Seagate Technology (STX) UBS Global Technology and AI Conference summary

Product and technology updates

• Completed first qualification of HAMR drives with a lead cloud service provider, enabling initial shipments in the coming weeks.

• HAMR drives offer over 30TB capacity, with 3TB per disk, targeting long-term cloud storage needs.

• Focus remains on ramping 3TB per platter and qualifying 4TB per platter products to support future growth.

• Customers are actively qualifying higher-capacity drives, with strong demand for new technology.

• HAMR is expected to be margin accretive as cost reductions and technology transitions continue.

Operational and supply chain developments

• Bringing previously offline capacity back online, not adding new capacity, to address production issues.

• Production challenges will impact fiscal Q3, with a potential $200 million hit, but no effect on current quarter.

• Inventory pools have been used to mitigate short-term impacts, but Q3 will see the main effect.

• Prioritizing build-to-order commitments to key customers while managing legacy product supply.

• No evidence of customer stockpiling; discipline enforced by only building to order.

Market and demand outlook

• Cloud storage demand remains strong, with long-term growth expectations around 25%.

• Industry is shifting to a build-to-order model, improving predictability and reducing overcapacity.

• Exabyte capacity growth will come from higher drive density, not increased unit production.

• No significant drive capacity increase planned; focus is on density and product transitions.

• AI and big data applications are expected to drive incremental demand for both SSD and HDD, with technologies seen as complementary.