Western Digital at Goldman Sachs Conference: AI Drives Storage Demand

On Wednesday, 10 September 2025, Western Digital (NASDAQ:WDC) presented at the Goldman Sachs Communicopia + Technology Conference 2025. The company highlighted its robust position in the storage market, propelled by the burgeoning demand for AI-driven storage solutions. CFO Kris Sennesael emphasized a stable pricing environment and strategic long-term agreements, although challenges such as maintaining gross margin improvements remain.

Key Takeaways

• Western Digital is experiencing strong demand for storage solutions due to AI.
• The company is focused on increasing exabyte output with a projected CAGR of 15% to 23% from 2024 to 2028.
• Operational efficiencies and technological advancements like EPMR and HAMR are key priorities.
• A $2 billion share buyback program and a $0.10 per share quarterly dividend underscore its commitment to shareholder returns.
• The company maintains strong relationships with top hyperscale cloud customers, ensuring future demand visibility.

Financial Results

• Gross margins are currently in the low 40s.
• Client and consumer revenue constitutes about 10% of total revenue.
• The top 10 customers account for 68% of the volume.
• Operating expenses are at 13% of revenue or below.
• Western Digital’s debt stands at $4.7 billion, with $2.1 billion in cash, resulting in a net debt of $2.6 billion.
• The company has a net debt EBITDA leverage ratio of one turn.
• The dividend program initiated two quarters ago pays $0.10 per share per quarter.
• $150 million has been utilized from the authorized $2 billion share buyback program.

Operational Updates

• The average capacity per unit shipped is 21 to 22 terabytes, with the highest at 32 terabytes.
• EPMR technology advancements include a CMR version at 28 terabytes and an ultra-SMR version at 36 terabytes.
• HAMR technology aims for a capacity of 36 to 44 terabytes per unit.
• Ultra-SMR technology is expected to account for 50% of nearline shipments by the end of 2025.

Future Outlook

• Western Digital projects a 15% to 23% CAGR in exabyte growth from 2024 to 2028, driven by AI.
• Next-generation EPMR qualifications are targeted for early 2026, with a ramp-up later that year.
• HAMR qualifications are set for the latter half of 2026, with volume ramping up in early 2027.

Q&A Highlights

• The company is focused on customer engagement, prioritizing high-quality, reliable products.
• It maintains strong relationships with top hyperscale cloud customers, providing visibility into future demand.
• Long-term commercial agreements and purchase orders extend into fiscal 2026 and beyond.

In conclusion, Western Digital remains well-positioned in the evolving storage market, driven by AI demand and strategic partnerships. For more details, readers are encouraged to refer to the full transcript.

Full transcript - Goldman Sachs Communicopia + Technology Conference 2025:

Jim Schneider, Semiconductor Analyst, Goldman Sachs: Okay, let’s get started. Good afternoon, everybody. Welcome to the Goldman Sachs Communicopia and Technology Conference. My name is Jim Schneider. I’m a semiconductor analyst here at Goldman Sachs. It’s my pleasure to welcome Western Digital and CFO Kris Sennesael to have us with us today. Thank you, Kris, for being here. I appreciate it.

Kris Sennesael, CFO, Western Digital: Yes, Jim, thanks for having us here at the Goldman Sachs conference. Maybe before we start, I’ll just make a small disclosure here. Today I will be making some forward-looking statements based on management’s current assumptions and expectations, including with respect to our product portfolio, business plans and performance, market trends, dynamics, and future financial results. These forward-looking statements are subject to risks and uncertainties. Please refer to our most recent financial report on Form 10-K and other filings with the SEC for more information on the risks and uncertainties that could cause actual results to differ materially from our expectations. I will also be making some references to non-GAAP financials, and the reconciliation of our GAAP and non-GAAP results can be found on our website as well.

Jim Schneider, Semiconductor Analyst, Goldman Sachs: Definitely.

Kris Sennesael, CFO, Western Digital: Exactly.

Jim Schneider, Semiconductor Analyst, Goldman Sachs: Okay, so maybe start off top level. Kris, over the past 18 months or so, the industry has done a great job of pushing for higher pricing while limiting production levels and overall industry level. Maybe walk us through the progress that has been made, where you believe supply-demand sits today, and then in terms of overall industry utilization.

Kris Sennesael, CFO, Western Digital: Yeah, that’s a great question. To be clear, I can’t really speak for the industry, right? I only will speak as I see it, as it relates to Western Digital. I think it’s very clear that demand in the demand environment is very strong. It’s strong, and it’s getting stronger by the day or the week with a lot of positive news. Although I feel, talking to investors and friends, I feel there is maybe a little bit of a misconception. There is kind of like this maybe misconception that there is a huge demand-supply imbalance. Maybe we all wish that was true, but I don’t think that is the case. I think supply is tight, but we believe that, again, with very strong demand, we will be able to supply in line with the demand.

Just to put some perspective on that, in February, when we had our investor day, we outlined a growth forecast for the storage business. On a base case, we indicated 15% CAGR, year-over-year growth for storage on an exabyte basis, with potential upside all the way up to 23% year-over-year growth on a CAGR from 2024 to 2028 as AI accelerates and AI kicks in. I think the good news, based on all the more recent updates that we have received, AI is really kicking in. We are getting a lot more comfortable to see strong demand up to the 20 plus 23% CAGR in terms of exabytes. The other good news as well on the supply side is that we feel well-positioned and comfortable to be able to supply in line with that strong growth.

The main reason how we do it without increasing unit capacity is through areal density, right? Areal density has multiple facets to it. First of all, we’re increasing the high end of the capacity per unit through multiple technology and product upgrades that we have planned out. In addition to that, we’re also moving the average of the capacity per unit that we are shipping today. Today, the average for us is on or about 21, 22 terabytes per unit. The highest capacity unit that we ship today is 32. We have long ways to go, not only to increase the 32 to eventually 36 and eventually 44 terabytes, but also move that average from 22 closer to the top end that we have. When you combine all of that, we feel comfortable in a continuous tight demand-supply environment to ship the volumes to our customers that they need.

Jim Schneider, Semiconductor Analyst, Goldman Sachs: Even without increasing your volume, if you assume that you’re kind of like near full utilization today.

Kris Sennesael, CFO, Western Digital: That is correct. The vast, vast majority of the growth will come through areal density. Of course, in addition to that, we are going to continue to drive operational efficiencies in our own manufacturing facilities and throughout the supply chain. We work on yield improvements, we work on automation, we work on OEE improvements. We actually collect a lot of data in our own factories. We have machine learning and AI algorithms on top of that. That really helps us to create a little bit more output as well. We work with some of our suppliers to get some additional supply as well. We are spending on or about 4% to 6% of our revenue in CapEx, right? CapEx that goes to media and heads. We do a little bit of CapEx even in the backend in testers, while of course we’re also working on test time reductions.

A combination of all of that will further increase the supply. Again, the vast majority of it will come through areal density.

Jim Schneider, Semiconductor Analyst, Goldman Sachs: Fair enough. Maybe talk about pricing for a moment. If you think back six or 12 months ago, what is the willingness of your customers to accept higher prices today relative to back then? Can you talk about whether that’s simply pricing on a per drive basis, or are you also talking about like-for-like pricing on a per exabyte basis as well?

Kris Sennesael, CFO, Western Digital: Yeah, as it relates to pricing, the way I’ve been talking about that, and I will repeat today, is we’re in a stable pricing environment. What do I mean with a stable pricing environment? I look at it on an ASP or a price per terabyte or ASP per exabyte, whatever you want to look at it. If you look at it the last couple of quarters, that has been stable, meaning on a sequential or year-over-year basis, it has been on or about flat. It could be up 1%, could be down 1%. It’s kind of a stable environment. We really think, and our customers really think in terms of price per exabyte or price per terabyte. Obviously, as we ship higher capacity units with more terabytes per unit, the price per unit goes up, but it’s on or about at the same price per terabyte or exabyte.

Jim Schneider, Semiconductor Analyst, Goldman Sachs: Is that stability sustainable, you think?

Kris Sennesael, CFO, Western Digital: The good news here again is that we do have a lot better visibility in the future and in our business. As you probably know, with four of our five largest customers, we have purchase orders for all of fiscal 2026, with the fifth out of five. We have LTAs and a lot of TDLEs. It’s almost as good as purchase orders for all of fiscal 2026. That has quantity and price commercial arrangements in it. With two out of five, we actually have purchase orders covering Q1 and Q2 of fiscal 2027. We have ongoing discussions with most of our large customers even beyond that, right? We now start talking about 24 months or 36 months out. Based on that visibility, again, we feel good about the growth in exabyte. We feel good about a stable pricing environment as well.

Jim Schneider, Semiconductor Analyst, Goldman Sachs: Very good. Let’s say we get ourselves into a situation where, you know, someplace down the line where the industry is overshipped in demand and customers look to cut orders. How does your build order strategy sort of protect you in that sort of situation? To what extent is there a cushion for you in a future potential down cycle?

Kris Sennesael, CFO, Western Digital: Yeah, so first of all, currently there is no overshipping, right? Given the very tight demand-supply environment, there is no overshipping. We have some visibility at our customer level. Some of our customers are down to a week or less than a week of inventory. I think we’re in a pretty good spot right now. Again, demand continues to be strong. Demand is being secured with longer-term commercial arrangements. This is a planned economy. This is how I’ve been talking about it more recently, right? Our customers plan ahead two or three years. They know how much storage capacity they will need. They go and secure land, get permits, build buildings, and facilitate those buildings and build out those storage units. Sometimes you might see some variability in our revenue on a sequential basis based on deployments. Sometimes deployments get pulled in.

Sometimes a permit didn’t come through and a deployment gets pushed out. Overall, I think there’s very, very strong demand. Again, we have POs and we have LTAs. Having said that, if there is demand variability, which we don’t see for the next one or two or three years, if there is demand variability, we’re going to work with our customers, right? It doesn’t make sense if the customer, for whatever reason, doesn’t want the product now or there is some slowdown a couple of years down the road. It doesn’t make sense to go and force product upon the customer. They’re just going to put it on their shelves and you’re going to pay for it later. We’d rather have, in this partnership relationship, full transparency and visibility, work with each other. If one customer doesn’t want the product, maybe another customer wants the product.

Maybe we can adjust our manufacturing scheduling in line with the customer. That’s what we do. In addition to that, as I said, we are very, very careful in bringing on additional capacity, right? Again, investments in heads and media, some investments in the backend, yes, but we’re not really extending unit capacity. We’re growing the revenue through areal density.

Jim Schneider, Semiconductor Analyst, Goldman Sachs: Fair enough. I want to ask you one last thing. Just strategically, you know, we hear a lot about, you know, every couple of years it comes up, the debate between Flash and HDD in terms of cost competitiveness. Where do you believe we stand today in terms of cost per bit delta between the two technologies and also TCO between the two? You know, where do you think that goes in the medium term and any reservations about a closing gap there?

Kris Sennesael, CFO, Western Digital: Yeah, that’s a great question. We get that a lot. There’s a couple of data points there. If you look at the installed base of storage capacity, roughly 80% of that is hard disk drive, 3% is tape, and 17% is SSDs, flash, whatever you call it. Now, you can say, okay, that’s backward looking, but we also have visibility in the next two or three years based on discussions with our customers, based on the purchase orders and the LTAs we have with our customers, based on third-party research. We see even going forward, the new capacity that’s being brought online, on or about 80% of that is hard disk drive. The main reason why it’s 80% hard disk drive is the economics behind it. We are on or about six times lower cost in cost of acquisition.

Flash, SSDs, they have some other advantages in terms of power consumption and density. When you look at the total cost of ownership, we are 3.6 times lower total cost of ownership. That’s why the bulk of the storage is being done on hard disk drives. There are some good reasons to use SSDs and flash. That’s why, call it 17 or 20% or on or about, the storage is being done on flash and SSDs. They have faster throughput. They have other performance advantages. By the way, their business is growing. This business is growing fast. People confuse it a little bit. I think when they see their business is growing fast, they think it’s by taking share from hard disk drives. No, the overall business is growing fast. Hard disk drive is growing fast. SSDs are growing fast.

We don’t see any market share gains or losses because we don’t see much changes to the six times cost advantage on cost of acquisition, or we don’t see much changes to the 3.6 cost advantage on a TCO basis for hard disk drives.

Jim Schneider, Semiconductor Analyst, Goldman Sachs: Great. We’ll talk about the market for a moment. Over the last several quarters, you’ve gained pretty meaningful nearline market share over your largest competitor. Do you feel that you can at least maintain this market share level even as you’re kind of accelerating your time to market for HAMR?

Kris Sennesael, CFO, Western Digital: We’re not really that much focused on market share. We’re really focused on our customers, right? We want to create those deep customer engagements. We want to partner with our customers. We want to make our customers more successful by delivering them high quality, high reliability, high performance product. That has worked out pretty well for us. I do believe it has worked out pretty well for our closest competitor. We’re not that focused. Yes, we feel good about our position with our customers. Again, we have a best-in-class technology and product roadmap. We just introduced our latest, but not the last version of EPMR technology in March of 2025 that came at a CMR version of 26 terabytes and an ultra-SMR version at 32 terabytes, which is the highest capacity hard disk drive you can buy in the industry.

In addition to that, we are, and we’ve been very vocal about that, we are still working on one more generation, probably the last, and I’ll never say last, but probably the last generation of EPMR that will come out in a CMR version at 28 terabytes and an ultra-SMR version at 36 terabytes. We’re targeting qualifications in the first half of calendar year 2026 and then ramp in the second half of calendar year 2026. Good progress is being made there. I think we’re actually a little bit ahead of schedule. We’re still kind of leaning in on the engineering community to potentially get to higher capacity points as well. In parallel, we work on our HAMR strategy, which, by the way, we’ve been working on that for more than 10 years. Really good progress has been made.

For now, from a timing point of view, we target qualifications in the second half of calendar year 2026 and then volume ramp at scale with high quality, high reliability products in the first half of calendar year 2027. That’s at 36 up to 44 terabyte capacity per unit. Good progress has been made. The areal density, we’re there. I can ship you a couple hundred or a couple thousand 44 terabyte HAMR drives if you want.

Jim Schneider, Semiconductor Analyst, Goldman Sachs: Please do.

Kris Sennesael, CFO, Western Digital: We still have some work to do on quality and reliability, which is very important to our customers. This is a new technology, and we want to make sure if and when we start ramping that in high volume, the quality and reliability is secured so there are no problems one or two or three or five or seven years down the road. We also still have some work to do on manufacturing yield. We want to be able to ramp the new technology in volume. I guess ramping it and shipping 100,000 units is not really ramping in my mind. We want to continue to work on that, making sure that if and when we ramp it in the first half of 2027, we can do it in a favorable economic way to us and making sure there are no hiccups for our customers.

Jim Schneider, Semiconductor Analyst, Goldman Sachs: Okay, wow. You answered my next eight questions maybe in that end, but I do want to maybe rewind for a second and just kind of go back to ask you. Relative to EPMR and ultra-SMR, you mentioned those capacity uplifts for the next generation drives. What portion of your total shipments are coming from those two technologies right now?

Kris Sennesael, CFO, Western Digital: Yeah, so ultra-SMR is in the 40 to 45% of our nearline shipments right now and moving up towards 50% by the end of calendar year 2025. The customers love the product because, again, the customers want more exabytes. One way to get to more exabytes is qualified ultra-SMR. It’s a proven technology. It gives you 20% more capacity in a reliable way. Again, two of our five large customers have ramped. The third one, we finished qualification and now we’re moving on to a fourth customer for qualification. In addition to that, some of the smaller customers already have adopted ultra-SMR as well. It’s a proven technology. It’s great performance. It gives you more exabytes.

Jim Schneider, Semiconductor Analyst, Goldman Sachs: Okay. You mentioned your HAMR schedule. Going back a few quarters, I think it’s fair to say that we saw your largest competitor struggle a little bit to ramp that technology with their lead cloud segment customer. Do you believe you’re going to have a smoother transition with your ramp as you do that? Has the additional time and development given you more confidence in sort of executing the technical and operational aspects of that transition?

Kris Sennesael, CFO, Western Digital: Yeah, I think that’s definitely our strategy, right? We know how to ramp new technology. We just did it in March. We shipped 800,000 units in the first quarter of our new EPMR generation. In the second quarter, we shipped 1.7 million units. This quarter, we will ship more than 2 million units. This is high quality, high reliability, no supply issues. Customers love it, right? We’re going to repeat that when we launch and ramp up our next generation of EPMR. We want to do something similar in the first half of calendar year 2027 when we ramp HAMR. We’re not feeling rushed. The customer is not pushing us. The customer is not rushing us either. We want to make sure the quality and reliability is good. The manufacturability and manufacturing yields are under control.

When we feel good about that, and we’re on schedule with that, right, to ramp it in the first half of 2027.

Jim Schneider, Semiconductor Analyst, Goldman Sachs: Great. Just in terms of customers, is there any sort of framework or kind of sizing you can put on your exposure to the largest four or five hyperscale cloud customers? Is it fair to say they represent sort of more than half your business at this point?

Kris Sennesael, CFO, Western Digital: Yeah, yeah, I think that’s fair. I think in our last 10-K, we disclosed that our 10 largest customers, which of course includes the five largest, was on or about 68% of revenue, right? Several of those large customers now have crossed into their plus 10% range. Those are great customers, right? Those are the most innovative, most successful companies on the planet with very deep pockets. They are committed to make AI a reality. They’re investing a lot. They themselves have strategic partners throughout this whole ecosystem. It’s really encouraging for us to have a seat at the table with them to strengthen, again, the engagements we have with them and being recognized as a strategic component in this whole ecosystem because you don’t have AI without data. You don’t have data without storage, right? They fully understand that it’s a critical component. I think we’re well positioned.

Jim Schneider, Semiconductor Analyst, Goldman Sachs: Just to ask you briefly about your client and consumer businesses, what’s the long-term trajectory you see for those businesses? Do you think they’re in a kind of a long-term state of decline, or do you see them maintaining a certain chunk of your revenue for a while longer?

Kris Sennesael, CFO, Western Digital: Yeah, so in the last quarter, cloud was approximately 90% of total revenue. That means client and consumer. Client is the PC, a little bit of desktop business, and consumer was on or about 10% of total revenue. Investors don’t pay too much attention to it anymore because it’s only 10%. We believe that business will continue to grow. The cloud business is probably going to grow faster than the consumer and client business. As a result of that, as a percentage of revenue, it might continue to go down from the 10% it is today. Overall, that is still more than $1 billion of revenue. The gross margin profile of that business is improving because we also see a stable pricing environment in that part of the business. We continue to drive the cost down. Hence, we also have gross margin improvements in that part of the business.

It doesn’t require a lot of OpEx. From an operating margin point of view, that’s a very solid, profitable business where we continue to see growth, maybe not as fast as the cloud business, but continue to see growth.

Jim Schneider, Semiconductor Analyst, Goldman Sachs: Okay. Financials, we got 25 minutes in. I didn’t ask you about the financials yet. Let me do that. Starting with what you just brought up with this gross margin. One question that I get from investors most frequently is the trajectory for gross margins in your business. Can you maybe kind of provide some perspective about how much natural room you see over the next, say, two years to expand gross margins from here? What are the drivers? Is that pricing, cost, mix, otherwise?

Kris Sennesael, CFO, Western Digital: Yeah, so I mean, really happy with gross margins starting with a 4 handle. I mean, a couple of years ago, people were thinking about how this drive was something in the 20s. That’s what it was. Eventually, we got into the low 30s, mid 30s, high 30s. At least Western Digital, we crossed into the 40s, low 40s right now. I think that’s really good. Today it’s a totally different business, right? Three, four, five, ten years ago, it was client-consumer. There was a little bit of cloud. Today, it’s AI, data-centric cloud. A total different ballgame. A totally different value proposition. A totally different set of customers. We’re in the low 40s right now. We only got one quarter at a time, but I’ve indicated, yes, there is some more juice to be squeezed. I think there is still some further improvement on gross margins.

When I think about gross margins, I think you summarized it really well. There’s three elements, right? There’s price, there’s cost, and there is mix. On price, we already discussed. We see a stable price environment, which is much better, again, than what we’ve seen historically. Historically, we’ve seen on or about a 7% year-over-year ASP erosion on an ASP per terabyte basis, right? Today, it’s stable. Not only today, I think the next couple of quarters, years, it looks like it’s going to be stable. Eventually, I mean, there could be some ASP erosion, but currently, it’s stable. We’re doing a really good job on driving down the cost, right? Multiple elements there. Probably the largest one is areal density getting to higher capacity drives, right? That really helps from a cost per terabyte.

In addition to that, the teams are executing really well in driving down cost in our own manufacturing environment as well throughout the supply chain. Great execution there. Then mix is trending in the right direction, right? When I think about mix, it’s about mix towards higher capacity drives, mix towards more ultra-SMR, mix shifts, including our platforms business. We haven’t talked too much about that, but we have a platforms business that is accretive from a gross margin point of view because we add more value there as well. A combination of all of that, I think, gives me confidence that there are more gross margin improvements to come.

Jim Schneider, Semiconductor Analyst, Goldman Sachs: Very good. Now, between you and your main competitor, there’s a 4% difference in your target financial models. To what would you attribute that difference? Could you maybe address the level of confidence you have in achieving a somewhat higher goal than you’ve laid out?

Kris Sennesael, CFO, Western Digital: Yeah, I can’t really speak to my competitor and their model and their probably target model that they laid out. The way I look at it, it’s definitely not an apples to apples because we did not lay out a target model on the February investor day, right? We laid out a base case model, almost like to be considered as a floor.

Jim Schneider, Semiconductor Analyst, Goldman Sachs: A floor.

Kris Sennesael, CFO, Western Digital: A floor, right? Not a target, a floor, right? That’s why we are operating well above the floor right now, right? To maybe summarize what we said at the model, growth in exabyte at 15% CAGR base case, potentially up to 23% with AI CAGR. As I said before, I think we are definitely trending towards the high end of that exabyte growth. We also indicated a 7%, or in our model, we assumed a 7% ASP erosion. As we discussed earlier, that’s trending kind of more flattish, right? Stable. We’ve also had a 38% gross margin floor. As we discussed earlier, we’re now in the 40s, low 40s, with further potential expansion from there. We’ve also indicated on or about 14% OpEx. If you look at currently, we’re more in the 13 or sub 13% OpEx to revenue.

That is despite the fact that we’re not starving the business, right? We are investing in technology and product roadmaps. We are investing in our next generation EPMR in parallel. We are investing in HAMR. We do see, as revenue continues to grow strong, further leverage in our model and OpEx as a percent to revenue could continue to go down from our current levels. That translates into very strong bottom line growth and also very strong free cash flow.

Jim Schneider, Semiconductor Analyst, Goldman Sachs: I want to ask one question on your LTAs with hyperscale cloud customers. What portion of your business is kind of covered by those agreements? Maybe talk about the terms under which they operate, whether that is volume commitments, pricing, revenue, and just kind of other things that are tied into the contract.

Kris Sennesael, CFO, Western Digital: Yeah, we have not disclosed that, but you can do a little bit of the math yourself, right? Earlier, I said that the top 10 is 68% of the volume. We only have those LTAs and POs out many, many quarters. Although the number 6, 7, 8, 9, and 10, we have good growth there as well. They also start putting in orders a lot more ahead of time, right? With the top five, you can do the math there a little bit, how much that covers. I’m not going to discuss in detail the commercial arrangements we have with each and every customer. When you think about POs, yes, POs have quantities and price in it, right? Again, with one customer, it’s an LTA, but you can consider the LTA something similar as a PO as well.

There is a lot of teeth into those LTAs and POs that we have out there.

Jim Schneider, Semiconductor Analyst, Goldman Sachs: Okay, very good. Last question, capital return. Maybe outline the plan at a high level. What are your thoughts on dividends and buybacks today and once you reach your net leverage target?

Kris Sennesael, CFO, Western Digital: Yeah, yeah. Maybe to wrap it up, right, I think we have strong top line growth. We continue to expand gross and operating margins. That translates in strong bottom line. That translates in combination with good working capital management and strong free cash flow. There is still further opportunity to increase the free cash flow and improve the free cash flow margin. I think we feel really good about that part of the business. Secondly, we have strengthened the balance sheet, right? At the separation back in February of 2025, the balance sheet became a lot stronger. Post-separation, we furthered on some debt reduction. At the end of last quarter, we still had $4.7 billion of debt, $2.1 billion of cash. That translates in $2.6 billion of net debt at on or about $2.6 billion of EBITDA. We’re down to one turn on net debt EBITDA leverage ratio.

We’ve indicated at the analyst day, we target one to one and a half. I’m actually comfortable even going below the one, right, and further strengthen the balance sheet. Keep in mind that we still have 7.5 million of SanDisk shares that we have indicated at a certain point we will monetize prior to the one-year anniversary of the separation. That’s worth almost like half a billion at today’s prices. That is fantastic. There is still some potential for further deleverage of the balance sheet as well and get below one turn, as well as EBITDA, of course, continues to grow as well. What do we do then with the excess cash? We’ve initiated a shareholder-friendly capital return policy. We’ve stated that all the excess cash will be returned back to the shareholder through a combination of our dividend program and the share buyback program.

The dividend program was initiated two quarters ago at $0.10 per share per quarter. At the time of initiation, it was 1% dividend yield. Now it’s down to 0.5%. Nobody is complaining. We’re committed to our dividend program. There is going to be, for a certain period of time, some accelerated growth to get a stronger dividend program. Once we get to a more comfortable level, there will be further growth, but more in line with our free cash flow growth. That’s the dividend program. In addition to that, on, I think, May 13, the day after I joined Western Digital, the board authorized a $2 billion share buyback program. We immediately switched that on. In just a month and a half, in last quarter, we did $150 million, right?

This quarter, I’ve indicated, it’s going to be three months of activity and a meaningful step up of what we did last quarter. We’re committed to this program. There is no hesitation to buy back stock at today’s prices or anything, right? Very strong capital return and returning excess cash back to the shareholders.

Jim Schneider, Semiconductor Analyst, Goldman Sachs: Great. That’s about time. Kris, thank you for being here. We appreciate it.

Kris Sennesael, CFO, Western Digital: Enough. Thanks for having me.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.