瞻性陳述，包括產品組合預期、業務計劃和業績、需求和市場趨勢，以及基於管理層當前假設和預期的財務前景，因此確實包含風險和不確定性。

We assume no obligation to update these statements. Please refer to our most recent financial report on Form 10-K filed with the SEC for more information on the risks and uncertainties that could cause actual results to differ materially. We will also make references to non-GAAP financial measures today. Reconciliations between the non-GAAP and comparable GAAP financial measures are included in the press release and other materials that are being posted in the Investor Relations section of our website. With that, I'll now turn the call over to David for introductory remarks.

我們不承擔更新這些聲明的義務。請參閱我們最近提交給 SEC 的 10-K 表格財務報告，以了解有關可能導致實際結果出現重大差異的風險和不確定性的更多信息。今天，我們還將參考非公認會計準則財務指標。非 GAAP 和可比 GAAP 財務措施之間的對賬包含在新聞稿和我們網站投資者關係部分發布的其他材料中。有了這個，我現在將把電話轉給大衛做介紹性發言。

Thank you, Peter. Good morning, everyone, and thank you for joining the call to discuss our 2023 first quarter results.

謝謝你，彼得。大家早上好，感謝您加入討論我們 2023 年第一季度業績的電話會議。

I am pleased to see the Western Digital team work together to deliver revenue at the upper half of the guidance range in the midst of an incredibly dynamic and challenging macroeconomic environment. We reported first quarter revenue of $3.7 billion and non-GAAP operating income of $307 million. Our operating income performance was above the midpoint implied by our guidance and demonstrated our ability to actively respond and navigate this environment.

我很高興看到西部數據團隊攜手合作，在充滿活力且充滿挑戰的宏觀經濟環境中實現指導範圍上半部分的收入。我們報告第一季度收入為 37 億美元，非美國通用會計準則營業收入為 3.07 億美元。我們的營業收入表現高於我們指引所暗示的中點，並展示了我們積極應對和駕馭這種環境的能力。

Our non-GAAP earnings per share was $0.20 and included an approximately $0.30 impact due to higher-than-forecasted tax rate. Overall, the actions we have taken over the past few years are enabling us to manage through business cycle troughs more effectively and position the company to thrive as market conditions improve. These efforts have reinvigorated the Western Digital innovation engine and strengthened our product portfolio.

我們的非公認會計原則每股收益為 0.20 美元，其中包括由於高於預期的稅率而產生的約 0.30 美元的影響。總體而言，我們在過去幾年採取的行動使我們能夠更有效地度過商業周期的低谷，並使公司能夠隨著市場條件的改善而蓬勃發展。這些努力重振了西部數據的創新引擎並加強了我們的產品組合。

In particular, we are leading the transition to SMR-based hard drives alongside our cloud customers, showcasing our product leadership. In flash, we have nearly tripled our bit shipments in the NVMe enterprise SSD product category as compared to the last down cycle, adding another large and growing end market in which we can allocate our flash bits. Our industry-leading innovation, diversified portfolio and broad go-to-market strategy across cloud, client and consumer end markets allow us to enjoy strong relationships with our customers and meet the full range of storage needs.

特別是，我們正在與我們的雲客戶一起引領向基於 SMR 的硬盤的過渡，展示了我們的產品領先地位。在閃存方面，與上一個下降週期相比，我們在 NVMe 企業 SSD 產品類別中的位出貨量增加了近三倍，增加了另一個大型且不斷增長的終端市場，我們可以在其中分配我們的閃存位。我們行業領先的創新、多元化的產品組合以及跨雲、客戶端和消費者終端市場的廣泛上市戰略使我們能夠與客戶建立牢固的關係並滿足全方位的存儲需求。

The breadth of markets we address also offers us unique visibility into end market demand signals which allowed us to recognize potential challenges to our business as they unfolded. We have proactively and effectively managed our business through weakening consumer demand by optimizing product mix and rightsizing our hard drive manufacturing footprint.

我們所涉足的市場廣度也為我們提供了對終端市場需求信號的獨特洞察力，這使我們能夠在業務發展過程中認識到對我們業務的潛在挑戰。我們通過優化產品組合和調整我們的硬盤製造足跡來削弱消費者需求，從而積極有效地管理我們的業務。

As part of these efforts to manage through this part of the cycle, we are reducing our capital investments and operating expenses as we move to align our cash flow and cost structure with market conditions. Wissam will go over our efforts in more detail.

作為管理週期這一部分的這些努力的一部分，我們正在減少我們的資本投資和運營費用，因為我們正在努力使我們的現金流和成本結構與市場條件保持一致。 Wissam 將更詳細地介紹我們的工作。

As we closely monitor the macro environment, we are encouraged to see retail flash and channel demand leveling out and orders from PC customers stabilizing, a sign that consumer-led inventory correction is abating. We believe the long-term growth in flash demand, combined with reduced flash industry supply will restore supply and demand balance in the next couple of quarters.

隨著我們密切關注宏觀環境，我們很高興看到零售閃存和渠道需求趨於平穩，PC 客戶的訂單趨於穩定，這表明以消費者為主導的庫存調整正在減弱。我們認為閃存需求的長期增長，加上閃存行業供應減少，將在未來幾個季度恢復供需平衡。

Before I jump into updates on our HD and Flash businesses, I want to provide a short update on our strategic review process. The executive committee of our Board, which I lead, continues its process, which I previously announced includes the participation of Elliott Management under a nondisclosure agreement. Given the ongoing nature and confidentiality of the process, we will not be answering any questions about the strategic review today. We will provide updates as we have them.

在我開始更新我們的高清和閃存業務之前，我想簡要介紹一下我們的戰略審查流程。我領導的董事會執行委員會繼續執行我之前宣布的流程，其中包括 Elliott Management 根據保密協議的參與。鑑於該過程的持續性質和保密性，我們今天不會回答有關戰略審查的任何問題。我們將提供更新，因為我們有它們。

Now turning to our HDD business. During the first quarter, our HDD revenue declined modestly as we had forecasted in August. Sequentially, total HDD and nearline exabyte shipments were both flat. Continued momentum with U.S. cloud customers and accelerated adoption of SMR hard drives were offset by softness in other capacity enterprise product channels and consumer HDD demand. Shipment of capacity enterprise drives based on SMR technologies exceeded 25% of this category, 1 quarter ahead of our expectations. We now expect SMR to represent over 40% of our capacity enterprise exabyte shipment exiting fiscal year 2023.

現在轉向我們的硬盤業務。在第一季度，我們的硬盤收入小幅下降，正如我們在 8 月份所預測的那樣。隨後，HDD 和近線 EB 總出貨量均持平。美國雲客戶的持續增長勢頭和 SMR 硬盤的加速採用被其他容量企業產品渠道和消費者硬盤需求的疲軟所抵消。基於 SMR 技術的大容量企業級硬盤出貨量超過該類別的 25%，比我們的預期高出 1 個季度。我們現在預計 SMR 將占到 2023 財年退出的容量企業 EB 出貨量的 40% 以上。

SMR adoption drove a 19% sequential and 21% year-over-year increase in average capacity to 17 terabytes per capacity enterprise drive, and our 20-terabyte drive exabyte shipments increased more than 150% sequentially. We are deep into the process of qualifying our latest generation of hard drives, including our 26-terabyte UltraSMR hard drives at multiple U.S. cloud and OEM customers. Interest in SMR from other hyperscalers worldwide is increasing as the 20% capacity gain offers multi-generation TCO benefits to the most complex data centers worldwide.

採用 SMR 後，企業級硬盤的平均容量環比增長 19%，同比增長 21%，達到 17 TB，我們的 20 TB 驅動器 EB 出貨量環比增長超過 150%。我們正在深入驗證我們最新一代硬盤的過程，包括我們為多個美國雲和 OEM 客戶提供的 26 TB UltraSMR 硬盤。隨著 20% 的容量增益為全球最複雜的數據中心提供多代 TCO 優勢，全球其他超大規模企業對 SMR 的興趣正在增加。

Looking ahead, our U.S. cloud customers have started sharply reducing their hard drive inventory alongside other components for their data center build-outs. This, along with continued subdued demand across markets in China, will impact near-term demand over the next few quarters. Despite these near-term corrections, it is clear from our conversations with these customers that HDD products will be the foundational storage for their continued cloud build-out in the years to come.

展望未來，我們的美國雲客戶已經開始大幅減少他們的硬盤庫存以及其他組件，用於他們的數據中心建設。再加上中國市場需求持續低迷，將影響未來幾個季度的近期需求。儘管有這些近期的修正，但從我們與這些客戶的對話中可以清楚地看出，HDD 產品將成為他們未來幾年持續雲構建的基礎存儲。

Our product leadership and innovation engine remain as strong as ever, and we are confident that Western Digital's hard drive business will thrive over the long term as demand improves and new products continue to ramp.

我們的產品領導力和創新引擎一如既往地強大，我們相信隨著需求的改善和新產品的不斷推出，西部數據的硬盤業務將長期蓬勃發展。

Turning to Flash. Revenue was slightly ahead of our expectations. Thanks to our broad portfolio, diverse routes to market and leading brands, including WD Black, SanDisk and SanDisk Professional that are recognized globally for their cutting-edge innovation, performance and quality. I'm pleased to say that we exceeded our bit shipment forecast this quarter.

轉向閃光。收入略高於我們的預期。得益於我們廣泛的產品組合、多樣化的市場途徑和領先品牌，包括 WD Black、SanDisk 和 SanDisk Professional，這些品牌因其尖端的創新、性能和質量而享譽全球。我很高興地說，我們本季度的出貨量超出了我們的預測。

Our client SSD products for PC OEM, retail and mobile drove the upside in bit shipments. Average capacity per client SSD increased 24% sequentially and 54% year-over-year, driven by doubling of standard storage capacity for PCs sold by multiple OEMs. This is another reminder of the insatiable demand for data storage and the resilience of flash demand as price elasticity drives increased consumption per device.

我們用於 PC OEM、零售和移動的客戶 SSD 產品推動了位出貨量的上升。每個客戶端 SSD 的平均容量環比增長 24%，同比增長 54%，這得益於多家 OEM 銷售的 PC 標準存儲容量翻倍。這再次提醒人們對數據存儲的永不滿足的需求以及閃存需求的彈性，因為價格彈性推動了每台設備的消費增加。

On the technology front, BiCS5 accelerated to over 2/3 of our Flash revenue in the September quarter, up from about half in the previous quarter. BiCS6 yield and development of subsequent 3D-NAND Flash are both progressing well. For the December quarter, we expect Flash shipments to increase sequentially, led by seasonal strength in retail and mobile. With the abrupt change in market conditions, we are acting decisively to adjust our supply trajectory to align with demand.

在技術方面，BiCS5 在 9 月季度加速到我們 Flash 收入的 2/3 以上，高於上一季度的約一半。 BiCS6 的良率和後續 3D-NAND Flash 的開發都進展順利。對於 12 月季度，我們預計 Flash 出貨量將環比增長，這主要得益於零售和移動領域的季節性增長。隨著市場條件的突然變化，我們正在果斷地調整我們的供應軌跡以適應需求。

We are pushing out BiCS6 transition to meaningfully reduce our capital expenditures for fiscal year 2023 which may offer us a potential opportunity to leapfrog to a future BiCS technology node as demand normalizes. With that, let me now turn the call over to Wissam, who will discuss our first quarter results in greater detail and provide an outlook for the second quarter.

我們正在推動 BiCS6 過渡，以顯著減少 2023 財年的資本支出，這可能為我們提供一個潛在的機會，以便隨著需求的正常化跨越到未來的 BiCS 技術節點。有了這個，現在讓我把電話轉給 Wissam，他將更詳細地討論我們的第一季度業績並提供第二季度的展望。

Thank you, David, and good morning, everyone. As David mentioned, revenue was in line, thanks to our team's agility and resilience in managing through this dynamic environment. Total revenue for the quarter was $3.7 billion, down 17% sequentially and 26% year-over-year. Non-GAAP earnings per share was $0.20. And as David mentioned, included an approximately $0.30 impact due to the higher than forecasted tax rate. Looking at our end markets, cloud represented 49% of revenue at $1.8 billion, down 13% sequentially and 18% year-over-year. Compared to the prior quarter, continued momentum in capacity enterprise drives sold to U.S. cloud customers and an increase in smart video hard drives demand partly offset the decline in all other hard drive product channels and flash.

謝謝你，大衛，大家早上好。正如大衛所說，由於我們團隊在管理這種動態環境方面的敏捷性和彈性，收入符合預期。本季度總收入為 37 億美元，環比下降 17%，同比下降 26%。非公認會計原則每股收益為 0.20 美元。正如大衛所說，由於稅率高於預期，包括約 0.30 美元的影響。看看我們的終端市場，雲佔收入的 49%，為 18 億美元，環比下降 13%，同比下降 18%。與上一季度相比，向美國雲客戶銷售的容量企業級硬盤的持續增長以及智能視頻硬盤需求的增加部分抵消了所有其他硬盤產品渠道和閃存的下降。

Sequentially, nearline bit shipments were flat at 112 exabytes, driven by our success in leading the industry transition to SMR hard drives. The year-over-year decrease was due to broad-based decline across both hard drive and flash products. Clients represented 33% of total revenue at $1.2 billion, down 25% sequentially and 34% year-over-year.

隨後，近線位出貨量持平於 112 艾字節，這得益於我們成功引領行業向 SMR 硬盤過渡。同比下降是由於硬盤和閃存產品的廣泛下降。客戶佔總收入的 33%，為 12 億美元，環比下降 25%，同比下降 34%。

Sequentially, the decline was attributed to flash driven by inventory reduction at PC OEMs and lower pricing. The year-over-year decline resulted primarily from the reduced flash pricing. Lastly, consumer represented 18% of revenue at $0.7 billion, down 15% sequentially and 30% year-over-year. On both a sequential and year-over-year basis, the revenue decline was due to flash pricing and lower retail HDD shipments.

隨後，下降歸因於 PC OEM 庫存減少和定價降低導致的閃存。同比下降主要是由於閃存定價的降低。最後，消費者佔收入的 18%，為 7 億美元，環比下降 15%，同比下降 30%。在連續和同比的基礎上，收入下降是由於閃存定價和零售硬盤出貨量下降。

Turning now to revenue by segment. We reported HDD revenue of $2 billion, down 5% sequentially and 21% year-over-year. Compared to the prior quarter, total HDD exabyte shipments increased by 1% and average price per hard drive increased by 4% to $125. On a year-over-year basis, total HDD exabyte shipments decreased by 12% and average price per unit increased by 23%.

現在轉向按部門劃分的收入。我們報告 HDD 收入為 20 億美元，環比下降 5%，同比下降 21%。與上一季度相比，HDD EB 總出貨量增長了 1%，每個硬盤的平均價格增長了 4%，達到 125 美元。與去年同期相比，HDD 艾字節總出貨量下降了 12%，每單位平均價格上漲了 23%。

Flash revenue was $1.7 billion, down 28% sequentially and 31% year-over-year. Sequentially, Flash ASPs were down 22% on a blended basis and 17% on a like-for-like basis. Flash bit shipments decreased 10% sequentially and 7% year-over-year.

Flash 收入為 17 億美元，環比下降 28%，同比下降 31%。隨後，Flash ASP 在混合基礎上下降了 22%，在同類基礎上下降了 17%。閃存位出貨量環比下降 10%，同比下降 7%。

As we move to costs and expenses, please note that my comments will be related to non-GAAP results unless stated otherwise. Gross margin for the fiscal first quarter was 26.7%, down 5.6 percentage points sequentially and 7.2 percentage points year-over-year. Our HDD gross margin was 28.5%, up 30 basis points sequentially and down 2.4 percentage points year-over-year. Our Flash gross margin was 24.5%, down 11.4 percentage points sequentially and 12.5 percentage points year-over-year.

當我們轉向成本和費用時，請注意，除非另有說明，否則我的評論將與非公認會計原則的結果有關。第一財季毛利率為26.7%，環比下降5.6個百分點，同比下降7.2個百分點。我們的 HDD 毛利率為 28.5%，環比增長 30 個基點，同比下降 2.4 個百分點。我們的 Flash 毛利率為 24.5%，環比下降 11.4 個百分點，同比下降 12.5 個百分點。

Operating expenses were $689 million, down $71 million sequentially and below our guidance range due to lower variable expenses and tighter expense management, including reduction of discretionary spending. Operating income was $307 million, representing a 56% decrease from the prior quarter and a 68% decrease year-over-year. As David mentioned, we are pleased to have delivered operating income above the midpoint implied by our guidance in a challenging market backdrop.

運營費用為 6.89 億美元，環比下降 7100 萬美元，低於我們的指導範圍，原因是可變費用減少和費用管理更嚴格，包括可自由支配支出的減少。營業收入為 3.07 億美元，比上一季度下降 56%，同比下降 68%。正如大衛所說，我們很高興在充滿挑戰的市場背景下實現了高於我們指引所暗示的中點的營業收入。

Our tax expense was $168 million, resulting in a tax rate of 72% higher than previously forecasted. Tax expense is influenced by several factors, including the projected quarterly profitability for the rest of the year and our corporate tax structure. Earnings per share was $0.20 compared to $1.78 in the prior quarter and $2.49 in the year-ago quarter.

我們的稅費為 1.68 億美元，導致稅率比之前的預測高 72%。稅收費用受幾個因素的影響，包括預計今年剩餘時間的季度盈利能力和我們的公司稅收結構。每股收益為 0.20 美元，上一季度為 1.78 美元，去年同期為 2.49 美元。

Operating cash flow for the first quarter was $6 million, and free cash flow was an outflow of $215 million. Cash capital expenditures, which includes the purchase of property, plant, equipment, and activity related to our flash joint ventures on our cash flow statement represented a cash outflow of $221 million. Our gross debt outstanding remained at $7.1 billion at the end of the fiscal first quarter.

第一季度的經營現金流為 600 萬美元，自由現金流為流出 2.15 億美元。現金資本支出，包括在我們的現金流量表上購買與我們的閃存合資企業相關的財產、廠房、設備和活動，代表現金流出 2.21 億美元。截至第一財季末，我們的未償債務總額仍為 71 億美元。

Our liquidity position continues to be strong. At the end of the quarter, we had $2 billion of cash and cash equivalents and revolver capacity of $2.25 billion. Our trailing 12-month adjusted EBITDA at the end of the first quarter, as defined in our credit agreement was $4.1 billion, resulting in a gross leverage ratio of 1.7x compared to 2x a year ago.

我們的流動性狀況繼續強勁。在本季度末，我們擁有 20 億美元的現金和現金等價物以及 22.5 億美元的左輪手槍容量。根據我們的信貸協議，我們在第一季度末的 12 個月調整後 EBITDA 為 41 億美元，與一年前的 2 倍相比，總槓桿率為 1.7 倍。

As a reminder, our credit agreement includes $0.9 billion in depreciation add-back associated with the flash ventures. This is not reflected in the cash flow statement. Please refer to the earnings presentation on the Investor Relations website for further details.

提醒一下，我們的信貸協議包括 9 億美元的折舊加回與閃現企業相關。這沒有反映在現金流量表中。有關詳細信息，請參閱投資者關係網站上的收益報告。

Before I go over guidance for the fiscal second quarter, I would like to discuss the business outlook for the balance of this fiscal year and the actions we are taking to align our execution plan with the changes in business environment. In Flash, we expect shipments to increase sequentially in the fiscal second quarter and the balance of the fiscal year 2023 as the market stabilizes. In HDD, we expect our revenue to recover as our U.S. cloud customers reduce their inventories over the next 2 quarters.

在我介紹第二財季的指導之前，我想討論一下本財年剩餘時間的業務前景，以及我們為使執行計劃與商業環境的變化保持一致而採取的行動。在 Flash 中，隨著市場趨於穩定，我們預計第二財季和 2023 財年餘下的出貨量將環比增長。在 HDD 方面，隨著我們的美國雲客戶在未來兩個季度減少庫存，我們預計我們的收入將恢復。

On the manufacturing front, we have sharply reduced client hard drive production capacity by approximately 40%. For the fiscal year 2023, we are reducing our gross capital expenditures to $2.7 billion. We are also aiming to reduce our cash capital expenditure by 20% versus our prior expectation. The main drivers of our lower capital expenditures are primarily the push out of BiCS6 transition in Flash and reduced investments in hard drive manufacturing.

在製造方面，我們已將客戶硬盤的產能大幅削減了約 40%。在 2023 財年，我們將總資本支出減少至 27 億美元。我們還計劃將我們的現金資本支出與我們之前的預期相比減少 20%。我們降低資本支出的主要驅動力主要是推動閃存中的 BiCS6 過渡以及減少對硬盤製造的投資。

As for our operating expenses, we proactively reduced our spending by approximately $80 million in the first fiscal quarter relative to the midpoint of the guidance range. We are also taking further action to lower our ongoing operating expenses range to $650 million to $700 million as we navigate this dynamic environment. We believe these actions we are taking will allow us to continue to invest in innovation as a top priority for our company going forward.

至於我們的運營費用，相對於指導範圍的中點，我們在第一財季主動減少了大約 8000 萬美元的支出。我們還在採取進一步行動，將我們的持續運營費用範圍降低到 6.5 億美元至 7 億美元，因為我們在這個動態的環境中航行。我們相信，我們正在採取的這些行動將使我們能夠繼續投資於創新，這是我們公司未來發展的重中之重。

For the fiscal second quarter, our non-GAAP guidance is as follows: we expect revenue to be in the range of $2.9 billion to $3.1 billion. We expect gross margin to be between 20% and 22%. We expect operating expenses to be between $650 million and $670 million. Interest and other expenses are expected to be approximately $80 million. We expect the tax benefit between $70 million and $90 million. We expect loss per share of $0.25 to earnings per share of $0.05 in the second quarter, assuming approximately 319 million fully diluted shares outstanding. I'll now turn the call back over to David.

對於第二財季，我們的非公認會計準則指引如下：我們預計收入將在 29 億美元至 31 億美元之間。我們預計毛利率將在 20% 至 22% 之間。我們預計運營費用將在 6.5 億美元至 6.7 億美元之間。利息和其他費用預計約為 8000 萬美元。我們預計稅收優惠在 7000 萬美元到 9000 萬美元之間。假設大約有 3.19 億股完全稀釋的流通股，我們預計第二季度每股虧損 0.25 美元至每股收益 0.05 美元。我現在將電話轉回給大衛。

Thanks, Wissam. Let me briefly wrap up, and then we'll open up for questions. While near-term market conditions are challenging, digital transformation continues to drive long-term growth for data storage from client to edge to cloud. With products and solutions that play in every part of the technology ecosystem, Western Digital can meet customers' needs across the spectrum and unlock the possibilities of data.

謝謝，維薩姆。讓我簡單地總結一下，然後我們將提出問題。儘管近期市場條件充滿挑戰，但數字化轉型繼續推動數據存儲從客戶端到邊緣再到雲的長期增長。憑藉在技術生態系統的各個部分發揮作用的產品和解決方案，西部數據可以滿足客戶全方位的需求，並釋放數據的可能性。

For example, while we are successfully managing through the consumer-led downturn, which is showing signs of stabilization, we are ramping multiple new products into data centers worldwide. As we remain focused on innovation and execution, I am optimistic that Western Digital will emerge stronger as we continue to ramp multiple new products into data centers worldwide and market conditions improve. With our top-tier team innovative and diversified portfolio, broad customer base and differentiated go-to-market engine, we are uniquely positioned to capture the opportunities stemming from the rapid global adoption of the cloud and the expansive and growing ecosystem it supports.

例如，雖然我們成功地度過了以消費者為主導的低迷時期，並顯示出穩定的跡象，但我們正在向全球數據中心推出多種新產品。由於我們仍然專注於創新和執行，我樂觀地認為，隨著我們繼續將多種新產品推向全球數據中心並且市場條件改善，西部數據將變得更加強大。憑藉我們的頂級團隊創新和多元化的產品組合、廣泛的客戶群和差異化的上市引擎，我們具有獨特的優勢，可以抓住全球快速採用雲及其支持的廣泛且不斷發展的生態系統所帶來的機遇。

Finally, I want to thank our employees for their hard work during this quarter and for solidifying our leadership in storage. In the face of an extremely challenging macro environment, our team worked together to deliver solid financial performance for Western Digital. I am proud of what this team has accomplished and excited to see what we can do together in calendar 2023 and beyond.

最後，我要感謝我們的員工在本季度的辛勤工作以及鞏固我們在存儲領域的領導地位。面對極具挑戰性的宏觀環境，我們的團隊通力合作，為西部數據帶來穩健的財務業績。我為這個團隊所取得的成就感到自豪，並且很高興看到我們可以在 2023 年及以後一起做些什麼。

All right, Peter. With that, let's open it up for Q&A.

好吧，彼得。有了這個，讓我們打開它進行問答。

(Operator Instructions) Our first question today comes from Aaron Rakers with Wells Fargo.

（操作員說明）我們今天的第一個問題來自富國銀行的 Aaron Rakers。

I want to go into the Flash business and kind of parse out kind of how you're thinking about the gross margin trajectory into the December quarter guidance? And specifically, within that, your JV partner, Kioxia announced a couple of weeks ago that they were going to cut production by as much as 30%. I'm curious your gross margin expectations. Have you taken any actions to take out production? And with that, any underutilization charges that are baked into your expectations into the December quarter?

我想進入 Flash 業務，並分析一下您對 12 月季度指導的毛利率軌蹟有何看法？具體來說，您的合資夥伴鎧俠在幾週前宣布，他們將減產多達 30%。我很好奇你的毛利率預期。你有沒有採取任何行動來停止生產？這樣一來，您對 12 月季度的預期中是否存在任何未充分利用的費用？

Yes, Aaron, thanks for the question. We have not taken any major underutilization actions in the fab. We always reserve that right in the future, depending on market conditions. So when we look at our -- the way to think about Q4, and I'll invite calendar Q4, Wissam, to obviously make some comments. I mean we're still under a -- pricing is still under pressure. I think that's fairly clear what's going on in the market.

是的，亞倫，謝謝你的提問。我們沒有在晶圓廠採取任何重大的未充分利用措施。我們始終根據市場情況在未來保留該權利。因此，當我們查看我們思考第四季度的方式時，我將邀請日曆第四季度的維薩姆發表一些評論。我的意思是我們仍然處於 - 定價仍然面臨壓力。我認為市場上正在發生的事情相當清楚。

And then we've got a sequential increase, slight increase in bit shipments. So I think that's one way to think about how we're thinking about the quarter. Wissam, anything to add?

然後我們有一個連續的增長，比特出貨量略有增長。所以我認為這是思考我們如何看待本季度的一種方式。維薩姆，有什麼要補充的嗎？

Yes. The only thing -- I mean, I think the only thing I would add, David, is yes, pricing is pretty much what's going to be the main driver of gross margin in the calendar Q4.

是的。唯一的 - 我的意思是，我認為我唯一要補充的是，大衛，是的，定價幾乎是第四季度日曆毛利率的主要驅動力。

And then as a quick follow-up on the hard disk drive, the nearline, it sounds like you and your competitors are going through some digestion at some of your CSP partners. What's the expectation for the December quarter? It sounds like you expect -- is the expectation is that shipments start to improve going into the March quarter at this point? And then I'll see the floor.

然後作為對硬盤驅動器（近線）的快速跟進，聽起來您和您的競爭對手正在您的一些 CSP 合作夥伴處進行一些消化。對 12 月季度的預期是什麼？這聽起來像您所期望的那樣 - 是否期望此時出貨量開始改善到 3 月季度？然後我會看到地板。

Yes, we're going to -- you've got it. We're going to see a sharp decline in shipments in calendar Q4, and that's going to lead to some pretty significant absorption charges or underutilization charges. And then will grow back out of that as we move into -- as we move through '23.

是的，我們將——你明白了。我們將看到第四季度的出貨量急劇下降，這將導致一些相當大的吸收費用或未充分利用費用。然後，隨著我們進入 23 世紀，我們會從中恢復過來。

The next question comes from C.J. Muse with Evercore.

下一個問題來自與 Evercore 的 C.J. Muse。

I guess a follow-up to the prior first question around NAND. I was hoping you could speak maybe more broadly around your NAND bit allocation strategy. You spoke to no underutilization charges today. I think your NAND gross margins obviously moving lower. And in the last cycle, I think in 2019, we troughed at 19%. So curious, how are you thinking about what business you'll take, what you won't take and how that will impact, whether desire to build inventory and/or choose to cut utilization at some point?

我想是關於 NAND 的前面第一個問題的後續。我希望你能更廣泛地談論你的 NAND 位分配策略。您今天談到沒有未充分利用的費用。我認為您的 NAND 毛利率明顯下降。在上一個週期中，我認為在 2019 年，我們跌至 19% 的谷底。如此好奇，您如何考慮您將從事什麼業務，您將不從事什麼業務以及這將如何影響，是否希望建立庫存和/或選擇在某個時候削減利用率？

I think this is -- the strategy we've been executing over the last couple of years and what we've been talking about, I think, is really paying off for us now at this part of the cycle. We've worked very hard to drive the portfolio abroad and deep portfolio across consumer, across mobile. We obviously still stay qualified at all of the vendors, the client SSD portfolio is an anchor of the portfolio, gaming. And now we've added enterprise SSD into the mix. So we've always talked about we want to have a broad portfolio to be qualified everywhere we can. And then be able to mix based on what gets us to the best return. And so I think at this part of the cycle, we're able to do that.

我認為這是 - 我們在過去幾年中一直在執行的策略以及我們一直在談論的內容，我認為，在這個週期的這個階段，我們現在真的得到了回報。我們一直在努力推動海外投資組合和跨消費者、跨移動設備的深入投資組合。我們顯然仍然在所有供應商中保持合格，客戶端 SSD 產品組合是遊戲產品組合的支柱。現在我們已將企業級 SSD 添加到組合中。因此，我們一直在談論我們希望擁有廣泛的投資組合，以便在任何地方都能獲得資格。然後能夠根據什麼讓我們獲得最佳回報進行混合。所以我認為在周期的這一部分，我們能夠做到這一點。

And it also gives us quite a few homes for our supply. So that allows us in a tough quarter, have sequential bit growth. Obviously, pricing is market-based pricing. So we participate in the market and it allows us to basically just change the mix to get the best return we can. So again, I think the portfolio strategy we've been pursuing and we've been talking about getting qualified at the hyperscalers on enterprise SSD, and that is -- that gives us another really important home for our supply. So that's how we're thinking about it.

它還為我們提供了相當多的房屋供我們供應。因此，這使我們能夠在艱難的季度中實現連續的位增長。顯然，定價是基於市場的定價。因此，我們參與了市場，它使我們基本上可以改變組合以獲得最好的回報。再說一次，我認為我們一直在追求的投資組合戰略，我們一直在談論在企業 SSD 上獲得超大規模的資格，那就是——這為我們的供應提供了另一個非常重要的家。所以我們就是這麼想的。

I think when you look across the portfolio, we have 5 or 6 categories, depending on the quarter. If you look at it for the whole fiscal year, we'll have 6 different categories where we have a double-digit mix of bits going into those different parts of the market. So I think it gives us a lot of optionality and the ability to generate the best return we can.

我認為當您查看整個投資組合時，我們有 5 或 6 個類別，具體取決於季度。如果您查看整個財年的情況，我們將有 6 個不同的類別，其中我們有兩位數的比特組合進入市場的不同部分。因此，我認為它為我們提供了很多選擇餘地，並有能力產生我們所能獲得的最佳回報。

That's very helpful. I guess, a follow-up on your technology road map. You talked about theoretically potentially skipping a node. And historically, players in the market have not done very well when they pursue that strategy. So I guess can you kind of walk through what gives you the confidence that, that's something that would make sense for you guys, just given the historical precedents?

這很有幫助。我想，你的技術路線圖的後續行動。您談到理論上可能會跳過一個節點。從歷史上看，市場參與者在追求該策略時表現並不好。所以我想你能不能介紹一下是什麼讓你有信心，這對你們來說是有意義的，只是考慮到歷史先例？

Yes. I think the way we think about it right now, BiCS6 is -- we're taking the actions around capital investment to slow down our bit supply in the market to try and get the market balance. I think everybody is doing that. There's really an enormous number of actions to try and get the market back in balance.

是的。我認為我們現在考慮的方式，BiCS6 是——我們正在採取圍繞資本投資的行動來減緩我們在市場上的比特供應，以試圖獲得市場平衡。我想每個人都在這樣做。確實有大量的行動試圖讓市場恢復平衡。

We feel good about those. We'll take effect next year as we move through the year. What it means for us is BiCS6 will be a shorter node. At this point, the follow-on node BiCS8 is progressing very, very well. And as we move through the year, we'll be able to make a judgment about how long we're going to stay on which node. There's a number of issues around qualifications of products and all those kinds of things. So we'll make thoughtful decisions about that when we get closer to that point as we move through '23, but we feel very good about where both nodes are and how they're progressing and that will give us the -- give us, again, more optionality about how we think about what products we put in the market to get us the best financial return and obviously, the best solution for our customers.

我們對這些感覺很好。隨著我們度過這一年，我們將在明年生效。這對我們來說意味著 BiCS6 將是一個更短的節點。在這一點上，後續節點 BiCS8 進展非常非常好。隨著這一年的推進，我們將能夠判斷我們將在哪個節點上停留多長時間。圍繞產品的資格和所有這些事情存在許多問題。因此，當我們在 23 年接近那個點時，我們將對此做出深思熟慮的決定，但我們對兩個節點的位置以及它們的進展情況感覺非常好，這將給我們 - 給我們，再次，關於我們如何考慮將哪些產品投放市場以獲得最佳財務回報以及為我們的客戶提供最佳解決方案的更多選擇權。

The next question comes from Joe Moore with Morgan Stanley.

下一個問題來自摩根士丹利的喬摩爾。

Great. Sounds like you guys are pretty optimistic that this improves. But I guess in the event that it doesn't, if earnings stay at this level for a few quarters or get worse, it looks like you might be challenged on the leverage ratio. We've talked to a bunch of people in credit, and it sounds like that's a relatively easy amendment to make that there's no strain to it, if you do it quickly. So just wondering how are you thinking about that? Are you -- and then just sort of broader, more philosophically, it feels like it's going to be a tough economic year next year, there could be a lot of challenges. But with Chinese supply out of the mix, the next NAND cycle should be pretty exciting.

偉大的。聽起來你們很樂觀，這會有所改善。但我想如果不是這樣，如果收益在這個水平上保持幾個季度或更糟，看起來你可能會在槓桿率方面受到挑戰。我們已經與一群有信譽的人進行了交談，這聽起來是一個相對容易的修改，如果你快速完成的話，它不會有任何壓力。所以只是想知道你是怎麼想的？你是不是——然後從更廣泛、更哲學的角度來說，感覺明年將是艱難的經濟年，可能會有很多挑戰。但由於中國供應不足，下一個 NAND 週期應該會非常令人興奮。

So I feel like as you think about more negative scenarios, how do you think about weathering the storm and making sure that the kind of $15 of earnings power you did a few years ago is something we might see in the future?

所以我覺得當你考慮更多的負面情景時，你如何看待風暴並確保你幾年前所做的那種 15 美元的盈利能力是我們未來可能看到的？

Yes. Joe, thanks for the question. So with respect to the first part of your question, look, we're -- we entered this down cycle in a very much stronger financial position than the previous one. If you recall, we reduced our debt by $2.7 billion. We've improved the earnings power of the business. We strengthened our portfolio. And also, if you look at our liquidity at the end of Q1, we had around $4.3 billion between a little bit more than $2 billion of cash and cash equivalents and the $2.25 billion revolver that's undrawn.

是的。喬，謝謝你的問題。所以關於你問題的第一部分，看，我們進入了這個下行週期，其財務狀況比上一個要好得多。如果您還記得，我們的債務減少了 27 億美元。我們提高了企業的盈利能力。我們加強了我們的投資組合。此外，如果您查看我們在第一季度末的流動性，我們大約有 43 億美元，介於略多於 20 億美元的現金和現金等價物以及未動用的 22.5 億美元左輪手槍之間。

So we have ample liquidity to operate within the -- in the next few quarters. And from where we are now, we're very comfortable in terms of the continued profitability of the business.

因此，我們有足夠的流動性在接下來的幾個季度內運營。從我們現在的情況來看，我們對業務的持續盈利能力感到非常滿意。

Joe, and just to add to that, I mean, we're thinking about how you are. I mean, look, we've got a -- we've got to get through this phase of the cycle. I think there's been a lot of discussion about everything from reduced utilization to pushing out CapEx. To your point, there are some regulations that are going to impact supply in the market in '23. So we're optimistic about the next cycle about getting there. The market is all the -- we're reacting strongly to get supply and demand back in balance.

喬，補充一點，我的意思是，我們正在考慮你的情況。我的意思是，看，我們有一個 - 我們必須通過這個週期的階段。我認為從降低利用率到推出資本支出等各個方面都有很多討論。就您而言，有一些法規將影響 23 年的市場供應。因此，我們對到達那裡的下一個週期持樂觀態度。市場就是一切——我們正在做出強烈反應，以使供需恢復平衡。

So -- but we -- as Wissam said, we've invested in our balance sheet. We've invested in innovation in our portfolio to build the resiliency and the agility in the business to manage through this.

所以 - 但我們 - 正如維薩姆所說，我們已經投資了我們的資產負債表。我們在我們的產品組合中進行了創新投資，以增強業務的彈性和敏捷性，以應對這一挑戰。

(Operator Instructions) The next question comes from Toshiya Hari with Goldman Sachs.

（操作員說明）下一個問題來自高盛的 Toshiya Hari。

I had a question on the NAND business as well. So David, based on the CapEx decisions you've made over the past couple of months, how should we think about your bit supply growth in, say, calendar '23. Obviously, you've got bits on your balance sheet. But on a manufacturing basis, given the decisions you've made, how should we think about bit supply growth. And it seems like you're not cutting production like many of your other peers. I guess my question is, why not? Is that a function of the contaminant issue earlier in the year and you're looking to regain some ground? Or is there something else?

我也有關於 NAND 業務的問題。所以大衛，根據你在過去幾個月裡做出的資本支出決定，我們應該如何考慮你在 23 年日曆中的比特供應增長。顯然，你的資產負債表上有一些東西。但是在製造的基礎上，鑑於您做出的決定，我們應該如何考慮比特供應增長。看起來你並沒有像許多其他同行那樣削減產量。我想我的問題是，為什麼不呢？這是今年早些時候污染問題的一個原因，您希望重新獲得一些支持嗎？或者還有別的什麼？

No, it's -- on the second part of your question, it's not because of that at all. It's because we have a lot of homes for our supply, and we're able to get, we think, a good economic return for that. So from -- just purely from an economic point of view, it makes sense for us to continue to build the supply. We're definitely going to slow down our bit supply. I think you can think like low to mid-20s for supply next year is kind of the way we're thinking about it.

不，這是——關於你問題的第二部分，根本不是因為這個。這是因為我們有很多房屋可供供應，我們認為，我們能夠為此獲得良好的經濟回報。所以從 - 純粹從經濟角度來看，我們繼續建立供應是有意義的。我們肯定會放慢我們的比特供應。我認為您可以認為明年的供應量在 20 年代中期是我們正在考慮的方式。

The next question comes from Wamsi Mohan with Bank of America.

下一個問題來自美國銀行的 Wamsi Mohan。

I wanted to go back to your initial comments around consumer stabilization. I know you alluded to some points around retail and PC orders. And I was hoping that you can maybe double click a little bit on what you're seeing both in retail and PC orders, specifically. And also perhaps touch on your expectation of inventory levels exiting the December quarter.

我想回到你關於穩定消費者的最初評論。我知道你提到了一些關於零售和 PC 訂單的觀點。我希望您可以雙擊一下您在零售和 PC 訂單中看到的內容，特別是。還可能涉及您對 12 月季度結束後庫存水平的預期。

So let me take the first part, and I'll ask Wissam to comment on inventory. If we go back and we look at kind of the progression of what's happened this year, back in March, we -- roughly the March time frame, we saw the consumer market come under pressure. We talked a lot about that. In, let's call it, the June time frame, we saw the PC OEMs really start adjusting their inventory very aggressively. We talked about that last quarter. And we've seen that play out during the quarter now in a number of different fronts.

所以讓我來談談第一部分，我會請 Wissam 對庫存發表評論。如果我們回頭看看今年發生的事情的進展，回到三月份，我們 - 大約在三月份的時間框架內，我們看到消費市場面臨壓力。我們談了很多。在我們稱之為 6 月份的時間框架中，我們看到 PC OEM 確實開始非常積極地調整他們的庫存。我們在上個季度談到了這一點。我們已經在本季度的多個不同方面看到了這種情況。

And then just within the last month or 2, we've started to see the big data center operators do the same thing, really sharply adjust their inventory. And obviously, that's factored into our guide. So we've seen this kind of rolling change as it goes through one market to the next. If you look at the other side of it, where are they at in that process, consumer market, we're seeing relatively predictable behavior. It's not like it's at a great point, but it's not falling the way it was. Our ability to predict where it's going to be week-over-week and month-over-month have increased. And so we've got more confidence. We understand where that market is at and how it's going to play out going forward.

然後就在過去一兩個月內，我們開始看到大數據中心運營商也在做同樣的事情，他們真的大幅調整了他們的庫存。顯然，這已納入我們的指南。因此，我們已經看到了這種滾動變化，因為它從一個市場到另一個市場。如果你看看它的另一面，他們在那個過程中的消費市場，我們看到的是相對可預測的行為。它不像它處於一個偉大的點，但它並沒有像以前那樣下降。我們預測每周和每月將在哪裡的能力有所提高。所以我們更有信心。我們了解該市場的位置以及未來將如何發揮作用。

In the PC market and see Q4, we're actually going to see some sequential growth in units of client SSD, not a huge amount, but it's sequential growth. Again, we talked about a very, very sharp inventory correction. So we're starting to see -- we're getting to the point there where the -- the inventory correction last quarter was quite severe, I mean, when customers going down to less than 10% of their usual demand. Now we see things coming back and stabilizing a little bit.

在 PC 市場和第四季度，我們實際上會看到客戶端 SSD 單位的一些連續增長，不是很大，而是連續增長。再次，我們談到了非常非常急劇的庫存調整。所以我們開始看到——我們已經到了——上個季度的庫存調整非常嚴重，我的意思是，當客戶下降到他們通常需求的 10% 以下時。現在我們看到事情正在恢復並穩定下來。

So I don't want to leave you with the impression that things are back up and to the right, but they're stabilizing a bit, and we're starting to see some signs that we're getting more predictable behavior and then that we can then grow out at this point. Obviously, the data center, the big U.S. hyperscalers were just kind of going into that. And we'll have more to say as we -- it's going to be a couple of quarters, but we'll have more to say as we go through the quarter of what we're seeing and then what we see going into next quarter. Inventory?

所以我不想給你留下這樣的印象，即事情正在恢復並向右轉，但它們正在穩定一點，我們開始看到一些跡象表明我們的行為變得更加可預測，然後然後我們可以在這一點上成長。顯然，數據中心，美國的大型超大規模企業只是進入了這個領域。我們還有更多話要說——這將是幾個季度，但是當我們經歷我們所看到的這個季度以及我們看到的下一個季度的情況時，我們會有更多的話要說.存貨？

Yes. And on the second part of the question, Wamsi. In Q1, we saw approximately a couple of hundred million dollars of growth in inventory at the end of the quarter. Our days of inventory were at 128. We're expecting to see a similar type of trends in the calendar Q4, roughly speaking, let's say, $100 million to $200 million growth and a bit of an increase in our days of inventory.

是的。關於問題的第二部分，Wamsi。在第一季度，我們在季度末看到了大約幾億美元的庫存增長。我們的庫存天數為 128。我們預計第四季度會出現類似的趨勢，粗略地說，我們的庫存天數增長 1 億至 2 億美元，庫存天數略有增加。

The next question comes from Timothy Arcuri with UBS.

下一個問題來自瑞銀的 Timothy Arcuri。

I had a question, and then I had a clarification. So the question is on NAND cost. And the question really is sort of what the push out of BiCS6 does to your longer term? And when I say longer term, I mean like inside of calendar '23 and into '24, like what that does to your NAND cost curve? You've been bringing costs down mid-teens. I know it's going to be less than that next year. But what is the push out due to your cost curve?

我有一個問題，然後我有一個澄清。所以問題在於NAND成本。問題實際上是 BiCS6 的推出對您的長期影響？當我說更長期時，我的意思是在 23 年和 24 年之間，這對你的 NAND 成本曲線有什麼影響？你一直在把成本降低到十幾歲。我知道明年會比這個少。但是，由於您的成本曲線而推出的產品是什麼？

And then I wanted to clarify on the HDD margin assumption for December, can you sort of disaggregate a little bit what you think HDD margins will be for December like what's implied? It seems like gross margin is down to smidge that's being implied in your guidance?

然後我想澄清一下 12 月的 HDD 保證金假設，你能稍微分解一下你認為 12 月的 HDD 保證金，就像暗示的那樣嗎？似乎毛利率下降到您的指導中暗示的微不足道？

Yes. On NAND cost, when we went through the CapEx exercise, we obviously kept a very close eye on still being able to drive cost declines. It's a very important element of the whole model of what we're doing here. So we're still comfortable with you modeling 15% year-over-year cost declines.

是的。在 NAND 成本方面，當我們進行資本支出練習時，我們顯然非常密切地關注仍然能夠推動成本下降。這是我們在這裡所做的整個模型的一個非常重要的元素。因此，我們仍然對您模擬 15% 的同比成本下降感到滿意。

I mean, clearly, there'll be some variability from quarter-to-quarter, but we still target that 15% year-over-year. It's a big part, I've talked about this a lot in the past. It's an actual input into the process -- into the design process, not an output. And so we really designed to meet that, and it's a strong part of what we're -- what the whole business is about.

我的意思是，很明顯，每個季度都會有一些變化，但我們仍然以同比 15% 為目標。這是一個很大的部分，我過去已經談過很多次了。它是過程的實際輸入——設計過程，而不是輸出。所以我們真的設計來滿足這一點，這是我們的重要組成部分——整個業務的意義所在。

HDD margins will be under pressure next quarter. We will have -- as I said before, we'll have some significant underutilization costs that will go into the financials. The other side of that is pricing in nearline and capacity enterprise has been stable, benign about what we expect. But we're clearly going to have to -- we're going to slow down production significantly, and that will hit us in the margin line next quarter.

HDD 利潤率將在下個季度面臨壓力。我們將有 - 正如我之前所說，我們將有一些重大的未充分利用成本，這些成本將進入財務狀況。另一方面是近線和容量企業的定價一直穩定，對我們的預期溫和。但我們顯然將不得不——我們將顯著放緩生產，這將在下個季度打擊我們的利潤線。

And then we'll grow out of that as volume comes back. And as we go through '23, we also feel very -- we feel very good that we're going to be ramping into the 22-terabyte drive, which is deep in qualification at a lot of different places around the world. And also the 26-terabyte UltraSMR drive is in qualification as well.

然後隨著銷量的回升，我們將擺脫這種局面。當我們經歷 23 年時，我們也感覺非常 - 我們感覺非常好，我們將進入 22 TB 的驅動器，這在世界各地的許多不同地方都有很深的資格。 26 TB UltraSMR 驅動器也已通過認證。

And we talked a lot about SMR in the prepared remarks, that is a technology we believe very strongly. That's the next phase of the data center is SMR. And it was -- just last quarter, we talked about ending the year with 25% of our exabytes in that market being SMR, and we achieved that a quarter early. And now we expect to exit the fiscal year with over 40% of our exabytes being shipped on SMR. So I feel really good about where the portfolio is. And as we grow out of this sharp inventory correction through '23, we'll be going into strength in the product road map.

我們在準備好的評論中談到了很多關於 SMR 的內容，這是我們非常相信的一項技術。那就是數據中心的下一個階段是 SMR。就在上個季度，我們談到今年年底該市場 25% 的 EB 是 SMR，我們提前一個季度實現了這一目標。現在，我們預計在本財年結束時，超過 40% 的 EB 將通過 SMR 運送。所以我對投資組合的位置感覺非常好。隨著我們在 23 年擺脫這種急劇的庫存調整，我們將在產品路線圖中增強實力。

The next question comes from Shannon Cross with Credit Suisse.

下一個問題來自瑞士信貸的 Shannon Cross。

I'm just wondering, can you talk a bit about the pricing environment, both in NAND and drives and how both -- you expect the prices to move from an absolute basis and then also from a mix basis as the 22, 26, et cetera, comes out over time. I'm just wondering how we should sort of think about that.

我只是想知道，您能否談談 NAND 和驅動器的定價環境，以及兩者如何 - 您預計價格會從絕對基礎上移動，然後從混合基礎上移動，如 22、26 等等等，隨著時間的推移出來。我只是想知道我們應該如何考慮這個問題。

Pricing in HDD has been something we've been very much focused on. We feel very, very positive about the innovation we're bringing to market. I mean that's where all -- everything about pricing starts with innovation. You got to bring a great product to market. You got to continue to drive a better value proposition for our customers. And we believe strongly we're doing that. These new drives have very good TCO benefits for the largest data center operators in the world.

HDD 的定價一直是我們非常關注的問題。我們對我們正在推向市場的創新感到非常非常積極。我的意思是這就是一切——關於定價的一切都始於創新。您必須將出色的產品推向市場。您必須繼續為我們的客戶提供更好的價值主張。我們堅信我們正在這樣做。這些新驅動器為世界上最大的數據中心運營商帶來了非常好的總體擁有成本優勢。

So pricing in nearline has been, I think, benign is the word I've used for many quarters now, and I would continue to use that word. And we're going to be focused on value-based pricing as we ramp into 2022 and '26. So that's the way we're thinking about it. Again, it's all about driving a better TCO value proposition through innovation, and then we get to share the benefit of that with our customers.

因此，我認為，近線定價一直是良性這個詞，我已經使用了很多個季度，我會繼續使用這個詞。隨著我們進入 2022 年和 26 年，我們將專注於基於價值的定價。這就是我們正在考慮的方式。同樣，這一切都是為了通過創新推動更好的 TCO 價值主張，然後我們可以與客戶分享其中的好處。

In NAND, pricing has clearly been under pressure. I think that's very well documented. As I said before, that -- look at our pricing last quarter, like-for-like, minus 17%; blended, minus 22%. We're clearly mixing -- the mix hurts the pricing a bit, but it also allows us to move a lot of supply and we think it's the right decision for the business. We expect pricing to be under pressure in calendar Q4 as well.

在 NAND 中，定價顯然面臨壓力。我認為這是非常有據可查的。正如我之前所說，看看我們上個季度的定價，同比下降 17%；混合，負 22%。我們顯然在混合——混合有點損害定價，但它也讓我們能夠轉移大量供應，我們認為這對企業來說是正確的決定。我們預計第四季度的定價也將面臨壓力。

The next question comes from Krish Sankar with Cowen and Company.

下一個問題來自與 Cowen and Company 的 Krish Sankar。

I had a quick one on SMR. Can you talk a little bit about how to think about SMR in terms of your revenue mix and also how many customers do you have? And are you seeing any nearline HDD share shifts because of your SMR position?

我在 SMR 上有一個快速的。您能否談談如何從您的收入組合以及您擁有多少客戶方面來考慮 SMR？由於您的 SMR 位置，您是否看到任何近線 HDD 份額變化？

Yes. We don't talk about specific customers, but what I can say is there's multiple very large customers committed to SMR. Some of the largest data center operators in the world. And I think the whole industry is -- especially UltraSMR, I mean, SMR has been around a long time, right? SMR has been shipped in client drives for a long time, but it actually requires some work on the host side for the data center operators. So when we were able to introduce UltraSMR and get plus 20% on a CMR drive versus the industry standard of plus 10%, that really changed the equation a bit. And when you can get 20% capacity uplift, it's worth the investment on the host side, and we're seeing that move across a lot of operators be very interested in that. So we don't break out specific customers.

是的。我們不談論具體的客戶，但我可以說的是有多個非常大的客戶致力於 SMR。世界上一些最大的數據中心運營商。我認為整個行業——尤其是 UltraSMR，我的意思是，SMR 已經存在很長時間了，對吧？ SMR 已經在客戶端驅動器中提供了很長時間，但它實際上需要在主機端為數據中心運營商做一些工作。因此，當我們能夠引入 UltraSMR 並在 CMR 驅動器上獲得 20% 的收益，而行業標準為 10% 時，這確實稍微改變了這個等式。當你可以獲得 20% 的容量提升時，主機方面的投資是值得的，我們看到許多運營商對此非常感興趣。所以我們不會細分特定的客戶。

I said on an exabyte basis, we expect it to be over 40% exiting the fiscal year. I think you can assume on a revenue basis, it will be slightly more than that, but I think that's how we think about it.

我說以艾字節為基礎，我們預計本財年將超過 40%。我認為你可以假設在收入的基礎上，它會略高於這個，但我認為這就是我們的想法。

The next question comes from Mehdi Hosseini with SIG.

下一個問題來自 SIG 的 Mehdi Hosseini。

I also have one question, 2 parts. With your wafer purchase based on cost plus and given continued weakness in NAND prices, how is that going to impact your margin? There was a reference earlier of a minimum margin of 19% and I just want to make sure that we understand that there is that minimum gross margin given the fact that you actually purchase wafer from the JV? And on the HDD side, as you think about the dynamics, if we're actually seeing the bottom into next year. How are you planning for your capacity? And what kind of the exabyte growth are you forecasting for your HDD manufacturing capacity that you have online? In other words, how are you thinking about your HDD capacity? What kind of assumption for shipments do you have?

我也有一個問題，2個部分。由於您基於成本加成購買晶圓，並且 NAND 價格持續疲軟，這將如何影響您的利潤率？之前有參考最低毛利率為 19%，我只是想確保我們了解，考慮到您實際上是從合資企業購買晶圓的事實，存在最低毛利率？在硬盤方面，當您考慮動態時，如果我們真的看到明年的底部。您如何規劃您的容量？您預測您在線擁有的 HDD 製造能力會有什麼樣的 EB 增長？換句話說，您如何看待您的硬盤容量？您對發貨有什麼樣的假設？

All right. Let me -- I'll make some comments here and then I'm sure Wissam will probably have something to add as well. So first of all, let's clarify the comment on gross margin. There is no minimum gross margin. I think the comment was that in the last down cycle, the company's gross margin bottomed at 19% in Flash. I will note that, that number did not include the underutilization charges. And when you include the underutilization charges, Wissam, I know we calculated this number. It was...

好的。讓我 - 我會在這裡發表一些評論，然後我相信 Wissam 可能也會添加一些內容。首先，讓我們澄清一下對毛利率的評論。沒有最低毛利率。我認為評論是在上一個下行週期中，該公司的毛利率在 Flash 中觸底為 19%。我會注意到，這個數字不包括未充分利用的費用。當你包括未充分利用的費用時，Wissam，我知道我們計算了這個數字。它是...

Yes, we're in the sort of, let's say, between the -- it's in the low teens.

是的，我們處於那種，比方說，介於 - 它處於青少年時期。

Low teens.

低齡少年。

It is in the low teens.

它處於青少年時期。

Okay. So I think that was just -- Mehdi, I just think that was a benchmark that one of the previous questioners was using. So you're right about how we get -- how we -- the JV economics work? But again, our -- the way we think about the portfolio is if we can get -- if we have a home for the bits, that's number -- that's the first thing, like do we have a place where we can, do we have customers that value our innovation in our portfolio, and we have a place to put the supply and then we look at pricing, and then we look at that equation and does it make economic sense to do that, and we drive the portfolio there.

好的。所以我認為這只是-- Mehdi，我只是認為這是之前的一位提問者使用的基準。所以你對我們如何獲得——我們如何——合資經濟運作是正確的？但同樣，我們 - 我們考慮投資組合的方式是，如果我們能夠得到 - 如果我們有一個家，那就是數字 - 這是第一件事，就像我們有一個可以的地方，我們在我們的投資組合中擁有重視我們創新的客戶，我們有一個放置供應的地方，然後我們查看定價，然後我們查看這個等式，這樣做是否具有經濟意義，我們在那裡推動投資組合。

We were actually -- given where we are in the cycle, we're pleased with the gross margin we're able to drive in the business at this point. So that's how we're thinking about it. Exabyte growth, I mean, clearly, we're going to slow down ACD exabyte growth. I think this -- the industry is going through a pretty large digestion cycle. Part of the CapEx pushout that Wissam talked about the lion's share of that is on the flash side of the business, but we're also moving out ACD CapEx as well to slow down our exabyte growth there.

實際上，考慮到我們在周期中的位置，我們對目前能夠在業務中推動的毛利率感到滿意。所以我們就是這麼想的。艾字節的增長，我的意思是，很明顯，我們將減緩 ACD 艾字節的增長。我認為這 - 該行業正在經歷一個相當大的消化週期。 Wissam 談到的部分資本支出推出，其中大部分是在業務的閃存方面，但我們也正在撤出 ACD 資本支出，以減緩我們在那裡的艾字節增長。

We have a lot of conviction that the market is still going to grow in that high 20, 30-plus range on exabyte growth, but we're going to have to grow back into that as we go through this inventory correction.

我們堅信市場仍將在 20 至 30 艾字節以上的高增長范圍內增長，但隨著我們進行庫存調整，我們將不得不重新回到這一點。

The next question comes from Harlan Sur with JPMorgan.

下一個問題來自摩根大通的 Harlan Sur。

On the inventories, 6% sequential growth, and I know you guys expect more sequential growth in inventories this quarter. Was -- is the build more flash or HDD driven? I'm talking about the September quarter? And then given the sharp pullback in the cloud, you guys are cutting utilizations in HDD this quarter, but are you guys also holding back shipments of HDD in the December quarter? And then on the NAND side, despite the sequential growth for bits in flash, are you guys holding back some shipments in the December quarter?

在庫存方面，環比增長 6%，我知道你們預計本季度的庫存環比增長會更多。是 - 構建更多的是閃存還是硬盤驅動器？我說的是九月季度？然後考慮到雲計算的急劇回落，你們本季度正在削減 HDD 的利用率，但你們是否也在抑制 12 月季度的 HDD 出貨量？然後在 NAND 方面，儘管閃存中的位連續增長，你們是否在 12 月季度抑制了一些出貨量？

So let me take the question. So with respect to inventory in the September quarter, the majority of the inventory growth was in NAND. On the HDD side, we were mostly flattish. As we look into the December quarter, we're expecting to continue to see more NAND inventory growth. And there will be some HDD inventory growth, but not as much as we're anticipating to see NAND growth there.

所以讓我來回答這個問題。因此，就 9 月季度的庫存而言，大部分庫存增長都來自 NAND。在硬盤方面，我們大多是平淡無奇的。展望 12 月季度，我們預計 NAND 庫存將繼續增長。並且會有一些 HDD 庫存增長，但沒有我們預期的 NAND 增長那麼大。

The HDD growth will be basically just driven by the weakness we're seeing in the market. But also we will -- we're carefully managing our utilization. There will be under absorption costs, but we're also trying to carefully manage our utilization going forward. And in terms of the part of the question with respect to holding shipments, no, we're not planning to hold shipments.

HDD 的增長基本上只是由我們在市場上看到的疲軟推動的。但我們也會 - 我們正在仔細管理我們的利用率。會有吸收成本不足，但我們也在努力謹慎管理我們未來的利用率。就問題中關於保留貨物的部分而言，不，我們不打算保留貨物。

The next question comes from Tom O'Malley with Barclays.

下一個問題來自巴克萊銀行的 Tom O'Malley。

You guys have seen a pretty long stretch year of seeing HDD ASPs on the rise. Obviously, with a lot of moving parts with the weakness that you're seeing, could you guys comment on what you expect HDD ASPs as a whole? You report the number every quarter to do sequentially? Is it falling because of mix? Or is there any puts and takes that we need to be considering when we look at the December guidance?

你們已經見證了 HDD ASP 在相當長的一年裡不斷上升。顯然，有很多移動部件與您所看到的弱點，你們能否評論一下您對整個 HDD ASP 的期望？你每季度按順序報告多少？它是因為混合而下降嗎？或者，當我們查看 12 月的指引時，我們需要考慮哪些看跌期權？

Yes. The transition is primarily driven by mix. Yes, that's the driver for the ASP.

是的。這種轉變主要是由混合驅動的。是的，這就是 ASP 的驅動程序。

Yes. So Tom, if you look at calendar Q4, you should expect ASP for HDDs to be down, mainly driven by mix as the hyperscale guys go through the digestion phase.

是的。所以湯姆，如果你看一下第四季度的日曆，你應該預計硬盤的 ASP 會下降，主要是由於超大規模公司經歷消化階段的混合驅動。

The next question comes from Jim Suva with Citi Group.

下一個問題來自花旗集團的 Jim Suva。

You mentioned Q4 will be -- or December quarter will be burdened with underutilization charges, is that kind of the brunt of it, the worst or the most amount to be absorbed there and then we start to improve going after? Or does it continue and you mentioned CapEx, you're slowing that down. Could you quantify or give us some CapEx guidance about what we should kind of anticipate for CapEx and for modeling cash flow around CapEx?

您提到第 4 季度將——或者 12 月季度將承擔未充分利用的費用，這是首當其衝的，最糟糕的還是要吸收的最多的數額，然後我們開始改進？或者它會繼續嗎？你提到了資本支出，你正在放慢速度。您能否量化或給我們一些資本支出指導，說明我們應該對資本支出和圍繞資本支出進行現金流建模的預期？

Yes. So on the comment with respect to underutilization, yes, from where we stand today, this seems to be the -- where we see probably underutilization at its lowest, and we would start getting ourselves out of that as demand improves. With respect to CapEx, we are aiming to reduce our cash CapEx for the fiscal year by 20%. Ideally, we want to do more.

是的。因此，關於未充分利用的評論，是的，從我們今天的立場來看，這似乎是 - 我們看到可能處於最低水平的未充分利用，隨著需求的改善，我們將開始擺脫這種局面。關於資本支出，我們的目標是將本財年的現金資本支出減少 20%。理想情況下，我們想做更多。

The way to think of it is in our cash CapEx, the 20% is roughly split around 30% reduction with -- and these are relative to our previous expectations. So 30% lower than previously expected on the NAND side and on the HDD side, it's a reduction of 10% to 15% relative to the previous expectations.

考慮它的方式是在我們的現金資本支出中，這 20% 大致分為大約 30% 的減少 - 這些與我們之前的預期有關。因此，NAND 方面和 HDD 方面比之前預期的低 30%，相對於之前的預期減少了 10% 到 15%。

The next question comes from Sidney Ho with Deutsche Bank.

下一個問題來自德意志銀行的 Sidney Ho。

I want to ask about the free cash flow expectation. What is your expectation for the December quarter and for fiscal '23 and perhaps the kind of trajectory of how things go? And maybe I'll throw this one in too. When you look at the inventory still going up next quarter, are you concerned about inventory write-downs, especially given the main gross margin? I think it was 25% probably going down for a couple more quarters?

我想問一下自由現金流預期。您對 12 月季度和 23 財年的預期是什麼，也許事情的發展軌跡是什麼？也許我也會把這個扔進去。當您查看下一季度仍會上漲的庫存時，您是否擔心庫存減記，尤其是考慮到主要毛利率？我認為它可能會在幾個季度內下降 25%？

Yes. So Sidney, for free cash flow, we're projecting a negative free cash flow in the December quarter and for the fiscal year. Keep in mind that we have the IRS settlement payment that is still projected to be in the fiscal '23 and this was estimated at $600 million to $700 million.

是的。因此，西德尼，對於自由現金流，我們預計 12 月季度和本財年的自由現金流為負數。請記住，我們的 IRS 結算付款仍預計將在 23 財年支付，估計為 6 億至 7 億美元。

With respect to inventory, look, the -- we did see a small impact in terms of write-down in the September quarter. Ultimately, it all depends on how the NAND pricing develops in the next few quarters. So it's difficult to predict at this time, but it will depend on where the NAND pricing progresses.

關於庫存，看，我們確實在 9 月季度的減記方面看到了小幅影響。最終，這一切都取決於未來幾個季度 NAND 定價的發展情況。因此目前很難預測，但這將取決於 NAND 定價的進展情況。

The next question comes from Ananda Baruah with Loop Capital.

下一個問題來自 Loop Capital 的 Ananda Baruah。

David, just interested in hearing what you're seeing and what your thoughts are with regards to nearline demand from your OEM customers that might go the on-premise spending?

大衛，只是想听聽您所看到的內容以及您對 OEM 客戶的近線需求的想法，這些需求可能會用於本地支出？

Yes. I would say those are under pressure as well. I mean, I think across the whole data center business, we see pressure on that part of the market, both from the OEM side and the hyperscalers. I would say the hyperscaler is a little more severe correction, but we're seeing pressure on both sides of the data center business.

是的。我會說那些也有壓力。我的意思是，我認為在整個數據中心業務中，我們看到了來自 OEM 方面和超大規模企業的那部分市場的壓力。我會說超大規模的修正要更嚴重一些，但我們看到數據中心業務雙方都面臨壓力。

The next question comes from Karl Ackerman with BNP Paribas.

下一個問題來自法國巴黎銀行的 Karl Ackerman。

I was hoping you could discuss the run rate level of OpEx for the next few quarters. And as you address that question, how much of the $70 million improvement this quarter is from the 40% reduction in hard drive capacity versus changes in accounting for R&D and NAND? As well as could you touch on your ability to redeploy heads and media production into cloud products where demand should grow very well on a structural basis going forward?

我希望你能討論接下來幾個季度的運營支出水平。當您回答這個問題時，本季度 7000 萬美元的改進中有多少來自硬盤容量減少 40% 與研發和 NAND 的會計變化？您能否談談您將頭部和媒體製作重新部署到雲產品中的能力，在這些產品中，未來的結構性基礎上需求應該會增長得很好？

Yes. So with respect to the run rate of OpEx, when you look at -- maybe I'll talk a little bit about where we ended in Q1 because this is a bit relevant on how we think about it going forward. So in Q1, we saw approximately $70 million to $80 million actually drop from the prior quarter. So we ended at around $689 million. We took action on variable expenses and nondiscretionary spend. Basically, we are tightening the -- totally the expenses management. As we look forward for the next few quarters, the run rate is expected to be $650 million to $700 million. And we're still contemplating a few other actions that we -- that may help us keep things even tighter. So that's the run rate.

是的。因此，關於 OpEx 的運行率，當您查看時 - 也許我會談談我們在第一季度結束的地方，因為這與我們對未來的看法有點相關。因此，在第一季度，我們看到實際上比上一季度下降了大約 7000 萬至 8000 萬美元。因此，我們的收盤價約為 6.89 億美元。我們對可變支出和非可自由支配支出採取了行動。基本上，我們正在收緊 - 完全是費用管理。在我們展望接下來的幾個季度時，預計運行率將在 6.5 億美元至 7 億美元之間。而且我們仍在考慮採取其他一些行動——這可能有助於我們把事情做得更緊密。這就是運行率。

On the part of the question related to the client capacity restructuring. The OpEx does not reflect that. This mostly -- the impact of that is mostly on the cost of goods sold. And what -- with the reduction of approximately 40% of our capacity, we expect to see on an annual basis, roughly $45 million to $50 million benefit. So that's, roughly speaking, a little bit more than $10 million, let's call it, around $10 million to $12 million a quarter.

關於客戶能力重組的部分問題。 OpEx 並未反映這一點。這主要是- 其影響主要是對銷售商品的成本。還有什麼——隨著我們產能減少約 40%，我們預計每年將獲得大約 4500 萬至 5000 萬美元的收益。所以，粗略地說，比 1000 萬美元多一點，我們稱之為，大約每季度 1000 萬到 1200 萬美元。

In terms of the last part of the question on the heads and media, they -- some of this capacity is fungible. And we -- part of our capital investment was to continue to invest in our heads and media to ensure we have the capacity to drive the -- or supply the growth expected in the future. But as we talked about that also, we are managing our capital expenditures over the next few quarters to manage our cash flow.

就頭部和媒體問題的最後一部分而言，他們——其中一些能力是可替代的。我們 - 我們的部分資本投資是繼續投資於我們的頭腦和媒體，以確保我們有能力推動 - 或提供未來預期的增長。但正如我們也談到的那樣，我們正在管理未來幾個季度的資本支出，以管理我們的現金流。

I think you've got the heads set right, which is in the transition from client to cloud. We move all the heads and media over to cloud. We've been in that transition for a long time. We're very, very deep in that. I would say we're in the last stages of that transition. So simple thing, with client drives have a lot more disks and heads in them, and we use all that capacity.

我認為你已經正確地設置了頭部，這是從客戶端到雲的過渡。我們將所有頭部和媒體轉移到雲端。我們已經經歷了很長時間的轉變。我們對此非常非常深入。我想說我們正處於過渡的最後階段。如此簡單的事情，客戶端驅動器中有更多的磁盤和磁頭，我們使用所有這些容量。

The next question comes from Mark Miller with Benchmark Company.

下一個問題來自 Benchmark Company 的 Mark Miller。

You saw a decline in cash in the current quarter. And you're talking about negative free cash flow. Where do you think cash will be at the end of December quarter and the year?

您看到本季度的現金減少。你說的是負自由現金流。您認為在 12 月季度末和年度末現金將在哪裡？

Yes. So I won't necessarily guide to a cash number, but we're expecting a negative free cash flow quarter in the calendar Q4. From a liquidity perspective, look, we've -- we ended the Q1 at $4.3 billion with around $2 billion of cash and we still have $2.25 billion of revolver. And so from a liquidity perspective, we're comfortable in the ability for us to continue to operate comfortably.

是的。所以我不一定會指導現金數字，但我們預計第四季度的自由現金流為負數。從流動性的角度來看，我們已經 - 我們以大約 20 億美元的現金結束了第一季度的 43 億美元，我們仍然有 22.5 億美元的左輪手槍。因此，從流動性的角度來看，我們對繼續舒適運營的能力感到滿意。

This concludes our question-and-answer session. I would like to turn the conference back over to David Goeckeler for any closing remarks.

我們的問答環節到此結束。我想把會議轉回給 David Goeckeler 做任何閉幕詞。

All right. Thanks, everyone, for joining us. Look, we'll be talking to all of you throughout the quarter. We appreciate your participation in the call. It's obviously a very dynamic environment we're all facing out there. I feel really good about the way we've been navigating this. Hopefully, we've given you some good color about how we're thinking about the business going forward.

好的。謝謝大家加入我們。看，我們將在整個季度與你們所有人交談。我們感謝您參與電話會議。這顯然是我們都面臨的一個非常動態的環境。我對我們一直在導航的方式感覺非常好。希望我們已經為您提供了一些關於我們如何看待未來業務的好消息。

Again, have a great day, everyone. Thank you.

再次，祝大家有美好的一天。謝謝你。

The conference is 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。