A：The Mosaic 4 plus platform features up to forty-fourth raby's per drive, thirty more capacity compared to the first generation mosaic drives, and incorporates internally designed laser and integrated photonic circuitry into the recording head for high volume and extreme precision manufacturing.

A：The Mosaic 5 product is planned to deliver capacities at petabytes with qualification shipments targeted for late calendar 2027. These drives will leverage advanced photonics expertise and internally designed laser to extend aerial density capabilities.

A：Seagate plans to use the 4 and 5 TB capabilities to produce cost-efficient, lower capacity products for enterprise data centers and edge IoT applications. This unified platform approach aims to simplify the product portfolio, enhance manufacturing and supply chain efficiencies, and provide strong economics over the long term.

A：The March quarter's results were significant for Seagate as they exceeded expectations for revenue, operating margin, and earnings per share while setting a new profitability record. The results reflected sustained data center demand and further strengthened Seagate's balance sheet.

A：In the March quarter, Seagate's revenue was $3.1 billion, up 10% sequentially and 44% year over year. The gross margin was 47% and the non-GAAP operating margin expanded to 37.5%.

A：Seagate's March quarter revenue was primarily from the data center market accounting for 88% of exercise shipments and 80% of revenue, with strong contributions from global cloud and enterprise customers. The company shipped 175 exabytes into the data center market, a 6% sequential increase and a 47% year-over-year increase. The IoT market made up 20% of revenue.

A：Non-GAAP gross profit increased to $1.5 billion, a 23% quarter-over-quarter growth and an 87% comparison with the prior year period. Non-GAAP operating expenses were in line with expectations at $196 million, and non-GAAP operating profit was $1.2 billion, a 30% sequential improvement.

A：Seagate expects free cash flow generation to improve further through the remaining quarter in fiscal year 2026, supported by sustained demand trends, operational efficiency, tax savings, and capital discipline. Capital expenditures for the last quarter were $161 million, and for fiscal year 2026, they are targeted to be inside the range of 4 to 6% of revenue.

A：The specific tailwinds to HHDs from AI include the need for storage capacity to handle large data sets that are created and processed by AI systems. This benefits HHD demand as AI applications often involve querying enormous data sets and generating new data that needs to be stored. The speaker notes that while some applications are small data applications, others drive significant data requirements, which impacts the storage tiers, including HHDs.

A：Seagate has focused on minimal platform changes to derisk product transitions and leverage the install base, which has allowed for cost reductions. They aim to minimize changes while adapting to technology evolution, especially in the heads of media. Seagate has observed that for the second generation of the hammer, they are achieving higher aerial density with small changes, mainly in laser, photonic circuitry, and media material set, enabling cost leverage. Future cost reductions will be driven by the continued fast growth in the mix change and the utilization of higher capacity dies, as well as the transition to the hammer roadmap, which has shown significant improvements in terabytes per unit without major changes in materials, suggesting robust cost-efficiency.

A：Seagate anticipates that pricing trends will continue as more new contracts come into play. The company believes in locking in true demand with customers to provide predictability in economics for building data centers and ensuring favorable pricing for products manufactured. As for the transition of Mosaic to Mosaic 3 and the overall Hammer exablate crossover, the company remains on track with these milestones, with an expectation for Mosaic to crossover with Mosaic 3 towards the end of the calendar year.

A：The company is confident in the opportunity to increase profit and revenue sequentially through the fiscal 27, specifically until the 22nd of the next fiscal year.

A：The company continues to focus on increasing the capacity per spindle as the highest priority, rather than changing the product structure or roadmap. There is a focus on improving performance and continuing to support demand through improvements in endurance and data management for AI and compliance purposes.

A：The company plans to retire a significant amount of debt, including convertible debt, which has been creating dilution. The majority of the company's near-term capacity is already allocated for the next few quarters. After addressing the remaining convertible debt, the company intends to return value to shareholders, with share buybacks being a probable outcome.

A：The company's focus is on increasing the capacity per unit, which involves managing a complex supply chain with various suppliers and long lead times for critical components. The company aims to orchestrate this effectively to enhance the overall amount of exabytes in the world, improve energy efficiency, and scale space efficiencies.

A：The company's strategy involves increasing the aerial density and continuing to drive technology innovation for efficiency improvements. This is in line with customer needs for energy efficiency and space optimization. The company is also looking forward to the second and third generations of its technology, including achieving a petabyte by the end of the next calendar year.

A：The company's pricing strategy has not changed, and it continues to execute on that strategy, which has led to increased profitability for the past 12 consecutive quarters. The pricing strategy is focused on trends without changes in how customers are moved to different products. The company anticipates a consistent pricing dynamic for the remainder of fiscal 27 and potentially beyond.

A：The expected year-over-year growth in price per exit byte for longer dated orders at the end of fiscal year X is characterized as being in the low, mid, or high single digits.

A：The expected profitability improvement is coming from pricing, the change in product mix, and the reduction in cost that the 4K terabyte drive will provide.

A：New products and higher capacity products are part of the company's strategy to address lower densities and increase market share aggressively, with demand considered to be high relative to supply.

A：The company is seeing strong demand, resulting in outperformance compared to a year ago, with execution that is even better than planned. The team is aggressively pushing aerial density, which is translating into a mix that allows leveraging more on the 40 TB drive.

A：The company's view on the future trajectory of operating expenses is relatively flat. While there is a possibility of increasing investment for technology, there is no need at the current time, and the team is managing a big Opex portfolio to adjust priorities internally.

A：The total number of units is not expected to increase unless there is a resurgence in edge computing. The strategy to maintain current unit levels involves using hammer capacity ahead of TMR to keep units steady.

A：Hammer shipments are expected to exceed half of total exabyte shipments by the end of fiscal 27, driven by the anticipated 70% of hammer shipments being on the Aer Drive by the end of fiscal 27. This is also influenced by the current strategy of making sure the product blend is right in the wafer fab, as everything is spoken for and not all capacity is allocated to mosaic floor.

A：The expansion of the company's margins is being driven by leveraging existing technology to increase exabyte output and effectively manage costs while increasing storage capacity in the data center.

A：In data centers, a higher TB per flat (e.g., 3 TB, 4 TB, 5 TB per PLA or drive) signifies enormous value through space efficiency, reduced costs on supporting components, and lower power consumption, which customers find compelling.

A：Customers are leaning towards hard drives because of the value proposition they offer, and the company is able to drive this without adding too much incremental cost, which is expanding the company's margins.

A：While NAND has its niches where it outperforms hard drives, the company does not foresee a significant shift in the storage tiers within the data center due to economics. However, they acknowledge the need for both technologies to coexist as they serve different data market needs.

A：The strategy for addressing lower capacity points in the future involves scaling up the existing Mosaic technology, but the decision to ramp down to 20 TB on Mosaic 4 is dependent on the market's demand and the economics at that point.

A：The company is currently focusing on achieving higher free cash flow and optimizing pricing strategy rather than implementing prepayment models. While not excluding the possibility in the future, prepayment strategies have not been a focus to date.