Seagate Technology (STX) TD Cowen's 54th Annual Technology, Media & Telecom Conference summary

Technology and capacity strategy

• No unit capacity additions planned; exabyte growth achieved through technology transitions, especially HAMR generations, targeting about 25% exabyte increase year-over-year.

• Focus on stable unit production while increasing exabyte output via higher-capacity drives and technology mix.

• Third-generation HAMR with 5 TB per disk and 50 TB drives to be qualified by end of next calendar year.

• Technology transitions every 18–24 months drive significant exabyte increases, with each HAMR generation providing 25–30% more capacity.

• No current plans to add new factories or consolidate manufacturing footprint; production remains distributed across global sites.

Demand, pricing, and customer agreements

• Demand visibility is strong, with orders covering the next 4–5 quarters and long-term agreements (LTAs) based on exabyte allocation for future years.

• Data center segment, especially public cloud, accounts for over 80% of revenue and is the fastest-growing area.

• Pricing has shifted from quarterly to multi-quarter or annual negotiations, with consistent price increases expected to continue.

• Price increases are sustainable due to structured agreements and robust demand; revenue and profitability are projected to rise each quarter.

• Customers are not pushing back on price or exabyte growth rates, as other components like DRAM and power remain bigger bottlenecks.

Market trends and drivers

• AI, video, and data retention are major drivers of storage demand, with AI generating and retaining large volumes of data.

• Autonomous driving and robotics are emerging sources of significant data generation, supporting long-term storage growth.

• Both cloud and edge/on-premise deployments present opportunities for hard disk storage, with edge applications expected to grow over time.

• Surveillance and video applications in China (VIA) use both mid-capacity and high-capacity drives, depending on deployment scale.