Seagate Technology Holdings plc (STX) Citi's 2024 Global TMT Conference (Transcript)

Company and Industry Overview * Company: Seagate Technology Holdings plc (NASDAQ:STX) * Industry: Hard Disk Drive (HDD) manufacturing and storage solutions * Event: Citi's 2024 Global TMT Conference, September 4, 2024 Key Points Revenue and Profitability * Revenue: Sequential revenue growth of more than 10% expected for Q3 2024, with guidance ranging from $1.05 to $1.40 billion. * Profitability: Sequential profit guidance increased from $1.05 to $1.40 billion, with the midpoint of $1.25 billion expected to be surpassed. * Driver: Improved mix of 48TB CMR and 28TB SMR drives, along with better pricing than expected. Market Segments * Cloud: Cloud segment remains the primary driver of growth, with sequential improvement since September 2023. * Enterprise OEM: Enterprise OEM segment starting to improve, driven by server demand and potential AI applications. * Video Image Application: Video image application segment expected to contribute to the upcycle in the next few quarters. Demand Drivers * Data Growth: Continuous growth in data storage driven by various applications, including AI. * AI: AI expected to be a significant demand driver for HDDs, particularly in the long term. * Capacity: Focus on profitability and long-term demand, with disciplined capacity management to limit the impact of down cycles. Technology and Product Roadmap * HAMR: HAMR technology progressing well, with qualifications in multiple market segments, including enterprise OEM and video image applications. * Capacity: HAMR drives expected to achieve 40TB per disk by the end of 2025, with lower cost per terabyte compared to PMR drives. * Cost: HAMR drives expected to have similar unit cost as PMR drives, with higher capacity and improved profitability. SSD Cannibalization * Cloud: SSD cannibalization not significant in the cloud segment, with HDDs still dominating storage solutions. * Enterprise: SSD cannibalization expected to increase in the enterprise space, particularly for low-capacity drives. * Legacy: Legacy HDD segments (mission-critical, client, and consumer) expected to decline in importance, with focus shifting to mass capacity and HAMR drives. Capital Allocation * Debt Reduction: Focus on reducing debt to approximately $5 billion, with potential share buyback in the future. * Dividend: Dividend remains a priority for shareholder return, with protection during the down cycle.