Seagate Technology Holdings Conference Call Summary Company Overview - **Company**: Seagate Technology Holdings (NasdaqGS:STX) - **Date**: December 01, 2025 - **Key Speaker**: Gianluca Romano, CFO Industry Insights - **Industry**: Hard Disk Drive (HDD) and Storage Solutions - **Current Market Condition**: Supply-demand tightness has persisted for over two years, with demand consistently exceeding supply [2][8][34] Core Points and Arguments 1. **Supply-Demand Dynamics**: - Demand for HDDs has been above supply for over two years, with a focus on increasing exabytes rather than unit capacity [2][3] - Seagate aims to transition customers to higher capacity drives using HAMR technology, which can increase capacity from 30TB to 50TB and beyond [2][5] 2. **Capacity Expansion Strategy**: - Seagate does not plan to expand unit capacity based on customer prepayments; they will self-fund any future capacity increases [4][5] - The company is currently booked out through 2026 and into 2027, indicating strong demand [8][20] 3. **Profitability and Gross Margin**: - Seagate has doubled its gross margin in less than 10 quarters, focusing on consistent pricing strategies and moving customers to higher capacity drives [5][28] - Gross margin has expanded by 400-500 basis points in the last calendar year, driven by product mix and pricing strategies [28][29] 4. **Demand Drivers**: - AI applications are significantly increasing storage consumption, particularly in video storage [11][12] - The company does not see HDDs as a bottleneck in data center build-up; other components, such as power, are currently more constraining [10][34] 5. **Technology Roadmap**: - The qualification of HAMR drives is accelerating, with five customers qualified and more in the pipeline [22][24] - By the end of the fiscal year, 40% of exabytes sold will be from HAMR products, increasing to 70% by the end of fiscal 2027 [25][27] 6. **Market Position and Competition**: - Seagate does not view SSDs as direct competitors for the same workloads, as HDDs remain essential for data center storage needs [13][16] - The cost gap between NAND and HDD is expected to widen, benefiting HDDs as HAMR technology reduces costs per terabyte [39][40] 7. **Cash Flow and Capital Return**: - Seagate has reduced its debt from over $6 billion to $4.5 billion and plans to increase shareholder returns through dividends and share buybacks [35][36] 8. **Future Outlook**: - Demand growth is projected at a mid-20s percentage CAGR over the next three years, with short-term performance exceeding expectations [37] - The company is monitoring order volumes and market conditions closely to identify any signs of demand slowdown [34] Additional Important Insights - **Customer Agreements**: Long-term agreements with customers are in place for exabyte allocations, providing confidence in future demand [21] - **CapEx Contribution**: HDDs represent a mid-single-digit percentage of total data center CapEx, indicating a stable market share [45] This summary encapsulates the key insights and strategic direction of Seagate Technology Holdings as discussed in the conference call, highlighting the company's focus on capacity management, profitability, and adapting to market demands.