Vijay Rakesh: Got it. Any thoughts on the bit growth I guess for ‘24 and as the next generation, as the next bit stage starts to ramp I guess? Thanks.
David Goeckeler: Yes, we expect demand in ‘24 in the NAND business to be high-teens, you know, and if it gets really strong maybe it’ll creep over the 20s and low-20s, but we’re thinking about those high teens numbers. And like I said, production will be significantly below that.
Vijay Rakesh: Alright. Thank you.
Operator: Our next question comes from Harlan Sur from JPMorgan. Please go ahead with your question.
Harlan Sur: Hi, good morning. Congratulations…
David Goeckeler: Good morning, Harlan.
Harlan Sur: …on the strategic. Yes, congratulations on the strategic actions announced today. On the flash technology side, the JV brings strong synergies in flash manufacturing development and manufacturing scale. Excluding the underutilization charges, you guys have been driving down the underlying cost per bit at around a mid-teens type CAGR and in line with your prior targets and that’s even with the rising capital intensity, right? As you look ahead, BiCS6 transition moved to bonded architecture on BiCS8. Does the team believe it can sustain its mid-teens cost down profile?
David Goeckeler: Yes, we do. We feel very good about that. I mean, I’ve spoken about this in the past. It’s an explicit goal of the technology team to continue to drive those cost downs and we feel good about our ability to do that. It’s been one of the strengths of the JV and the JV technology team for a very long time.
Harlan Sur: Well, thank you for that. And then on the flash portfolio side within SSD, particularly the team has been in a very, very strong number two market share position in client SSD, very strong portfolio. In enterprise and cloud, however, you’ve been consistently in the sort of number five, number six global market share position. So as you think about spinning out the flash business, what is the team doing to improve its competitiveness in its enterprise and cloud SSD portfolio?
David Goeckeler: Well, we like the portfolio we have. We qualified our NVMe based enterprise SSD at multiple cloud providers. And unfortunately, we qualified right into a significant downturn in cloud consumption of enterprise SSDs. So as that starts to come back over the next several quarters and as we go through ‘24, we expect our position to improve as those vendors start consuming again. I mean, the reality is there’s just not a lot of buying in that market going on right now.
Harlan Sur: Perfect. Thank you.
David Goeckeler: Thank you.
Operator: Our next question comes from Mehdi Hosseini from SIG. Please go ahead with your question.
Mehdi Hosseini: Yes, thank you. David, I just want to go back to your comment just made regarding enterprise SSD. When I look at the slides from the results of a strategic review, you’re highlighting strengthening client SSD and also retail. But I don’t see any mention of enterprise SSD. How should I reconcile that with the comment you just made?
David Goeckeler: Well, I mean, it’s because those are two very, very strong strengths of the portfolio. I think they’re very unique. Look, our retail franchise is a real gem. I mean, it’s a big part of the portfolio. It provides better through cycle profitability. We’ve done a lot of work on building brands over the last several years. I mean, we’ve already had very, very strong brands in SanDisk. I think everybody knows SanDisk is the premier brand in the industry. We’ve built the BLACK brand around gaming now. That’s a significant part of the portfolio. I think we’re the preferred provider in gaming. We talked about it this quarter, where 50% year-over-year content increases in devices and doubling the number of bits in that.
So it’s been, you know, it’s a very, very key part of the portfolio. We look forward to highlighting it more. The client portfolio has always been a strength of the business. It’s something that’s been built over the last several years. We’ve driven several innovations in that, like the DRAM-less client SSD. That’s always been a very strong part of the portfolio. I guess, you know, Mehdi, we could have put a whole bunch of stuff on the slide that we’re proud of in the portfolio, but we picked the strongest ones. But we’re very bullish on the enterprise SSD market. It’s just a market that’s depressed right now. We talked a lot about that last year. We had qualifications at multiple hyperscalers. Those products are still active. We’re migrating them forward to future nodes and we expect those to ramp as that market recovers.
Mehdi Hosseini: Okay, great. And just a question, a follow-up question for Wissam, and I’m not asking you for a guide on 2024, but if I just look at your cost decline, if I just assume 10% the cost decline and assume the current ASP trend, your NAND flash business should become profitable maybe by mid-year or sooner than later. The trajectory is very supportive of reaching profitability in the next couple of quarters. Is that a fair assumption?
Wissam Jabre: Well, look, what — in the current guide for this quarter, it does imply that NAND should be gross margin positive. And in terms of the outer quarters, it’s a little bit too early for us to comment on them.
Mehdi Hosseini: Okay, thank you.
David Goeckeler: Thanks, Mehdi.
Operator: And our final question today comes from Toshiya Hari from Goldman Sachs. Please go ahead with your question.
Toshiya Hari: Hi. Good morning, and congrats on the announcement.
David Goeckeler: Thanks, Toshiya.
Toshiya Hari: Yes, Dave. So, on the NAND side, I think based on a response to a prior question. It looks like you’re assuming underutilization charges declined by about $60 million from September to December. Are you guys taking up wafer starts, or what’s driving the sequential decline in charges in NAND?
