Western Digital (WDC) Citi's Global TMT Conference 2024 summary

Strategic rationale and business separation

• Executives detailed the rationale for spinning out HDD and flash businesses, citing distinct capital intensity, cash flow profiles, and investor interests.

• The separation process began in October 2023, with IT and operational systems expected to be fully separated by early October, followed by a 'soft spin' through the December quarter.

• Leadership assignments for the new entities were confirmed, with new CFOs and CEOs appointed for both businesses.

• The goal is to unlock value and allow investors to choose between two well-positioned, high-performing franchises.

Joint venture and technology roadmap

• The flash JV with Kioxia remains strong, recently extended through 2034 with new fab agreements.

• The JV enables significant R&D investment, driving a competitive technology roadmap and capital efficiency.

• Optionality exists for future capacity moves post-2029, but current JV structure is expected to continue.

Market trends and demand outlook

• NAND business saw strong recovery led by PCs, now transitioning to data center demand, while consumer demand faces headwinds.

• HDD business benefits from supply-demand balance and record profitability, with improved visibility for the next 2–4 quarters.

• Cost actions during the downturn have led to margin expansion and a focus on sustained profitability.