HAMR Production and Qualification
Q: Are HAMR delays resolved, and can you meet shipment targets?
A: We've addressed the mechanical component issue by using alternative suppliers and quickly recovered our schedule. We remain confident in completing qualification this quarter and shipping units. While we won't specify exact HAMR unit forecasts, we plan to aggressively ramp HAMR production to meet customer demand.

Gross Margin Outlook
Q: How will pricing and HAMR impact gross margins ahead?
A: We've successfully improved pricing over recent quarters and expect continued gross margin expansion, reaching 30% or higher during this calendar year. As we scale HAMR volumes, gross margins should further improve, potentially exceeding prior targets.

Cloud Demand Recovery
Q: What is the pace and sustainability of cloud demand recovery?
A: Demand has notably increased in the last 90 days. We see exabyte growth accelerating and are optimistic about sustained recovery. However, we're ensuring we don't overbuild, focusing on predictability and long-term financial health.

Supply-Demand Balance Strategy
Q: How are you managing supply to prevent overbuilding?
A: We're diligently controlling builds and sticking to a build-to-order model to avoid supply chain inertia. This ensures we align production with actual demand, improving financial predictability.

Impact of AI on Business
Q: How is AI affecting your business and competition with Flash?
A: We're seeing new orders labeled as AI from cloud providers, indicating growing demand. HDDs remain competitive for mass capacity storage, even considering power and space, and we don't see Flash as a direct conflict in this segment.

Broadcom Deal's Financial Impact
Q: How will the Broadcom deal affect OpEx and gross margins?
A: The transaction will reduce OpEx by about $40 million in fiscal '25. We don't expect any significant changes to gross margins from operations.

Component Sourcing Flexibility
Q: How flexible are you with component suppliers for HAMR?
A: While we produce critical components in-house, we source many parts externally and have multiple suppliers for key components. This allows us to switch sources as needed without major disruptions.

Gross Margin Improvement vs. Past Cycles
Q: Can gross margins step up sharply like in past cycles?
A: We're seeing gradual gross margin improvement each quarter through better pricing and costs. Every cycle is different, but we aim to reach our target range even at lower revenue levels.

28TB SMR vs. 32TB HAMR Products
Q: Will 28TB SMR ramp cannibalize early HAMR deployments?
A: Different customers have varying requirements, so there's no one-to-one swap. Our product commonality allows us to quickly adapt to customer preferences without significant cannibalization.

Customer Build-to-Order Plans
Q: How are you managing customer build-to-order plans ahead?
A: We're engaging with customers to ensure predictability over the next 3–4 quarters. As demand strengthens, we're adjusting builds accordingly while rewarding customers who provide better forecasts.