Western Digital CEO: AI inference is generating more data and requiring storage hence demand growth

Core Insights - The company is experiencing significant demand driven by advancements in AI, particularly in model training and inference, which require increased storage capacity [2][3] - The company has been preparing for this demand surge over the past three to four quarters by innovating and delivering higher capacity drives [2][5] - Current product offerings have increased from 24 terabytes to 32 terabytes per drive, with plans for even higher capacity drives in the near future [5][6] Production and Capacity - The company is not adding production capacity in terms of unit output but is focusing on technological innovation to deliver higher capacity drives [4][5] - The emphasis on higher aerial density drives has contributed to margin expansion [5] Customer Base and Market Position - The company primarily serves hyperscale customers, as the majority of storage is shifting to the cloud due to the need for AI capabilities [8][9] - Engineering teams are closely aligned with the needs of hyperscale customers to meet their capacity and functionality requirements [9] Market Outlook - Demand for storage is projected to grow at a compounded annual growth rate of 25% over the next five years [10] - The company has secured long-term contracts with major customers, indicating strong future demand, with some agreements extending to the end of calendar year 2027 [10]