Western Digital (WDC) UBS Global Technology and AI Conference summary

Spin-off and capital structure plans

• Flash business will be spun out with $2B in debt, $1B in cash, and $1.5B in revolving credit for liquidity.

• Excess cash above $1B will be dividended to the hard drive business to reduce its debt.

• A 19.9% stake in the flash business will be retained and monetized within 12 months post-spin for further de-leveraging.

• Both businesses are expected to have stronger, best-in-class balance sheets within a year post-spin.

HDD business strategy and market dynamics

• Operating in a tight supply environment with no plans to add capacity, relying on build-to-order for demand visibility.

• Lead times have been extended to 52 weeks to improve planning and alignment with customers.

• New high-capacity drives, including a 32TB model, are being introduced, supporting exabyte growth.

• Focus on innovation and R&D to drive profitability and maintain competitive margins.

• AI and data growth are expected to benefit HDDs as the primary storage for vast data volumes, despite faster SSD growth.

NAND/SSD business outlook and operational approach

• Enterprise SSD is a growing segment, now over 15% of NAND bits, with a focus on agility and portfolio mix.

• Current enterprise SSDs use sub-200-layer nodes; transition to BiCS8 will be demand-driven and require CapEx.

• Emphasis on CapEx efficiency, leveraging JV experience to deliver capacity at lower cost than industry average.

• NAND supply-demand is expected to remain favorable in 2025, with demand outpacing supply and cautious CapEx.

• Bit growth is expected to average in the high teens percent, with investments aligned to real demand.