Western Digital Corporation (NASDAQ:WDC) Q1 2024 Earnings Call Transcript

David Goeckeler: Yeah, I guess what I — Wissam will comment a little bit as well, but I guess what I would say Toshiya is we’re, you know, we’re not putting a broad statement out there about that. What we’re doing is just being very dynamic with how we manage wafer start so that we can keep supply and demand matched as best we can without letting inventory get up too high. So as you saw, I mean, our NAND inventory is at the best level since I’ve been here in the company. I mean, Wissam’s team has done a great, and the operations team just done an unbelievable job of managing that. So we’ll stay very close to where our markets are and how we’re seeing demand, and then we’ll adjust wafer starts appropriately.

Wissam Jabre: Yes, thanks, Dave. The only thing I would add, Toshiya, is that when you think of underutilization just I know there was an earlier question on this. Yes, we do expect underutilization further in the second-half of fiscal year. The way to think of it as we were expecting underutilization to be slightly lower from these levels in the third fiscal quarter. And as David said, this is very dynamic. We continue to manage the business on a day-to-day, week-to-week basis. And so obviously, depending on business conditions, this could still change.

Toshiya Hari: That’s very helpful. Thank you. And then as a quick follow-up, David, you talked about value-based pricing on the hard disk drive side and how that’s driving better gross margins into the December quarter. Can you speak to any kind of specific end markets where you’re seeing traction? Is it mostly client and consumer? Are you able to push through some price increases in the cloud segment as well? Thank you.

David Goeckeler: I think it’s, so first of all on the channel, we’re seeing good response to value-based pricing. And then as we bring out new products, you know, as I said in the past, I think innovation is what the first part of value-based pricing is bringing a better value proposition to our customers. And as we continue to bring out unique products 26 terabyte ultra-SMR ramped very fast, nearly half of our nearline exabytes this quarter, and we’re now bringing out 28. And I think as we continue to do that, we’ll have the opportunity to have a better conversation with our customers, because we’re bringing more value to them. So I would say it’s, we’re looking at it across all of our markets.

Toshiya Hari: Got it. Thank you.

David Goeckeler: All right. Hey, thank you, Toshiya. We appreciate that. All right, everybody, we appreciate the time today. Thanks for the discussion, and we look forward to talking to you as we progress throughout the quarter.

Operator: And ladies and gentlemen, with that, we’ll conclude today’s conference call. We thank you for joining. You may now disconnect your lines.