But again, we want to come back to predictability as the overarching objective here and we’ll also reward customers who give us that predictability with the best financial outcome for themselves as well. So having those negotiations is giving us pretty good visibility into what’s coming over the next three or four quarters, and I’m happy with that.
Steven Fox: That’s helpful. Thank you.
Operator: The next question is from Timothy Arcuri with UBS Securities. Please go ahead.
Timothy Arcuri: Thanks a lot. I wanted to ask about this million HAMR unit that you had guided for the first half of the year, mostly was going to be 30 key drives. So you’re going to make up, it sounds like 700,000, 800,000 drives with other stuff beyond HAMR, but I had kind of two questions. One, you probably have to rework some of the HAMR WIPs, so that would be a negative, but it did seem like HAMR was going to be dilutive initially. So is that all kind of a net positive [trade] (ph) for June quarter gross margin? And then because you gave us this — sorry, go ahead.
Dave Mosley: No, you go ahead and finish your question, Tim.
Timothy Arcuri: Yeah, so I just was going to ask, since you gave us that million unit number, I’m curious if you can give us some indication of what you think units will be in the back half of the year for HAMR? Thanks.
Dave Mosley: Yeah, there’s two aspects of this. One is the completion of the time — the timing of the qualification and then the other is the total amount of material. And remember, we said we have other sources for the particular component, so we don’t have to segregate the entire WIP. There’s parts of the WIP that are still moving, right? But I think the timing of the qualification is really the issue there. We’re not going to get into how many we’re forecasting for the back half of the year because a lot of that will depend on specifics of demand from customers and when the rest of the qualifications time-out. But from my perspective, once we get that material segregated, yeah, is there some rework or scrap to do? Yeah, but I think we can take that.
And keep in mind that all of these products are common with one another. So we have homes for other product — other materials if we want to. It’s — it can be pivoted from the [24 — 28] (ph) family up to the Mozaic family as well. So I think we have a lot of flexibility there.
Gianluca Romano: And just a clarification, Tim, on the HAMR gross margin, we never said that HAMR was dilutive to gross margin. We said that HAMR gross margin will for sure improve in the second part of the ramp or the first part of the ramp as, of course, a little bit more cost, but we never said it was dilutive to our overall gross lines.
Timothy Arcuri: Right. Okay. Thank you, Gianluca.
Operator: The next question is from Karl Ackerman with BNP Paribas. Please go ahead.
Karl Ackerman: Yeah, thank you. I wanted to get a better understanding of the demand impact of both the ramp of 28-terabyte SMR and the simultaneous ramp of 32-terabyteb HAMR, which might be 34, 35-terabyte SMR. I’m curious whether you see that as perhaps somewhat catalystic to your early deployments of HAMR. If you could just discuss that, that would be great. Thank you.
Dave Mosley: Yeah, thanks, Karl. Different customers have different requirements and different feature sets, how they use the drive, and so I don’t think there’s a one-to-one swap. I mean, the good news for us is we have a lot of commonality and so we can react fairly quickly as to whether more people want one family or the other. But we’re working with a lot of people on, as I said in the prepared remarks, on two different qualifications at the same time. And as far as I’m concerned, the qualifications are going well. We’re staying very communicative with the customers. And against a demand environment that’s improving, I think we — that’s why they should value our predictability even more as we show them what we have and what we’re willing to build.
Operator: The next question is from Ananda Baruah with Loop Capital. Please go ahead.
Ananda Baruah: Yeah, good afternoon, guys. Thanks for taking the question. I guess just one on gross margin. In the past when you had dynamics similar to these demand ramp and price increases, and then Dave, supply demand tightness, there’s typically been a quarter or so where you can get pretty pronounced step-ups in gross margin. And just wondering if there is anything that will preclude this cycle at some point from having the same type of dynamics. And then just to sort of sneak one in there real quick. Gianluca, any updated metrics — you’ve given metrics in the past about revenue to gross margin, kind of scale ratios, do those still hold the ones that you’ve been given — giving or does the pricing dynamics here change that at all? Thanks, guys.
Dave Mosley: Thanks, Ananda. I’ll let Gianluca answer his part, but I guess what I’d say, at a very high level is that we’re going to continue to push aggressively through product transitions because we think that’s the best way to continue to add value to our customers and margin for ourselves. Some of the margin uplift that we’re seeing right now is obviously because of the factories being — they’re filling up, they’re not completely full yet, but they’re filling up and that’s a good sign.
Gianluca Romano: Yeah, on the trajectory, especially of the gross margin, but with the business in general, every cycle is a bit different. We are saying today we see a good recovery from the cloud part of the business. Of course, it’s not all the business increasing at the same way. So we still need to wait for other segments to start having the same kind of recovery before we can see a strong upcycle. But, no, we are very positive. We said earlier, we see that gross margin improving quarter-over-quarter and to be in the target range during this calendar year. I would say, every quarter, we have a little bit better pricing, little bit better cost. So the opportunity for us to achieve that target range at even lower level of revenue is for sure a reality.
