威騰電子 (WDC) 2023 Q3 法說會逐字稿

Good afternoon, and thank you for standing by. Welcome to Western Digital's Fiscal Third Quarter 2023 Conference Call. (Operator Instructions) As a reminder, this call is being recorded.

下午好，感謝您的收聽。歡迎參加西部數據2023財年第三季電話會議。 （接線生指示）溫馨提示：本次通話正在錄音中。

I would now like to turn the call over to Mr. Peter Andrew, Vice President, Financial Planning and Analysis of Investor Relations. You may begin.

現在我想把電話轉給投資者關係財務規劃與分析副總裁彼得·安德魯先生。您可以開始發言了。

Thank you, and good afternoon, everyone. Joining me today are David Goeckeler, Chief Executive Officer; and Wissam Jabre, Chief Financial Officer.

謝謝大家，下午好。今天與我一同出席的還有執行長David Goeckeler和財務長Wissam Jabre。

Before we begin, let me remind everyone that today's discussion contains forward-looking statements including expectations for our product portfolio, cost reductions, business plans and performance, demand and market trends and financial results based on management's current assumptions and expectations and as such, does include risks and uncertainties. We assume no obligation to update these statements. Please refer to our most recent financial report on Form 10-K and other filings with the SEC for more information on the risks and uncertainties that could cause actual results to differ materially.

在開始之前，我想提醒大家，今天的討論包含前瞻性陳述，包括對我們的產品組合、成本削減、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業績的預期，因此包含風險和不確定性。我們不承擔更新這些陳述的義務。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，請參閱我們最新的10-K表格財務報告以及向美國證券交易委員會提交的其他文件。

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.

我們今天也將提及非公認會計準則 (Non-GAAP) 財務指標。非公認會計準則 (Non-GAAP) 和可比較公認會計準則 (GAAP) 財務指標之間的對帳表已包含在新聞稿以及我們網站「投資者關係」板塊發布的其他資料中。

With that, I will now turn the call over to David for introductory remarks.

現在，我將把電話交給戴維 (David) 作開場發言。

Thank you, Peter. Good afternoon, and thank you for joining the call to discuss our 2023 third quarter results. Western Digital's third quarter performance exceeded expectations with core metrics at the high end of our guidance range, demonstrating the company's resilience in a challenging market environment. We reported third quarter revenue of $2.8 billion, non-GAAP gross margin of 11% and a non-GAAP loss per share of $1.37.

謝謝，Peter。下午好，感謝您參加我們2023年第三季業績的電話會議。西部數據第三季業績超越預期，核心指標達到我們指引範圍的高端，展現了公司在充滿挑戰的市場環境中的韌性。我們公佈第三季營收為28億美元，非公認會計準則毛利率為11%，非公認會計準則每股虧損為1.37美元。

Over the last several years, our team is focused on enhancing business agility and delivering a range of innovative, industry-leading products that address the increasing data storage demands of our customers. The groundwork we laid combined with the actions we have taken since the beginning of this fiscal year to rightsize and refocus our business have enabled us to navigate a dynamic environment.

過去幾年，我們的團隊致力於提升業務敏捷性，並提供一系列業界領先的創新產品，以滿足客戶日益增長的資料儲存需求。我們奠定的基礎，加上自本財年伊始以來為調整業務規模和重新聚焦業務而採取的行動，使我們能夠在瞬息萬變的市場環境中游刃有餘。

I am pleased that we delivered non-GAAP gross margin at the higher end of our guidance range due to strong execution across both our HDD and Flash businesses. In HDD, our early actions to streamline our manufacturing footprint and focus our product offerings on delivering the best value for our data center customers have resulted in gross margin upside and profitable market share gains in HDD.

我很高興，得益於HDD和快閃記憶體業務的強勁執行力，我們的非GAAP毛利率達到了預期區間的較高水準。在HDD領域，我們早期採取的措施包括精簡製造佈局，並將產品重點放在為資料中心客戶提供最佳價值上，這推動了HDD毛利率的提升和市場份額的提升。

In Flash, our broad go-to-market strategy anchored on our enviable retail franchise and a strong client SSD portfolio enabled us to optimize bit placement and bolster gross margin. During the fiscal third quarter, we saw signs of demand stabilizing across various end markets. In consumer, our Flash and HD results were consistent with the expectations we shared in January. In client, demand for each major product area came in better than we expected across PC OEM, channel, mobile and gaming. In cloud, demand for capacity enterprise hard drives improved, whereas the demand for flash drive was consistent with our expectations set in January.

在快閃記憶體領域，我們以令人羨慕的零售特許經營權和強大的客戶端SSD產品組合為基礎，制定了廣泛的市場推廣策略，這使我們能夠優化比特佈局並提升毛利率。在第三財季，我們看到各終端市場的需求呈現企穩跡象。在消費領域，我們的快閃記憶體和高清硬碟業績與我們一月份的預期一致。在客戶端領域，PC OEM、通路、行動和遊戲等各主要產品領域的需求均優於我們的預期。在雲端領域，企業級大容量硬碟的需求有所改善，而快閃磁碟機的需求則與我們一月份的預期一致。

Before I jump into updates on our HDD and Flash businesses, I would like to reiterate that the strategic review process is ongoing, and we will provide updates as we have them.

在介紹我們的 HDD 和快閃記憶體業務的最新情況之前，我想重申一下，策略審查過程正在進行中，我們將及時提供最新資訊。

I'll now turn to the business update, starting with HDD. During the fiscal third quarter, our HDD revenue improved sequentially with growth in capacity enterprise offsetting seasonal declines in retail and client. During the quarter, our 22 terabyte CMR drive became the highest volume product among all of our 20-terabyte-and-above capacity points, demonstrating our leadership position at this capacity point. In addition, we expect to complete qualification of our 26 terabyte UltraSMR technology in the fiscal fourth quarter. These innovative products provide multi-generation benefits to our customers.

現在，我將介紹業務更新，首先從硬碟 (HDD) 開始。在第三財季，我們的 HDD 營收季增，企業級容量的成長抵消了零售和客戶端的季節性下滑。在本季度，我們的 22TB CMR 硬碟成為我們所有 20TB 以上容量產品中銷量最高的產品，彰顯了我們在這一容量領域的領導地位。此外，我們預計將在第四財季完成 26TB UltraSMR 技術的認證。這些創新產品將為我們的客戶帶來多代效益。

Turning to Flash. Total exabyte shipment came in higher than expected in consumer, mobile, PC OEM and channel products. Despite the industry experiencing the worst downturn in over a decade, Western Digital delivered positive product gross margin, excluding underutilization charges driven by our unique combination of premium retail brands, broad go-to-market channels and low-cost flash supply from our joint venture fab with Kioxia. Furthermore, we continue to see encouraging signs of price elasticity-driven content growth in retail flash led by WD_BLACK SSD optimized for gaming as well as mobile PC OEMs and channel within client.

談到閃存。消費級、行動、PC OEM 和通路產品的總 EB 出貨量高於預期。儘管該行業經歷了十多年來最嚴重的低迷，西部數據仍實現了正的產品毛利率（不包括利用率不足的費用），這得益於我們獨特的高端零售品牌組合、廣泛的市場渠道以及與鎧俠合資工廠提供的低成本閃存供應。此外，我們繼續看到零售快閃記憶體市場價格彈性驅動內容成長的令人鼓舞的跡象，其中以針對遊戲、行動 PC OEM 以及客戶端通路優化的 WD_BLACK SSD 為首。

On the technology front, BiCS6 achieved its anticipated cost crossover during the quarter. Moreover, on March 30, Western Digital and Kioxia announced our next-generation BiCS8 node, a groundbreaking technology that builds upon the success of BiCS5 and BiCS6. This new technology is based on circuit bonded to array architecture which provides several benefits, including reduced cycle time, faster yield ramp, better lateral scaling and industry-leading I-O performance when compared to products based on circuit under array architecture. We continue to aggressively productize BiCS8 for a broad range of applications, which will position Western Digital for success as business conditions improve.

在技​​術方面，BiCS6 在本季度實現了預期的成本交叉。此外，西部數據和鎧俠於 3 月 30 日宣布推出下一代 BiCS8 節點，這是一項基於 BiCS5 和 BiCS6 成功經驗的突破性技術。這項新技術基於「電路鍵合陣列」架構，與基於「陣列下電路」架構的產品相比，它具有諸多優勢，包括縮短生產週期、加快良率提升、更佳的橫向擴展能力以及業界領先的 I-O 性能。我們將繼續積極推動 BiCS8 的產品化，使其適用於廣泛的應用領域，這將使西部數據在業務環境改善後獲得成功。

As we look to the fiscal fourth quarter, in hard drives, overall demand will be impacted by ongoing inventory digestion at cloud customers and a sustained decline in client. However, we are beginning to experience improved demand at certain customers in China. In Flash, we are seeing signs of stabilization and content increase per unit. PC OEMs have emerged from inventory digestion and are now shipping closer to end demand. Gaming will remain strong, while enterprise SSD for cloud applications will remain soft. We anticipate modest growth in bit shipments into the fiscal fourth quarter.

展望第四財季，硬碟方面，整體需求將受到雲端客戶持續庫存消化和客戶業務持續下滑的影響。不過，我們開始感受到中國部分客戶需求的回升。快閃記憶體方面，我們看到了穩定的跡象，單位容量有所增加。 PC OEM廠商已完成庫存消化，目前出貨量已接近終端需求。遊戲市場將保持強勁，而雲端應用的企業級SSD市場將保持疲軟。我們預計第四財季的位出貨量將小幅成長。

Before I hand the call over to Wissam, I would like to thank the Western Digital team for the response efforts they made in addressing the network security incident we disclosed on April 2. Our team took proactive and precautionary measures to secure our operations and successfully executed on our business continuity plans.

在將電話交給 Wissam 之前，我想感謝西部數據團隊在解決我們在 4 月 2 日披露的網路安全事件中所做的回應努力。我們的團隊採取了積極主動的預防措施來確保我們的營運安全，並成功執行了我們的業務連續性計劃。

With that, I'll turn it over to Wissam.

說完這些，我就把發言權交給 Wissam。

Thank you, David, and good afternoon, everyone. Fiscal third quarter results reflected the challenging market environment with continued pressure on revenue and profitability. Total revenue for the quarter was $2.8 billion, down 10% sequentially and 36% year-over-year. Non-GAAP loss per share was $1.37. Looking at end markets, cloud represented 43% of total revenue at $1.2 billion, down 2% sequentially driven by an increase in capacity enterprise drive shipments which was offset by a decrease in flash shipments. Nearline bit shipments were 79 exabytes, up 31% sequentially. Year-over-year, revenue declined 32%, primarily due to a decline in shipments of both hard drive and flash products as well as price decreases in Flash.

謝謝David，大家下午好。第三財季業績反映了充滿挑戰的市場環境，收入和獲利能力持續承壓。本季總營收為28億美元，季減10%，年減36%。非公認會計準則每股虧損1.37美元。從終端市場來看，雲端運算市場佔總營收的43%，達到12億美元，季減2%，主要是因為企業級硬碟出貨量成長，但被快閃記憶體出貨量的下降所抵銷。近線比特出貨量為79EB，季增31%。年比而言，營收下降32%，主要原因是硬碟和快閃記憶體產品出貨量均下降，以及快閃記憶體價格下跌。

Client represented 35% of total revenue at $1 billion, down 10% sequentially and 44% year-over-year. On both a sequential and year-over-year basis, the decrease was driven by price declines across our flash products and lower client SSD and hard drive shipments for PC application. Finally, consumer represented 22% of total revenue at $0.6 billion, down 22% sequentially and 29% year-over-year. Sequentially, the decrease was due to a seasonal decline in shipments of both retail hard drive and flash products as well as price declines in retail flash. The year-over-year decrease was driven by lower retail hard drive shipments and price declines in flash.

客戶端業務佔總營收的35%，為10億美元，季減10%，較去年同期下降44%。環比和年減均是由於快閃記憶體產品價格下跌，以及PC應用的客戶端SSD和硬碟出貨量下降所致。最後，消費者業務佔總營收的22%，為6億美元，季減22%，較去年同期下降29%。環比下降是由於零售硬碟和快閃記憶體產品出貨量的季節性下降，以及零售快閃記憶體價格的下降所致。年比下降是由於零售硬碟出貨量下降和快閃記憶體價格下降所致。

Turning now to revenue by segment. HDD revenue was $1.5 billion, up 3% sequentially and down 30% year-over-year. Sequentially, total HDD exabyte shipments increased 15% and average price per hard drive increased 10% to $109. On a year-over-year basis, total HDD exabyte shipments decreased 23%, and average price per unit increased 9%. Flash revenue was $1.3 billion, down 21% sequentially and 42% year-over-year. Sequentially, flash ASPs were down 10% on a blended basis and 12% on a like-for-like basis. Flash bit shipments decreased 14% sequentially and 1% year-over-year.

現在來看看各部門的收入狀況。 HDD 營收為 15 億美元，季增 3%，年減 30%。 HDD EB 總出貨量較上季成長 15%，單價上漲 10% 至 109 美元。年比下降，HDD EB 總出貨量下降 23%，單價上漲 9%。快閃記憶體收入為 13 億美元，季減 21%，年減 42%。快閃記憶體平均售價季減 10%，年減 12%。快閃記憶體比特出貨量較上季下降 14%，年減 1%。

Moving to costs and expenses. Please note that my comments will be related to non-GAAP results, unless stated otherwise. Gross margin for the fiscal third quarter was 10.6%, down 6.8 percentage points sequentially and 21.1 percentage points year-over-year. This includes $275 million of charges for manufacturing underutilization, inventory write-downs and other items.

談到成本和費用。請注意，除非另有說明，我的評論將與非公認會計準則 (non-GAAP) 績效相關。第三財季毛利率為 10.6%，季減 6.8 個百分點，較去年同期下降 21.1 個百分點。這其中包括 2.75 億美元的製造成本、庫存減損和其他項目費用。

HDD gross margin was higher than anticipated at 24.3%, up 3.6 percentage points sequentially and down 3.4 percentage points year-over-year. Sequentially, the increase was primarily due to higher capacity enterprise volume as well as lower manufacturing costs and underutilization related charges. Underutilization charges were less than projected at approximately $40 million or 2.7 percentage points, partially benefiting from the actions to streamline our manufacturing footprint and offsetting other charges of $22 million.

HDD 毛利率高於預期，達到 24.3%，季增 3.6 個百分點，年減 3.4 個百分點。環比成長主要得益於企業產能增加，以及製造成本和產能利用不足相關費用的降低。產能利用不足相關費用低於預期，約 4,000 萬美元，降幅為 2.7 個百分點，部分得益於我們精簡製造佈局的舉措，並抵消了 2,200 萬美元的其他費用。

Flash gross margin was negative 5%, down 19.5 percentage points sequentially and 40.6 percentage points year-over-year. Underutilization charges associated with the reduced manufacturing volumes were approximately $160 million or 12.2 percentage points, less than expected as we focused on lowering manufacturing costs. During the quarter, we incurred $53 million of flash inventory write-down charges resulting from projected selling prices falling below the cost of inventory. We continue to tightly manage our operating expenses, which were at $602 million for the quarter, down $57 million sequentially and $138 million year-over-year.

快閃記憶體毛利率為負5%，季減19.5個百分點，較去年同期下降40.6個百分點。與生產量減少相關的未充分利用費用約為1.6億美元，降幅為12.2個百分點，低於預期，因為我們專注於降低生產成本。本季度，由於預計售價低於庫存成本，我們計入了5300萬美元的閃存庫存減記費用。我們繼續嚴格控制營運費用，本季營運費用為6.02億美元，季減5700萬美元，年減1.38億美元。

Operating loss in the quarter was $304 million driven by underutilization charges, inventory write-downs and other items totaling $275 million. Income tax expense was $60 million. Despite the consolidated loss, we continue to have taxable income in certain geographies resulting in taxes payable in those areas. Fiscal third quarter loss per share was $1.37, inclusive of a $9 million dividend cost associated with the convertible preferred equity.

本季營運虧損為3.04億美元，主要原因是未充分利用費用、庫存減損及其他項目總計2.75億美元。所得稅費用為6000萬美元。儘管出現合併虧損，但我們在某些​​地區仍有應稅收入，因此需要在這些地區繳納稅款。第三財季每股虧損為1.37美元，其中包括可轉換優先股相關的900萬美元股利成本。

Operating cash flow for the third quarter was an outflow of $381 million, and free cash flow was an outflow of $527 million. Cash capital expenditures, which include the purchase of property, plant and equipment, and activity related to our flash joint ventures on the cash flow statement was $146 million. Gross debt outstanding was $7.1 billion at the end of the fiscal third quarter. Trailing 12-month adjusted EBITDA at the end of the third quarter, as defined in our credit agreement was $2.5 billion, resulting in a gross leverage ratio of 2.8x compared to 2.1x in the fiscal second quarter.

第三季營運現金流為3.81億美元，自由現金流為5.27億美元。現金資本支出（包括購買物業、廠房和設備以及現金流量表中與我們短期合資企業相關的活動）為1.46億美元。截至第三財季末，未償還債務總額為71億美元。根據我們的信貸協議定義，截至第三財季末，過去12個月調整後息稅折舊攤銷前利潤（EBITDA）為25億美元，導致總槓桿率為2.8倍，而第二財季為2.1倍。

As a reminder, our credit agreement includes $0.7 billion in depreciation add-back associated with the flash joint ventures. This is not reflected in our cash flow statement. Please refer to the earnings presentation on the Investor Relations website for further details. At the end of the quarter, total liquidity was $5.3 billion, including cash and cash equivalents of $2.2 billion, undrawn revolver capacity of $2.25 billion and unused delayed drawn term loan facility of $875 million.

提醒一下，我們的信貸協議包含與閃購合資企業相關的7億美元折舊加回。這部分款項未反映在我們的現金流量表中。更多詳情，請參閱投資者關係網站上的收益報告。截至本季末，總流動資金為53億美元，其中包括22億美元的現金及現金等價物、22.5億美元的未提取循環信貸額度以及8.75億美元的未使用的延期提取定期貸款額度。

Before I cover guidance for the fiscal fourth quarter, I'll discuss the business outlook. We expect HDD revenue to decrease sequentially due to ongoing inventory digestion at cloud customers. We expect flash revenue to decrease sequentially as modest growth in bit shipments is more than offset by ASP declines. We expect flash bit shipment growth to accelerate in the first half of fiscal year 2024. In the fiscal fourth quarter, total gross margin will be negatively impacted by underutilization charges and flash pricing. We continue to tightly manage our cost structure through this dynamic environment and expect operating expenses to be below $600 million.

在介紹第四財季業績指引之前，我將先討論一下業務前景。我們預計，由於雲端客戶持續消化庫存，HDD 收入將季減。我們預計，由於位元出貨量的溫和成長被平均售價的下降所抵消，快閃記憶體收入也將季減。我們預計，快閃記憶體位出貨量的成長將在 2024 財年上半年加速。第四財季，總毛利率將受到未充分利用費用和快閃記憶體定價的負面影響。在這種動態環境中，我們將繼續嚴格管理成本結構，並預計營運支出將低於 6 億美元。

For fiscal year 2023, we project gross capital expenditures to be approximately $2.2 billion and cash capital expenditures to be approximately $0.8 billion. The projected cash capital expenditures represent more than a 50% reduction from our forecast as we entered fiscal year 2023 and approximately 35% reduction from fiscal year 2022.

我們預計2023財年的總資本支出約為22億美元，現金資本支出約為8億美元。預計的現金資本支出較2023財年初期的預測減少了50%以上，較2022財年減少了約35%。

I'll now turn to guidance. For the fiscal fourth quarter, our non-GAAP guidance is as follows. We expect revenue to be in the range of $2.4 billion to $2.6 billion. We expect gross margin to be between 3% and 5% which includes underutilization charges across flash and HDD totaling $220 million to $240 million. We expect operating expenses to be between $580 million to $600 million. Interest and other expenses are expected to be approximately $90 million. We expect income tax expense to be between $60 million and $70 million. We expect loss per share of $2.20 to $1.90, assuming approximately 321 million shares outstanding.

現在我來談談業績指引。對於第四財季，我們的非公認會計準則（Non-GAAP）業績指引如下：我們預計營收將在24億美元至26億美元之間。我們預計毛利率將在3%至5%之間，其中包括快閃記憶體和硬碟（HDD）的未充分利用費用，總計2.2億美元至2.4億美元。我們預計營運支出將在5.8億美元至6億美元之間。利息和其他支出預計約為9000萬美元。我們預計所得稅支出將在6000萬美元至7000萬美元之間。假設流通股約為3.21億股，我們預期每股虧損將在2.20美元至1.90美元之間。

I'll now turn the call back over to David.

我現在將電話轉回給大衛。

Thanks, Wissam. Over the past few quarters, we have successfully ramped a series of industry-leading storage products and commercialized innovative technologies while concurrently rightsizing our cost structure. Our proactive actions have positioned Western Digital favorably for the future as demand gradually returns to normal levels.

謝謝，Wissam。在過去的幾個季度裡，我們成功推出了一系列領先業界的儲存產品，並實現了創新技術的商業化，同時優化了成本結構。隨著需求逐漸恢復正常水平，我們採取的積極措施為西部數據的未來發展奠定了有利基礎。

In closing, I would like to thank our team members for their unwavering commitment in advancing innovative products and driving operational efficiency. Their exceptional efforts have allowed Western Digital to deliver industry-leading gross margins across our HDD and Flash businesses despite the challenging and rapidly changing landscape. Additionally, I am immensely proud to share that Western Digital has been honored for the fifth consecutive year as one of the world's most ethical companies by the Ethisphere Institute. This recognition is a testament to the dedication and support of our people worldwide, and we remain committed to upholding the highest ethical standards in all that we do.

最後，我要感謝我們的團隊成員，感謝他們為推動創新產品和提升營運效率所做的不懈努力。正是他們的卓越努力，使得西部數據在充滿挑戰和快速變化的市場環境中，依然能夠在硬碟和快閃記憶體業務上實現業界領先的毛利率。此外，我非常自豪地宣布，西部數據連續第五年被道德村協會評為全球最具商業道德企業之一。這項榮譽充分證明了我們全球員工的奉獻和支持，我們將繼續致力於在所有工作中秉持最高的道德標準。

Okay. I look forward to your questions. Let's open it up.

好的。期待大家的提問。我們開始吧。

(Operator Instructions)

（操作員指示）

Our first question comes from C.J. Muse from Evercore.

我們的第一個問題來自 Evercore 的 C.J. Muse。

I guess I'd love to get a sense for where you're seeing demand stabilize versus where you still see pockets of inventory. And as part of that, I guess, embedded in your revenue guide, it looks like you're kind of suggesting HDD down maybe 10% to 15%, SSD down 5% to 10%. So I guess is that kind of the right way to think about it? And then as part of that, where do you think we're seeing stabilization? And where do you think we need to work down inventory some more?

我想我很想了解一下，您認為哪些地方的需求已經穩定，哪些地方仍然庫存充足。我想，在您的收入指南中，您似乎建議將HDD（硬碟）的庫存減少10%到15%，SSD（固態硬碟）的庫存減少5%到10%。我想，這樣想對嗎？那麼您認為哪些地方的需求已經穩定呢？哪些地方需要進一步降低庫存？

C.J., thanks for the question. Good to hear from you as always. Yes, I think as we talked about in consumer, we're seeing some stabilization there as far as demand. PC OEM, we've been talking about now for 3-plus quarters, and I think we see them mainly shipping to true demand. I mean nobody is building inventory right now, but we think the inventory correction there is mostly behind us. Our channel business performed really well this past quarter, I think, above what our expectation was; the inventory issue is still very much in data center, and it's very lumpy. We have some big cloud customers that are consuming. We have others that are really in full inventory digestion and aren't taking anything. So that market is still where we see a lot of a lot of inventory digestion going on. And I would expect that to be lumpy for the next couple of quarters.

C.J.，謝謝你的提問。一如既往，很高興收到你的來信。是的，正如我們之前討論的消費者市場，我們看到那裡的需求正在趨於穩定。 PC OEM市場，我們已經討論了三個多季度了，我認為他們主要根據真實需求進行出貨。我的意思是，目前沒有人在建立庫存，但我們認為庫存調整基本上已經結束。我認為，我們的通路業務在上個季度表現非常好，超出了我們的預期；庫存問題仍然主要集中在資料中心，而且波動很大。我們有一些大型雲端客戶正在消費。我們也有一些客戶正在完全消化庫存，沒有購買任何產品。因此，我們仍然看到這個市場正在進行大量的庫存消化。我預計未來幾季的庫存消化情況會比較波動。

We are seeing some signs of stabilization in China. We talked about that. I think it's setting up for a recovery in the second half of the year, a lot more activity around RFPs and discussions about what demand is going to look like in the second half. So that's a bit of an overview of where we see the market. I think on your numbers, you're probably down a little more than we are on HDD. I think that's probably more a single-digit kind of number on a sequential basis.

我們看到中國市場出現了一些穩定的跡象。我們之前討論過這個問題。我認為下半年市場復甦的勢頭正在增強，圍繞招標書（RFP）的活動會增多，關於下半年需求前景的討論也會增多。以上就是我們對市場的一些概述。我認為從你們的數據來看，你們的降幅可能比硬碟（HDD）的降幅更大一些。我認為環比來看，你們的降幅可能更接近個位數。

Very helpful. And as a quick follow-up, can you kind of walk us through what you're thinking today in terms of underutilization charges beyond the June quarter?

非常有幫助。接下來，您能否簡單跟進一下，您目前對六月季度之後的未充分利用費用有何看法？

Yes. Well, let's talk about it for each business. I mean I think in HDD -- and I'm sure Wissam will have a little bit to add here as well, HDD which is the smaller part of the number, but still significant, we're going to see a drop in volume next quarter. So we'll see some underutilization there. On the Flash side, we continue to underutilize the fab. We're managing it in a very dynamic way, kind of week-to-week, month-to-month to make sure we fully understand demand and keep our inventory in a position where we want it. And so -- but we will definitely see underutilization on both sides of the business next quarter.

是的。好吧，我們來分別談談每個業務的情況。我的意思是，我認為在硬碟（HDD）方面——我相信Wissam也會補充一點，HDD佔比較小，但仍然很重要——下個季度我們的出貨量將會下降。所以我們會看到那裡的產能利用率不足。在快閃記憶體方面，我們的工廠產能利用率仍然不足。我們正在以非常動態的方式進行管理，每週、每月都進行調整，以確保我們充分了解需求，並將庫存保持在我們想要的水平。所以——下個季度我們肯定會看到這兩個業務方面都出現產能利用率不足的情況。

Yes. And just to add -- C.J, sorry, just to add a bit more color. I think we -- in our guide, we're estimating around $220 million to $240 million, the range of underutilization charges. And by business, this is roughly 2/3 Flash, 1/3 HDD -- or 1/3 HDD.

是的。 C.J，抱歉，我只是想補充一下。在我們的指南中，我們估計未充分利用的費用大約在 2.2 億到 2.4 億美元之間。按業務劃分，大約相當於 2/3 的閃存，1/3 的硬碟。

Our next question comes from Joe Moore from Morgan Stanley.

我們的下一個問題來自摩根士丹利的喬·摩爾。

Great. You mentioned that you're taking lower cost or market charges on NAND. Can you talk about the methodology there? Is that -- do you pool that and then take a charge overall? Or is it any time any individual product falls below the market price, you adjust it down?

太好了。您提到你們對NAND採取了更低的成本或市場價格。能談談具體方法嗎？是把這些成本匯總起來，然後整體收取嗎？還是說，只要任何單一產品的價格低於市場價格，你們就會下調價格？

So Joe, with respect to our LCM charges, we do it at the finished good product level. It is not pooled.

Joe，關於我們的 LCM 費用，我們是按照成品等級收取的，而不是匯總的。

Got it. Okay. And then in terms of the underutilization charges and things like that, do you know how the covenants are going to be defined? Are you going to be able to remove those charges from the EBITDA number as defined in the covenant?

明白了。好的。那麼，關於未充分利用費用之類的問題，您知道這些契約是如何定義的嗎？您能依照契約的定義，將這些費用從EBITDA資料中剔除嗎？

Those are typically allowed to be added back per our credit agreement to the EBITDA.

根據我們的信用協議，這些通常可以加回到 EBITDA 中。

The next question comes from Aaron Rakers from Wells Fargo.

下一個問題來自富國銀行的 Aaron Rakers。

Yes. Just to build on that last question, just to be safe, your gross margin expectation in this current quarter, I'm guessing the commentary assumes that you're not expecting another inventory charge in the Flash business? And if so, why not?

是的。為了保險起見，為了補充最後一個問題，您對本季的毛利率預期，我猜評論假設您預計快閃記憶體業務不會再產生庫存費用？如果是這樣，原因是什麼？

So Aaron, we typically factor into our guidance all the expectations. And when we exited Q3, just like a typical quarter, we do our reserve reviews and we take the -- we make sure that the balance sheet is properly stated. And so based on our forecast, everything is baked into the guidance. Typically, we have a small amount in the guidance just like we did also in the past quarter.

Aaron，我們通常會將所有預期都納入我們的業績指引中。當我們結束第三季時，就像一個典型的季度一樣，我們會進行儲備評估，並確保資產負債表的正確列報。因此，基於我們的預測，所有內容都會被納入績效指引中。通常情況下，我們會在業績指引中納入少量預期，就像上個季度一樣。

Okay. And then I guess my follow-up question is on the hard disk drive business. I can appreciate you guys seeing some cloud customers kind of -- it sounds like purchased really no product this last quarter. I'm guessing from a competitive perspective, how would you characterize the current environment? Have you seen increased price aggressiveness? How do you guys think about the discussion around HAMR and your road map going forward, et cetera?

好的。接下來我想問的是關於硬碟業務的問題。我很理解你們看到一些雲端客戶——聽起來好像上個季度根本沒有買任何產品。我想從競爭的角度來看，您如何描述目前的環境？您是否看到價格競爭加劇？你們如何看待圍繞HAMR的討論以及你們未來的路線圖等等？

Yes. I mean I think there's always price pressure in this market, Aaron. But we've been very disciplined about the value of our products. I think one of the things we feel very good about is we've been investing in our HDD road map, things like OptiNAND, ePMR, UltraSMR. These products are really now starting to ship in volume. We talked about the 22-terabyte CMR drive was the highest volume drive at 20 and above. So we feel very good about where the portfolio is, about where it's going.

是的。 Aaron，我的意思是，我認為這個市場總是存在著價格壓力。但我們對產品的價值一直非常謹慎。我認為我們非常滿意的一點是，我們一直在投資我們的HDD產品線，例如OptiNAND、ePMR和UltraSMR。這些產品現在已經開始大量出貨。我們之前提到過，22TB的CMR硬碟是20TB以上容量硬碟中出貨量最高的。因此，我們對產品組合的現況和未來發展方向感到非常滿意。

We've got a number of very large customers qualifying SMR right now. That's clearly the next step in the data center. Our UltraSMR product there, the [2060.] We talked about we'll finish up calls this quarter and start deploying next quarter. So we feel like we've got a portfolio that is aligned with what the market needs. And that's showing up in kind of how we're able to monetize that portfolio and not have to compete on price. So future technologies like HAMR will be there. We're still a ways away before that product is going to be a volume-type product. The volume products are the [22s] going and then SMR are going to be the big volume products over the next couple of years. And after that, we'll get to HAMR. And we feel confident about that technology. It's been in development for a long time. We're in the final stages of it as an industry. And I think everybody is excited that it will be the road map for 30 and above when we need it.

目前，我們有許多大型客戶正在申請 SMR 認證。這顯然是資料中心的下一步發展方向。我們的 UltraSMR 產品，[2060]，我們之前提到過，我們將在本季結束電話會議，並在下個季度開始部署。因此，我們覺得我們已經擁有一個符合市場需求的產品組合。這體現在我們能夠將該產品組合貨幣化，而無需進行價格競爭。因此，像 HAMR 這樣的未來技術將會問世。距離該產品成為量產產品還有很長的路要走。量產產品是 [22]，然後 SMR 將在未來幾年成為大批量產品。之後，我們將推出 HAMR。我們對這項技術充滿信心。它已經開發了很長時間。作為一個產業，我們正處於它的最後階段。我認為每個人都很興奮，因為當我們需要它時，它將成為 30 及以上產品的路線圖。

Our next question comes from Sidney Ho from Deutsche Bank.

下一個問題來自德意志銀行的 Sidney Ho。

I want to ask about the network security breach. Can you give us an update on the recovery there? It looks like your operations are back to normal levels. But have you experienced -- or do you expect any more issues with production or your ability to ship products?

我想問一下網路安全漏洞的問題。能介紹一下恢復情況嗎？看起來你們的營運已經恢復正常了。但是，你們是否還遇到了——或者說，你們預計在生產或產品發貨方面還會遇到更多問題？

Yes. We've been very transparent about that incident. When we noticed it, we let folks know. We took our -- we basically disconnected ourselves from the public Internet to protect ourselves and then restore the environment. We still have capabilities inside the companies. And the factories were operational throughout that. Clearly, a tremendous amount of work by the team, but we feel like we're nearly all the way back now as far as operation. We've got to bring the store online in here in another week or so. But it was really, really good to see our business continuity plans. You don't want to rely on them too often, but when we had to, they were there and they kept the company moving forward.

是的。我們對那次事件一直非常透明。當我們注意到它時，我們就通知了大家。我們採取了措施——基本上是切斷了與公共互聯網的連接，以保護我們自己，然後恢復環境。我們公司內部仍然有相應的能力。工廠在此期間也一直正常運作。顯然，團隊付出了巨大的努力，但我們感覺現在幾乎已經完全恢復營運了。我們必須在一周左右的時間內讓這裡的商店恢復正常運作。不過，看到我們的業務連續性計劃真的非常非常高興。我們不想過度依賴它們，但當我們需要的時候，它們就在那裡，並幫助公司繼續前進。

Sidney, I just wanted to add that for fiscal Q3, we don't have any impact in the numbers to the network security.

西德尼，我只是想補充一點，對於財政第三季度，我們的數字對網路安全沒有任何影響。

Okay. That's great. Maybe my follow-up question is Samsung in early April talk about the cutting production. I'm curious if your conversation with your customers have changed since that announcement? And related to that, do you expect the June quarter to be the bottom for your bargains for your Flash business?

好的。太好了。我的後續問題是三星在四月初談到了減產。我很好奇，自從那次聲明之後，您與客戶的溝通是否有改變？與此相關的是，您是否預計六月季度將是快閃記憶體業務的最低谷？

I would say we have -- I mean, obviously, we have very robust conversations with our customers all the time. I wouldn't pin the tone of those conversations on to how any one particular player in the market is acting or what they're doing. We stay very focused on our business. As far as -- whereas the bottom, I mean, we expect the market to come into balance as we go through the second half of the year. I think we're clearly taking a lot of actions in our own business to closely manage it. Supply and demand, keep the utilization of the fab close to where our demand is, so we manage our inventory. Clearly, we're going through one of the most severe downturns in a while. But we think as we move through the second half of the year, the market will get in -- will come into balance.

我想說的是，我們一直與客戶進行非常深入的溝通。我不會將這些溝通的基調與市場上任何一個特定參與者的行為或他們的所作所為掛鉤。我們始終高度專注於自己的業務。至於底部，我的意思是，我們預計市場將在下半年恢復平衡。我認為我們顯然在自身業務中採取了許多措施來密切管理市場。例如，根據供需情況，我們保持晶圓廠的利用率接近需求水平，從而管理庫存。顯然，我們正在經歷一段時間以來最嚴重的經濟衰退之一。但我們認為，隨著下半年的到來，市場將會恢復平衡。

Our next question comes from Mehdi Hosseini from SIG.

我們的下一個問題來自 SIG 的 Mehdi Hosseini。

One near term and more to do with inventory. Your inventories are absolute dollar value keeps going higher. And I want to understand how the mix is changing between wafers, finished good and other materials? Is there any way you can give us a color how incremental changes are happening for different categories within our inventory? And I have a follow-up.

近期還有一項與庫存相關的問題。你們的庫存絕對價值一直在上漲。我想了解晶圓、成品和其他材料之間的組合是如何變化的？您能否具體說明一下我們庫存中不同類別的增量變化？我還有一個後續問題。

Yes. We typically don't break that out as much on the call. This is a bit too much detail, Mehdi, for me to discuss here. The one comment I would make, though, when we think of inventory, our operations team is really focused on minimizing where we can. So we basically try to stage it in the places that makes the most sense from a demand perspective.

是的。我們通常不會在電話會議上詳細討論這個問題。 Mehdi，這個問題太詳細了，我在這裡無法討論。不過，我想說的是，當我們談到庫存時，我們的營運團隊非常注重盡可能地減少庫存。所以我們基本上會試著把庫存放在從需求角度來看最合理的位置。

Let me rephrase the question. How do you -- how should we think about the risk of inventory write-down?

讓我重新表達一下這個問題。我們該如何看待庫存減記的風險？

The -- I mean, the inventory write-down typically is -- it's really based -- the ones -- that was, for instance, I called out is based on basically the inventory value relative to where the market price is. And so if -- when prices decline by a lot, then we do have to take a closer look and see if there's any impact. But that's -- yes, that's what I would say about that.

我的意思是，庫存減記通常是基於——例如我之前提到的，基本上是基於庫存價值相對於市場價格的比率。所以，如果價格大幅下跌，我們必須仔細觀察，看看是否有任何影響。是的，我就是這麼想的。

So would -- are you assuming that the rate of price decline is moderating, so maybe that would minimize the downside risk?

那麼——您是否假設價格下跌的速度正在放緩，那麼這也許可以最大限度地降低下行風險？

What I'm saying is we -- what I'm saying is at the end of every quarter, our balance sheet is properly stated because we do look at where the inventory value is versus where the demand is and the prices most particularly at the finished good level. And so where we see differences, we have to adjust our inventory value. Otherwise, it is properly stated. I guess your question is more around trying to predict where the price is going. And we typically don't necessarily do that.

我的意思是，我們——我的意思是，在每個季度末，我們的資產負債表都是正確的，因為我們會查看庫存價值與需求以及價格（尤其是成品價格）的對比情況。因此，如果我們發現差異，就必須調整庫存價值。否則，我們的資產負債表就是正確的。我想你的問題更多的是試圖預測價格走勢。而我們通常不一定會這樣做。

Okay. And then the question for David, looking at longer term, more than just one quarter. I think there is some confusion or unknown factor how new type of AI would impact demand for HDD versus SSD. Do you have any view how this incremental demand created? These are expensive working stations. How is it going to impact SSD versus HDD?

好的。接下來我想問David一個問題，從更長遠的角度來看，不只是一個季度。我認為，關於新型人工智慧將如何影響HDD和SSD的需求，存在一些令人困惑或未知的因素。您認為這種增量需求是如何產生的？這些都是昂貴的工作站。它將如何影響SSD和HDD？

We're doing analysis on that, Mehdi. What I would say is, to me -- I'll even go a little longer term, bigger picture. This just reinforces the value of stored data. I think that it just seems like there's this constant ways for people can figure out how to use all the data they've stored to do very productive things with it. And I think the latest is training these AI engines. And so we just think it's another element of the long-term value of data storage and it's just a big secular tailwind for the HDD business and the enterprise SSD business. I mean, again, you know that they're both -- they both have big TAMs in the data center, and they're both growing. And we think this is another reason why people will store more data is because they can monetize it in different ways in the future.

我們正在對此進行分析，Mehdi。我想說的是，對我來說——我甚至會從更長遠、更宏觀的角度來看待這個問題。這只會強化儲存資料的價值。我認為人們似乎總是能找到各種方法來利用他們儲存的所有資料來做一些非常有效率的工作。我認為最新的方法是訓練這些人工智慧引擎。所以，我們認為這是資料儲存長期價值的另一個要素，也是HDD業務和企業級SSD業務的長期利好因素。我的意思是，你知道它們在資料中心都擁有巨大的潛在市場（TAM），而且都在成長。我們認為這是人們儲存更多資料的另一個原因，因為他們未來可以透過不同的方式將其貨幣化。

But I guess I was hoping you would shed some light as to how the HDD CAGR would change. I don't think this is going to lift the TAM for each different types of stores at the same rate. Is there any thoughts that you can share with us?

但我希望您能解釋一下硬碟複合年增長率會如何變化。我認為這不會以相同的速度提升不同類型商店的TAM。有什麼想法可以跟我們分享嗎？

I think it will -- HDD is the lion's share of storage in the cloud. So you would expect that's where the bigger lift would be across those 2 technologies.

我認為會的——HDD 佔據了雲端儲存的最大份額。所以你可以預期，HDD 是這兩種技術之間更大提升的地方。

The next question comes from Shannon Cross from Credit Suisse.

下一個問題來自瑞士信貸的香農·克羅斯 (Shannon Cross)。

My first is, as you look at what you're doing on OpEx in terms of holding in cost, how do you think about the -- how you're -- where you're investing? And how are you making those decisions? And how should we think about potential impact to future projects at this point? And then I have a follow-up.

我首先想問的是，從控製成本的角度看，您在營運支出方面做了哪些工作？您是如何考慮投資方向的？您是如何做出這些決策的？我們現在應該如何看待這些投資對未來項目的潛在影響？然後我還有一個後續問題。

Yes. We've been very -- obviously, we've been -- one of the things we've been building into the business over the last several years as we've restructured the business as more agility and the ability to proactively respond to the market we're in. I think that's kind of the hallmark of the organization we're trying to build is agile and dynamic. But clearly, on top of that, Shannon, we went to a business unit structure for a reason. It's because we have 2 very, very focused organizations with very sophisticated leaders in them that is constantly doing the ROI analysis of where we put our OpEx, and we get the most out of it. And I think quite frankly, that's led to the portfolio we have today. I think we have the best portfolio we've ever had.

是的。過去幾年，我們一直在努力建立業務架構，力求提升敏捷性，並提升主動回應市場的能力。我認為這在某種程度上體現了我們努力打造的敏捷和活力的組織架構的標誌。但Shannon，我們採用事業單位架構顯然是有原因的。因為我們有兩個非常專注的部門，每個部門都有經驗豐富的領導者，他們不斷進行投資報酬率分析，評估營運支出的投入，並最大限度地利用這些支出。坦白說，正是這些因素造就了我們今天的產品組合。我認為我們擁有迄今為止最好的產品組合。

And that's an effort that goes on constantly, continuously. And so as we continue to draw down OpEx to resize the business to the realities of what the market are -- is. We've built the capability over the last couple of years to do that in a way where we can make sure we're going to get -- first of all, the OpEx we spend, we get the best ROI out of it, the best return and that we make sure that we're making -- we're taking actions to the business that don't harm the long-term value of it, and we make the right decision on a day-by-day, week-by-week, month-by-month basis. So I think this is really a capability we've built in the last 3 years, and I think it's serving us well right now to make sure that we are we're not cutting in ways that are going to impact the long-term health of the business.

這項努力需要持續不斷地進行。因此，我們不斷降低營運支出，並根據市場實際情況調整業務規模。過去幾年，我們已經建立了這方面的能力，以確保我們能夠獲得最佳的投資報酬率 (ROI)，也就是最佳回報。我們確保我們採取的行動不會損害業務的長期價值，並且我們每天、每週、每月都做出正確的決策。所以，我認為這是我們在過去三年中建立起來的能力，而且我認為它現在對我們很有幫助，確保我們不會以影響業務長期健康的方式削減開支。

That was helpful. I'm curious -- and maybe I'm trying to make lemonade out of lemons. But I'm just wondering, as you've cut capacity on the HDD side, and you've had these underutilization charges, are there things that you've learned in terms of maybe how you manufacture in the past ways to drive incremental productivity? I'm just thinking it's kind of -- it's certainly a unique time to maybe take a step back and look how things are -- how things have been done and what you can do in the future.

這很有幫助。我很好奇——也許我是在故弄玄虛。但我只是想知道，既然你們削減了硬碟的產能，並且出現了這些利用率不足的問題，你們是否從過去的製造方式中吸取了教訓，從而提高了生產效率？我只是覺得──現在確實是個獨特的時機，或許可以退一步看看現狀──看看過去的做法，以及未來可以做些什麼。

I'll make a few comments. I suspect Wissam will have a few comments as well. I mean this is -- there's been a lot of focus on this in the last year of how do we become more efficient, how do we automate more. Several of our factories have won World Economic Forum Lighthouse awards for automation. How do we rescale our employees? And how do we just -- we've been very focused on driving a level of automation, driving productivity and just lowering our fixed cost asset base in the HDD business.

我來談幾點看法。我想Wissam也會說幾句。我的意思是──去年大家非常關注如何提高效率，如何達到更高程度的自動化。我們的幾家工廠憑藉自動化技術獲得了世界經濟論壇燈塔獎。我們如何調整員工規模？我們如何——我們一直非常專注於提高自動化水平，提高生產力，並降低硬碟業務的固定成本資產基礎。

And I think our fixed -- I don't think, I know, our fixed costs in that business are now the lowest they've been in well over a decade. So I think that's paying off in the way we're able to generate margin in the business, that lower volume levels. And then as the volume starts to pick back up, we've got capacity to meet what the market needs, and I think we'll do that at a much lower cost basis.

我認為，我們在該業務上的固定成本——我不認為，我知道，我們目前在該業務上的固定成本是十多年來最低的。所以，我認為，較低的銷售量對我們在該業務中創造利潤的方式是有回報的。隨著銷售量開始回升，我們就有能力滿足市場需求，我認為我們將以更低的成本做到這一點。

Yes. I mean the one thing I would add also, in addition to what David said, some of the activities that we drive in terms of the manufacturing side are taken back into the development organizations to think about things that come on platforms and the ability to improve on the way our products are designed for manufacturing efficiency, even increasing manufacturing efficiency going forward. And of course, with that comes a better cost structure.

是的。除了David提到的，我還想補充一點，我們在製造方面推動的一些活動會被重新分配給開發部門，用於思考平台上出現的問題，以及改進產品設計方式以提高製造效率的能力，甚至在未來進一步提升製造效率。當然，這會帶來更好的成本結構。

Our next question comes from Krish Sankar from TD Cowen.

我們的下一個問題來自 TD Cowen 的 Krish Sankar。

David, first question is on your NAND ASP decline in March quarter, seems to be better than what your competitors had. I'm just kind of curious, any puts and takes if you talk about your specific pricing versus competition in March, how to think about it in June? And along the same path, you mentioned the supply-demand balance later this year and bit shipment for Flash growing. Are you baking in some kind of a mobile recovery that's going to help you drive that? And then I have a follow-up.

David，第一個問題是關於你們三月季度NAND平均售價的下降，似乎比競爭對手的下降要好。我只是有點好奇，如果您談到三月與競爭對手的具體定價，那麼六月的情況如何？同樣，您提到了今年稍後的供需平衡以及快閃記憶體出貨量的成長。你們是否正在醞釀某種行動裝置復甦，以幫助推動這一成長？然後我還有一個後續問題。

Yes. I think on pricing, it's kind of the same story all the time, right? Whether it's a down market, upmarket, mid-cycle market, which is -- really have a diverse portfolio. We've talked about this a lot from retail to the channel business, PC OEMs, enterprise SSD, gaming has become a very nice part of the portfolio and growing part of the portfolio. And it's just that -- mobile, obviously, is a big part of our portfolio.

是的。我認為定價方面，情況一直都差不多，對吧？無論是低迷市場、高階市場或中期市場，我們都有非常多樣化的產品組合。我們已經討論過很多次了，從零售到通路業務，PC OEM、企業級SSD，遊戲已經成為我們產品組合中非常重要的一部分，而且還在不斷增長。而且，移動顯然是我們產品組合的重要組成部分。

And it's just mixing across that where we get the best return, right, putting our supply and our bits in the places where we can get the best return. I do think that, that is a -- that go to -- that breadth of go-to-market is in markets that we can reach literally from every single consumer to the largest technology companies in the world and kind of everything in between. And just the ability to mix across that with a strong portfolio and a strong set of brands as well, SanDisk, SanDisk Professional, WD_BLACK, puts us in a good position to get the best return on our supply.

而我們能做的就是將這些資源和產品組合起來，以獲得最佳回報，對吧？把我們的供應和產品放在能帶來最佳回報的地方。我確實認為，我們能夠觸及的市場範圍非常廣泛，從一般消費者到全球最大的科技公司，以及介於兩者之間的所有市場。我們能夠將這些資源與強大的產品組合以及一系列強大的品牌（SanDisk、SanDisk Professional、WD_BLACK）相結合，這讓我們處於有利地位，能夠從我們的供應中獲得最佳回報。

Next quarter, we don't really want to comment on future pricing. It's all into the guide. We've talked about the individual markets. What I would say is we're pricing in or we're putting in what we think is going to do on an individual market-by-market basis and then how we'll mix that next quarter.

下個季度，我們不太想評論未來的定價。一切都在指南裡。我們已經討論過各個市場的情況了。我想說的是，我們會把我們認為每個市場將會採取的措施納入定價，然後再考慮下個季度我們將如何進行組合。

Got it. Got it. And then I have a follow-up on the CMR side, it's kind of nice to see the total like 23 terabyte is now bigger than 20 terabytes in terms of volume. How should we expect that to grow? And what is its impact on gross margin?

明白了，明白了。接下來想問CMR方面的問題。很高興看到總量達到23TB，比20TB還大。我們預計成長會如何？這對毛利率有什麼影響？

I think that's our focus -- on a CMR drive, that's our focused capacity point and it's significantly ahead of other CMR drives above 20. So -- or above the 20 terabyte drive. We expect that to be our premier drive for the next -- until we have a different CMR product in that part of the business. So we expect that to be a very good growth engine, and we've talked a lot about that drive of -- it provides a lot of value. It provides a lot of TCO value for our customers. And we -- it contributes an appropriate amount of margin from that perspective as well.

我認為這就是我們的重點——CMR硬碟，這是我們關注的容量點，它明顯領先其他20TB以上的CMR硬碟，也就是20TB以上的硬碟。我們預計它將成為我們下一階段的首選硬碟，直到我們在該業務領域推出不同的CMR產品。因此，我們預計它將成為一個非常好的成長引擎，我們已經多次談到它——它提供了巨大的價值。它為我們的客戶帶來了巨大的TCO價值。從這個角度來看，它也貢獻了相當可觀的利潤。

Our next question comes from Wamsi Mohan from Bank of America.

我們的下一個問題來自美國銀行的 Wamsi Mohan。

It's Ruplu filling in for Wamsi today. David, I think maybe another pricing question for you. I think you talked about price elasticity. Could you just elaborate a little bit on what exactly you're seeing either in flash or in HDD? And a related question to that is there's some worry that maybe a lot of memory inventory might be built again this quarter from the likes of some OEMs like Apple because they want to maximize their favorable component pricing, do you think this could lead to a further elongation in the recovery of the market, even though in the near term it might get a little bit tighter. So just your thoughts on that. And what exactly are you seeing in price elasticity?

今天是 Ruplu 代替 Wamsi 的節目。 David，我想再問您一個關於價格的問題。我記得您談到了價格彈性。您能否詳細說明您在快閃記憶體和 HDD 方面的具體表現？與此相關的一個問題是，有人擔心蘋果等 OEM 廠商本季可能會再次囤積大量記憶體庫存，因為他們想最大限度地提高其有利的組件價格。您是否認為這會導致市場復甦進一步延長，儘管短期內市場可能會略微收緊。您對此有何看法？您具體看到了哪些價格彈性？

I think the elasticity in NAND is mainly what I was talking about. I mean, we're seeing PC OEM up mid-20s year-over-year on capacity. I think it really interesting number to me is the elasticity across our consumer franchise, which is tens to hundreds of millions of devices we sell a year in that channel up 1/3 year-over-year on capacity per unit. Gaming up more than that, and mobile up even more than that. So I think we're seeing the market work. Even in the midst of a great downturn, you expect -- well, especially in the midst of a great downturn, you expect to see elasticity start to kick in, and we are starting to see that across the portfolio. What was the second part of the question, again?

我認為我主要談論的是NAND的彈性。我的意思是，我們看到PC OEM的產能年增了20%左右。我認為真正讓我感興趣的數字是我們整個消費業務的彈性，我們每年在該通路銷售的數千萬到數億台設備，單位產能年增了三分之一。遊戲業務的增幅更大，行動業務的增幅甚至更大。所以我認為我們看到了市場正在發揮作用。即使在經濟大衰退期間，你預計——尤其是在經濟大衰退期間，你預計會看到彈性開始發揮作用，而我們開始在整個產品組合中看到這種情況。問題的第二部分是什麼？

It was about customer...

這是關於客戶的…

It was for mobile...

它是為行動裝置設計的...

Prebuying. Yes. I think you do see -- I think we are seeing instances of that. I wouldn't say it's pervasive, but we see instances of it. And I think it -- I think maybe it's a sign of where the customers think we are in the cycle as well.

預購。是的。我想你確實看到了——我認為我們正在看到這樣的例子。我不會說它很普遍，但我們確實看到了。我認為這——我認為這也許表明了客戶認為我們處於週期的哪個階段。

Got it. So for my follow-up, if I can ask a quick one to Wissam. How are you thinking about free cash flow going forward? I mean is it -- what needs to happen to get to positive free cash flow? And is that possible in this calendar year? So just your thoughts on that? I mean, how are you looking at working capital and thinking about free cash flow?

明白了。接下來，我可以問Wissam一個問題。您如何看待未來的自由現金流？我的意思是，要實現正的自由現金流，需要做些什麼？今年有可能實現嗎？您對此有何看法？您如何看待營運資本和自由現金流？

Yes, Ruplu. So we are totally focused on free cash flow. As you've seen us since the beginning of the year, we've been very proactive on OpEx, reducing that quite a bit on CapEx as well as taking underutilization to manage and preserve our cash and not build inventory. And so this is very important to us.

是的，Ruplu。所以我們完全專注於自由現金流。正如大家從年初就看到的，我們在營運支出方面非常積極主動，大幅降低了資本支出，同時利用了未充分利用的資源來管理和保存現金，避免增加庫存。所以這對我們來說非常重要。

In fact, we continue to make improvements. I mean, if you look at our CapEx trend, it's gone down quite a bit. This year, we'll probably be spending approximately if not even more than 35% below last year. With respect to the next few quarters, we typically do not guide for free cash flow. But what I could say is that this is, as I said, a top priority for us and is a big focus, as you would imagine, as we navigate the dynamic environment.

事實上，我們正​​在持續改進。我的意思是，如果你看看我們的資本支出趨勢，你會發現它下降了不少。今年，我們的支出可能會比去年下降約35%，甚至更多。對於未來幾個季度，我們通常不會預測自由現金流。但我可以說，正如我所說，這是我們的首要任務，正如你所想像的，當我們應對不斷變化的環境時，這將是一個重點關注點。

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

下一個問題來自巴克萊銀行的湯姆奧馬利。

My first one is related to the HDD side of the business. Your competitor recently talked about a recovery that initially was expected to be in June and is now pushed out to the December quarter. Could you just frame the way that you're thinking about the recovery? Is it kind of in line with that? You're obviously guiding the HDD business down, but any color you could give on the back half of the calendar year about when you expect that business to recover?

我的第一個問題與硬碟（HDD）業務有關。您的競爭對手最近談到復甦，最初預計在6月份，現在推遲到了12月季度。能否簡單介紹一下您對復甦的看法？這與先前的預測一致嗎？您顯然在引導硬碟業務下滑，但您能否透露您預計下半年該業務何時復甦？

Yes. I think, Tom, it's -- I would say as we go through the second half of the year, it will get better. The issue is that these revenue levels and these unit levels, it's just very lumpy. You have very large customers that if they buy or not buy, it can impact the TAM and the available market in a very significant way. So -- and that's what we're experiencing next quarter. I mean, this quarter, we saw things were a little better than we thought on capacity enterprise shipments. We'll see a sequential decline in that, and then we're expecting to go back up as we go in the second half of the year.

是的。湯姆，我想，隨著下半年的到來，情況會好轉。問題是，這些收入水準和出貨量水準非常不穩定。你有一些非常大的客戶，無論他們購買或不購買，都會對TAM和可用市場產生非常顯著的影響。所以，這就是我們下個季度所經歷的。我的意思是，本季度，我們看到企業產能出貨量比我們預期的要好一些。我們會看到這方面的情況環比下降，然後我們預計下半年會回升。

But I expect it to be lumpy as we go through this inventory digestion because a lot like we saw in the PC OEM space, a lot of customers are just completely focused on inventory digestion, which is basically new purchases just go to 0. And customers at this scale with this kind of business that has an impact. So I expect to see a lumpiness over the next several quarters. I do have a level of optimism about China in the second half of the year. We're seeing better activity there. And so we expect to see that improve in the second half of the year as well, which should also help the business.

但我預計，在庫存消化過程中，業績會起伏不定，因為就像我們在PC OEM領域看到的那樣，許多客戶完全專注於庫存消化，導致新採購量幾乎為零。這種規模的客戶和業務都會受到影響。因此，我預計未來幾季業績會起伏不定。我對中國下半年的市場表現確實持樂觀態度。我們看到那裡的經濟活動有所改善。因此，我們預計下半年情況也會有所改善，這也應該有助於業務發展。

Helpful. And then just a follow-up is on the flash side. You guys talked about a mix of customer behavior, right, where some are still consuming inventory and then others are more aggressively purchasing to various degrees. I don't want you to speak on specific customers, but we've heard this across the ecosystem, particularly through this earnings period here where there is a discrepancy in terms of spend. Could you help maybe just frame where you're seeing that spend? Is there a certain type of customer that's spending more than others? Or is it really just random where guys came in with certain inventory levels and are working through that. Just any color there would be really helpful as we've heard that data point from multiple companies here?

很有幫助。接下來是關於快閃記憶體方面的一個後續問題。你們談到了客戶行為的混合，對吧？有些客戶仍在消耗庫存，而有些客戶則在不同程度上更積極購買。我不想讓你談論具體的客戶，但我們在整個生態系統中都聽過這種現象，尤其是在這個財報季，支出方面存在差異。你能不能幫我概括一下你看到的這種支出是哪些面向？是否有特定類型的客戶花費比其他客戶更多？或者這只是隨機的，有些客戶帶著特定的庫存水準進來，然後正在努力解決這個問題。任何顏色都會很有幫助，因為我們從多家公司聽到了相同的數據點？

I guess I would say that customers that are different segments of the market that are through their inventory digestion are now more or less shipping to end demand being lean on inventory. There are instances of people doing strategic buys in that -- in some of those cases where they've got their inventory to where they want it, but now they're making their own -- they have their own view of the cycle. That's a very small number, I would say.

我想說的是，不同細分市場的客戶在消化完庫存後，現在或多或少都會開始向終端需求出貨，導致庫存不足。有些客戶會進行策略性採購——有些客戶庫存已經到位，但現在開始自行生產——他們對週期有自己的看法。我想說，這種情況非常少見。

And then the other one is just -- where they're at in their -- the data center customers especially are just in -- there's a variability of the level of inventory at each customer, and they're so big that it can impact the entire market. So -- and like I said, ones that have heavy inventory are basically working that down in an aggressive way. And so I think it's going to -- like I said, I think it will be lumpy for a couple of quarters until we get through that.

另一個問題是——他們目前的情況——尤其是資料中心客戶——每個客戶的庫存水準各不相同，而且規模如此之大，以至於會影響整個市場。所以——就像我說的，那些庫存量很大的公司基本上都在積極地削減庫存。所以我認為——就像我說的，在我們度過難關之前，未來幾季的庫存狀況會比較不穩定。

Our next question comes from Toshiya Hari from Goldman Sachs.

我們的下一個問題來自高盛的 Toshiya Hari。

David, 3 months ago, you mentioned that you were cutting production in your NAND business by 30%. I'm curious if the magnitude of the cuts today are kind of in that ZIP code, if anything has changed materially? And going forward, what would you need to see to start taking up your utilization rates in the Flash business?

David，三個月前，您提到要將NAND業務的產量削減30%。我很好奇，今天的削減幅度是否與郵遞區號有關，是否有任何實質的變化？展望未來，您需要看到什麼才能開始提高快閃記憶體業務的使用率？

Yes. We're kind of at the point where we're -- I think it's -- I think probably the same ZIP code is probably a fair way to say depending on where you live. ZIP codes can be pretty big if you're in the country, I guess. But it's really about managing to where we see the demand and keeping our inventory relatively in check. We know it's going up somewhat, but we want to make sure it doesn't get away from us. So we'll use the fab in that. I mean, we're just -- we're going to have to see demand signals for our customers is just as simple as that.

是的。我們目前的情況是——我想——根據你住的地方，使用相同的郵遞區號可能比較合理。我想，如果你在鄉下，郵遞區號可能會很大。但關鍵在於如何管理我們能預見的需求，並保持庫存相對可控。我們知道需求會上升，但我們希望確保庫存不會失控。所以我們會利用晶圓廠來實現這一點。我的意思是，我們必須專注於客戶的需求訊號，就這麼簡單。

We have a very close relationship with a lot of them. We're in the -- obviously, in the market every single day. A lot of these consumer and channel markets are more transactional, where we can see the business across a wide swath. And then, of course, we're talking to the biggest customers biggest technology companies in the world. So we'll get a -- we have a pretty good idea of where their demand is, and we'll set the fab appropriately to make sure that we keep the right inventory position and we have the product when they're ready.

我們與許多客戶保持著非常密切的關係。顯然，我們每天都在市場上摸爬滾打。很多消費市場和通路市場的交易性更強，我們可以從各個角度觀察業務。當然，我們也正在與全球最大的客戶——最大的科技公司——溝通。因此，我們非常了解他們的需求，並將合理地安排工廠，以確保我們保持合適的庫存水平，並在他們準備好時及時交付產品。

Got it. That's helpful. And then one follow-up for Wissam on the balance sheet side of things. I know you don't guide free cash flow on a quarterly basis or annual basis, but just curious how we should be thinking about inventory, whether it be dollars or days, going into the June quarter and working capital overall. Is that going to be a consumer of cash in the June quarter? Or do you think you can generate some cash from working capital?

明白了。這很有幫助。接下來想問Wissam關於資產負債表方面的問題。我知道您不會以季度或年度為單位來指導自由現金流，但我好奇的是，我們應該如何考慮庫存（無論是以美元還是天數計算）以及6月當季的整體營運資本。這會在6月當季消耗現金嗎？或者您認為可以從營運資本中產生一些現金？

Sure, Toshiya. The -- with respect to inventory, we -- the current projection is, I would say, flattish in terms of dollar. But in terms of days, I anticipate we should see a downtick from here. Well, we continue to, as David said, manage it on a very, very regular basis very closely. And so that's probably the biggest in terms of the working capital. That's the number that would be moving the most. We're -- again, we don't guide the free cash flow, so I wouldn't want to make any more comments around working capital. But I think the answer on the inventory would be a good indicator to what working capital will look.

當然，Toshiya。關於庫存，我們目前的預測是，以美元計算，持平。但以天數計算，我預期庫存量應該會下降。正如David所說，我們將繼續非常、非常規律地密切管理庫存。所以，就營運資本而言，這可能是最大的影響。這個數位變動幅度最大。我們——再說一次，我們不指導自由現金流，所以我不想再就營運資本發表任何評論。但我認為庫存的答案可以很好地反映營運資本的狀況。

Our next question comes from Harlan Sur from JPMorgan.

我們的下一個問題來自摩根大通的 Harlan Sur。

The market share numbers are out for last year, you guys drove a strong #2 position in client SSD, strong double-digit sort of percentage share position, right? But in enterprise, you guys drove sort of low single-digit enterprise SSD market share last year, and it sort of hovered in this 4% to 7% range for a while now? Like what is the team doing to try and drive its share in this fast-growing market to more of what I would call appropriate sort of double-digit percentage share profile?

去年的市佔率數據已經公佈了，你們在客戶端SSD市場穩居第二，佔據了兩位數的份額，對嗎？但在企業級SSD市場，你們去年的市佔率只有個位數，目前在4%到7%之間徘徊了一段時間。你們團隊正在採取哪些措施，試圖在這個快速成長的市場中將份額提升到我所說的合適的兩位數份額水平？

Yes. Thanks for the question, Harlan. Always good to hear from you. It's -- we've talked about this quite a bit over the last year. It's about qualifying the products at the big players, qualified in the channel. We just qualified this last quarter on BiCS5 enterprise SSD with some of the biggest customers. So the road map is moving forward as we expected. It's just a very dynamic market right now. So it's difficult to judge share. Obviously, our goal is what we've put out there is to drive that higher. And I have every confidence we'll do that as the market stabilizes and some of these big customers get back to their normal rates of purchasing.

是的。謝謝你的提問，Harlan。很高興收到你的來信。我們在過去一年裡討論過這個問題，主要是關於在大型廠商和渠道商那裡進行產品認證。上個季度，我們剛剛與一些最大的客戶就BiCS5企業級SSD進行了認證。所以，產品路線圖正如預期推進。現在市場非常活躍，很難判斷市場佔有率。顯然，我們的目標是提高市場佔有率。我完全有信心，隨著市場穩定下來，一些大客戶恢復正常的採購率，我們一定能做到這一點。

Our next question comes from [Sarine Pajari] from Raymond James.

我們的下一個問題來自 Raymond James 的 [Sarine Pajari]。

I have a question on the cost side, Wissam. So it's a little tricky to figure out given all the, I guess, onetime charges. I'm just wondering, you previously talked about NAND cost declines in the mid-teens, I believe, just wondering if you're tracking to that. And then as we go to BiCS8, how should we think about the cost declines, especially -- I guess, historically, we've had 30% to 40% bit demand growth. And going forward, if that dynamic changes, if it's lower than 30%, do you think we can still kind of get to that mid-teens cost declines? Or do you need the 30% to get to that level?

我有一個關於成本方面的問題，Wissam。考慮到所有一次性費用，這有點難以理解。我只是想知道，您之前提到過NAND成本下降幅度在15%左右，我相信，您是否正在追蹤這個數字。然後，當我們談到BiCS8時，我們應該如何看待成本下降，尤其是——我想，從歷史上看，我們的比特需求成長率在30%到40%之間。展望未來，如果這種動態發生變化，如果低於30%，您認為我們還能達到15%左右的成本下降嗎？或者說，是否需要30%才能達到這個水準？

Sure. So thanks for the question. In terms of Q3, we have to think of it basically with and without underutilization. When you factor in the underutilization charges, we wouldn't be -- we wouldn't have reduced cost -- or cost income down by mid-teens. However, if we exclude that, then we're close to mid-teens in Q3. .

當然。謝謝你的提問。就第三季而言，我們基本上要考慮產能利用率不足和產能利用率不足的情況。如果把產能利用率不足的費用考慮進去，我們的成本或成本收入就不會降低到15%左右。但是，如果我們把這部分費用排除在外，那麼第三季的成本收入就接近15%左右了。

Now to your question on BiCS8. I mean this is -- with the way our road map works and the timing of when BiCS8 starts ramping, it is pretty much designed in a way to allow us to continue that mid-teens reduction -- cost reduction over time. I wouldn't want to comment about the exact sort of percentage and so on in terms of the crossover because I think it's a little bit premature to talk about this. But conceptually, that's what we're aiming with ramping BiCS8 slightly earlier than previously anticipated.

現在回答您關於 BiCS8 的問題。我的意思是，根據我們的路線圖以及 BiCS8 量產的時間安排，其設計基本上是為了讓我們能夠繼續實現成本的中段削減——隨著時間的推移。我不想評論具體的百分比等等，因為我認為現在談論這個還為時過早。但從概念上講，這就是我們比之前預期略早量產 BiCS8 的目標。

Our next question comes from Karl Ackerman from BNP Paribas.

我們的下一個問題來自法國巴黎銀行的卡爾·阿克曼。

Yes. I was hoping you could discuss the trajectory of exabyte demand of your cloud customers in the next couple of quarters? And whether there's a divergence and a recovery across on-prem and public cloud. And I guess as you address that question, how do you assess whether you might be shipping below normalized replacement demand?

是的。希望您能討論一下未來幾季雲端客戶EB級資料需求的走勢？以及本地部署和公有雲之間是否存在分化和復甦。我想，當您回答這個問題時，您如何評估您的出貨量是否可能低於正常化的替換需求？

It -- I think we see the enterprise and the cloud market, they're both soft right now. So we don't see a huge difference between the 2. Again, the difference is, Karl, that you got this idiosyncratic behavior at really big customers. So a customer that usually buys a significant amount of hard drives in a quarter, hundreds of millions of dollars goes to 0. You can pretty much assume they're buying under replacement demand. So that's kind of where we're at. We just -- again, other customers are going along more according to plan. So the inventory levels a bit distributed across big customers. So we look at this quite a bit to understand like where do we think the exabyte growth is and where are we setting the -- our long-term production capabilities and all of that. But right now, it's just a little difficult to draw long-term conclusions and some of -- a little bit behind some of your question, given just the way the market is -- the lumpiness of the market.

我認為，企業市場和雲端市場目前都比較疲軟。所以我們看不出這兩者之間有太大的差別。 Karl，差別在於，大客戶的行為有些特殊。一個客戶通常會在一個季度內購買大量硬碟，但數億美元的採購量現在變成了零。你幾乎可以假設他們是在滿足替換需求的情況下購買的。這就是我們現在的處境。我們只是——同樣，其他客戶則更多地按照計劃進行。所以庫存水準在大客戶之間有所分佈。所以我們會仔細研究這個問題，以了解EB級成長在哪裡，以及我們的長期生產能力如何等等。但現在，很難得出長期結論，考慮到市場的波動性，你的一些問題可能有點落後。

The next question comes from Vijay Rakesh from Mizuho.

下一個問題來自瑞穗的 Vijay Rakesh。

Just a quick question. I don't know if you talked about Elliott strategies, and I think they had filed some data filings, but just wondering how that process is progressing. I don't know if you can talk to it.

簡單問一下。我不知道您是否談到了艾略特策略，我認為他們已經提交了一些數據文件，我只是想知道這個過程進展如何。您是否可以談談這個問題。

It's progressing, very active. Everybody in it is under NDA, so I can't say anything about it, and we look forward to talking about it when we reach a conclusion.

這個項目正在推進，非常活躍。所有參與者都簽署了保密協議，所以我現在還不能透露任何消息，我們期待在達成協議後再進行討論。

Our last question comes from Ananda Baruah from Loop Capital.

我們的最後一個問題來自 Loop Capital 的 Ananda Baruah。

Maybe for Wissam. I might have missed it, but just wondering if there's any context you can provide about how you're thinking about the debt due in February of '24? How you're going to handle that, go back handling that (inaudible)?

也許對Wissam來說是這樣。我可能沒注意到，但我想知道您能否提供一些背景信息，說明您是如何看待2024年2月到期的債務的？您打算如何處理這筆債務，回去處理這筆債務（聽不清楚）？

Yes, Ananda. The -- with respect to the $1.1 billion of convert due in February '24, the plan is to address it over the next couple of quarters.

是的，阿南達。關於2024年2月到期的11億美元轉換款項，我們計劃在接下來的幾季內解決。

Okay. Jason, is that the last one?

好的。傑森，這是最後一個嗎？

Yes, that was the last question.

是的，這是最後一個問題。

All right, everyone. Thanks for joining us today. We look forward to seeing you through the quarter. Take care.

好的，各位。感謝大家今天的參與。我們期待在本季與大家見面。保重。

Thank you.

謝謝。

This concludes today's conference call. Thank you for joining. You may now disconnect.

今天的電話會議到此結束。感謝您的加入。您可以掛斷電話了。