Western Digital Corporation (WDC) Earnings Call Transcript & Summary

Very happy for our next session. I have Western Digital. And with WD, we have Dr. Siva Sivaram, who is the President of Technology and Strategy at WD; and we also have Peter Andrew, who runs IR at WD. Peter is going to read a statement, and then we'll get it to Q&A.

Yes. First, Tim, thank you for having us here today. During this presentation today, we may make forward-looking statements and I ask that you refer to our SEC filings for the risks associated with these statements. In addition, we might make references to non-GAAP financial measures, and a reconciliation of our GAAP to non-GAAP can be found on our website. So let me pass the mic back to you.

Perfect. Well, Dr. Sivaram, there's -- technologist, so maybe I'll lead with a technology question. There's quite a debate, I would say, on the HDD side in terms of technology and who's in the lead, who's not. There's a lot of interesting things happening and the potential for the -- to look different when we come out of this downturn. So maybe in a loaded question, can you sort of go into your technology position in HDD?

Yes. Thank you for having us here, Tim. I know that you said there's a lot of debate. In our minds, there is no debate here, right, as you would expect me to say. In May of this year, we made the announcements on our 22 terabytes CMR and the 26-terabyte SMR drives. We also showed a road map, making sure that our energy-enhanced PMR drives continue on a road map to 30-plus terabytes. We are shipping these products. We are qualifying these products at all the hyperscale customers. We are qualifying SMR at a rate that we will be shipping over 25% of our volume this quarter at SMR. In -- by the time we finished our fiscal year in June, we'll be shipping well over 40% of our capacity enterprise shipments to hyperscalers be in SMR. So we are very, very well positioned with a very strong road map with technologies that are already proven, technologies that you can touch and hold and run today and a road map that enhances on them. Just SMR uplift of over 20% from a 22-terabyte CMR to go get 26-terabyte SMR, there is no one in the competition that can do it. And the fact that our customers, two major hyperscale customers are going exclusively into SMR. This kind of result shows where we are in the marketplace. Even our last quarter results show where we are in the marketplace with respective technologies. So when the market does turn around, we expect to be in a very, very strong position.

Great. And let's sort of dovetail into some share dynamics and maybe what the industry could look like in terms of gross margin coming out of this? It used to be that you and your competitors used to have 40%, 45% share, and it used to oscillate back and forth. And the third party would have roughly 10% and the customers would want them to always be in the game because it would keep the triumvirate versus a duopoly. But now the technology seems to be moving so fast that it really is becoming more of a duopoly. So can you talk about how that and other factors, just simply how you're now -- you've been on the cusp of a CapEx cycle, there aren't any more client bits left to basically replace and migrate over to nearline. So as the cloud continues to demand more bits and there's more CapEx that you and your competitors need to throw at it, it's going to probably be pretty reticent after what's happened to spend money out of this downturn. So to me, it sort of argues that we can see a pretty strong ramp in gross margin out to the other side of the cycle.

So you said it very nicely, Tim. The marketplace has always been tough. It is a competitive marketplace. We have had three players that do truly compete in the marketplace. We have established -- we have put some space between us and the rest with the respective technology. We have products in the marketplace that we are selling. And as you said, this is no longer going to be a share gain game. That is not something that we are trying to go gain share by giving up on margins. We are going to be looking at value creation, how do we make sure we get the value that as our customers gain more from the drive that we create, how do we get our fair share. And this downturn in particular, and in general, we have become very, very careful with capacity as you just mentioned. There is no longer the client drives that you just go take that capacity and convert that into nearline capacity. There's no more of that. That conversion for both us and our competition is completed. Any new capacity has to involve spending additional capital. We are being very, very prudent with our deployment of capital right now, and we'll continue to be in the future. So coming out, given our technology leadership, given the insatiable demand for bits, given that the HDD is still the biggest storage for the cloud and given our carefulness with capital, we do expect our margins to rebound to the kind of levels that you would all expect in the mid- to high 30s before we get too far. In the short term, as you would expect, given the underutilization, margins are going to be under pressure because of the absorption charges that you would have in the short term. But in the long term when we recover out of it, we do expect HDD margins to be getting up into the mid- to high 30s.

I guess -- I mean, you're a technologist, what do you think, do you think that high 30s or even 40% gross margin, that's the technology you bring to the market, is it a high 30s, 40% gross margin business?

You know the level of complexity of this business, the amount of technology investment that goes into it, the amount of brain power that you need, this is not something that you turn the car and can get done. Magnetic recording may go from perpendicular magnetic recording to the new features we are adding with respect to new error-correction schemes with respect to the flash integration and what you've done with OptiNAND with respect to the additional energy enhancement teams with getting the ePMR road map pushed forward with triple-stage actuator. With all of these putting together, there is a lot of value being added and with the ability to provide in the same 1-inch form factor. In the last 10 years, they've gone from 14 terabyte and now we are talking about 26-, 30-terabyte road map. Lot of complexity. And as data gets to that, how our customers get their value, they do get a lot of value out of these hard drives. And it is only natural that going forward, we would expect our fair share of that value being created. And clearly, any number starting with four is a good place to go set as a target.

So let's talk about HAMR for a moment and sort of the interplay and the conversion between SMR and HAMR. HAMR, I think the first patent on HAMR was, what, maybe 20 years ago. I mean, it's been out there for a long time. Your competitors beginning to ship next year. What sort of -- can you talk about how you think SMR can compete with HAMR drives in the marketplace? I mean, obviously, HAMR allows you to scale and it has cost benefits. But just talk about SMR versus the HAMR.

Yes. They are not competing technologies. Whatever we do with the recording technology, these SMR and these enhancements will go on top of them. So surely, when we introduce them and we're going to have SMR HAMR. That uplift will be there. What HAMR allows us to do is to extend the road map. The road map is currently very strong. We have very clear line of sight with respect to 10, 11, 12 disks and we are adding the OptiNAND enhancements, the SMR enhancements put them all together with the aerial density improvements we are seeing just on energy enhanced all the way to 30-plus SMR on top. When HAMR proves out to be both reliability and cost competitive with this established technology in our hand, the incumbent technology, the nice thing about it is customers have used it. They have installed a lot and run this over time. Any new technology like HAMR is going to need to prove that before it becomes massed up. When that happens, we'll also have OptiNAND on top of it, SMR on top of it. So we expect to have a very strong HDD road map even going forward after HAMR gets it. We are not forcing HAMR. We are letting HAMR come to us at the right time when the cost crossover happens, reliability crossover happen.

So let's talk about cost curve in HDD versus in SDD versus in NAND. In some ways, you're reaching the -- I don't want to say diminishing returns in NAND cost, but the scaling was you got massive benefits initially, 64, 128. Now we're doing string stacking. So the big jumps in cost start to go down a little bit. Whereas in HDD, you could argue that the cost curve has just become a lot more extendable with HAMR. So can you talk about the relative cost curve between NAND and between -- now this is not as big of a deal for you because you sell them both, but can you talk about the relative cost curve between HDD and NAND and the potential over time for NAND to start to more meaningfully displace these larger capacity markets.

In our minds, this model of HDD displacing NAND -- I'm sorry, NAND displacing HDD, came in, in the prior client cases in the PCs where they are -- they have overturned them. That model doesn't quite hold true in the data center space. In the data center space, given a fixed form factor how higher capacity can I do so that the customer can fit more data and grow. There, HDD is going gangbusters. In that same 1-inch form factor, we have already taken 2x capacity into them without increasing, with the cost curve going down on top of it. So they get the double benefit of the cost going down and the capacity increasing the same contract. The amount of data that is coming in and that needs to be stored over for the long term, what we call cooler -- our cool data is ballooning. That needs to be long-term store in HDD. Flash has its own unique use case. When it is fast data that needs to be accessed and processed, the example I'm often using is when you are driving an autonomous car and you see a few -- headlights coming at you, you want that data processed instantaneously so that the car can make a decision. There, it will always be an SSD that is used in that way. And I want to make sure as that grows, that has its own unique places where it gets grows. These two tracks are in parallel. The fact that one is getting per bit cost lower is not going to make a big impact for a long time more even if the bit cost reduction on one is 15% or 16% in the flash case and in the HDD case, maybe in the teens. That's not the one that is going to make the biggest impact in -- this is not a replacement. These two tracks will run parallel for the foreseeable future. Now is there going to be a major breakthrough in one or the other, like you said, maybe we don't just do string stacking, we do some new things in flash. Of course, we want those to happen. That's why we run on both sides of these.

So let's talk about NAND. So you -- I always characterize your approach as brownfield versus the peers are more greenfield. You're very capital efficient. And you've proven that out over the years and your cost downs are very, very similar, if not better than your peers. So can we just talk about what's happening there? BiCS5 today, I think, is 80%, 85% of your wafers. You would normally be ramping BiCS6 right now, you're not skipping BiCS6, but using a ramp BiCS6 between them in particular markets, you're not going to ramp it as completely as you would have if the market was better. So can you talk about just what that it does to your cost curve? Obviously, there's going to be a blip in the curve. It won't be 15%, but can you still cost down while this is happening and how?

Yes. So two sides to the equation. On a technology sense, we look [ far and about ]. When BiCS4 or BiCS5 or BiCS6 or BiCS8 is done, we don't know what the market is going to be. So you determine the technology strategy well ahead of time. You are trying to form for the long term. So when I'm now designing whatever, BiCS9, BiCS10, we are thinking about what happens 4, 5 years from now. When we implement it, the only weapon we have at that time is what percentage of the capacity I may want to convert into that [ result ]. So we said BiCS5 is now running 85%, 90% of our wafers [ selling ] on BiCS5. BiCS6, we may not take it. We'll take only, let's say, 25%, 30% upper capacity may go into BiCS6. Whereas BiCS8, we may take into [indiscernible]. That lever, I still have real time as they go along. So longer term, our focus on minimizing capital spend, the metric you want to measure is how much capital do I spend per 1% reduction in bit cost. That metric will still be very valuable because I have to 2 levels to go increase in amount of bits, both by the technology and in the amount that they convert. Whereas reduction in cost is the one that will drive everything. In the short term, you're right, we are only operationally gaining efficiency. BiCS5 is going to run. We gained by improving yield, improving back-end costs, improving supply chain efficiency, those kind of things. That will not give you a 15% cost reduction, but it will still give you cost reduction. BiCS6 will give you a cost reduction. BiCS8, when we ran, will give you -- get back the curve much stronger.

And how is your road map going to be impacted by your JV partner not having a great liquidity position. Does that have any impact on your road map? I mean at the end of the day, you're in a JV, and you're -- in some ways, I mean, yes, you have your own development. But in some ways, in terms of the JV, you're only as good as your JV partner?

So we've had a 22-year life together as a married couple. We have been together, making wafers and bits for a very long time. Both of us have gone through rough times and good times. They have been a very good partner to us. They have managed their business the way they like, they emphasize on the kind of markets that they want to ship. We have chosen this vertical integration profile, where we spend not just on that development, we spend a lot more on engineering, customizing products to our customer needs, then delivering it as a fully finished system. With this in mind, despite all this, we have done very well. R&D goes on as planned. Both of us talk a lot together, communicate a lot together so that we can plan our capacity expansion, no transitions. We have done that very well over, and we'll continue to do that.

Having said that, the current actions that they're taking versus what you're taking are actually quite different because they're actually cutting negotiation, they're cutting start-ups, you're not doing that. So the underabsorption cost of the fab are being absorbed by them, not by you. Now there are the times where the opposite has been the case. So can you talk a little bit about that? Is that more because of the end markets that you're choosing to serve?

Exactly. Precisely correct. This also shows the resiliency of the JV. The JV's resiliency allows each of us enough room to maneuver. We have enough individual freedom that I can ramp a certain node and not that node. I can allow for underutilization and one as opposed to the other. We can keep our costs very clear. We know what each cost are attributable to whom, and we make sure we divide up fairly. In this case, given our markets, we play with a bunch of our bits going into client where we see a small uptick in demand. We want to make sure that we are able to meet that. We have our consumer business that seems to have bottomed out. And even if it is not going up, it is at least we know where we can place bits and what kind of revenue we can get out of. We are able to make those decisions. Now none of this is cast in stone. We talk weekly. We talk all the time whether I want to underutilize, you want to underutilize, I want to ramp here. We do that all the time. No decision is one that is irreversible. They have made the call in September to take their demand down by 30% their underutilization. We are doing it by reduction in CapEx and pushing out BiCS8 -- BiCS6 ramp. Between us, we will continue to talk and know what is prudent for our end markets.

So can you talk through the logistics of that? [ Nick ] and I were talking about this earlier, not today, but previously. So I mean, there are the JV fab. So the fabs themselves run underutilized but you take the same number of wafers that you had committed to. They're the ones who are taking less wafers. Therefore, they're the ones to absorb the underutilization.

That is exactly correct. So model the fabs, the JV fabs -- as much as [ you're allowed to say ], we have 40% of the output, they have 60% of the output. But you can never go point to a tool and say, hey, that tool is mine and not yours. Everything is intermingled. So what you do is, hey, moderate as if it is 100% loaded. That's when we get our 40% cost, you get 60% cost. Now if it is more, okay, you cost this, you get to bear the extra cost.

Got it. let's kind of talk about the end markets that you choose to serve. Your -- I mean you have an unmatched consumer brand, great brand. Not to compare you to them, but they've got a great client presence. You tend to focus on the high-end smartphone. One comment that I think you've made publicly is you talked about as the demand dynamic has progressed through the past couple of months, there was a period where a lot of your consumer customers, particularly PC customers just literally bought nothing for months at a time to clear out inventory. But now we're hearing bit-by-bit dribs and drabs of PC customers saying, hey, our component procurement is kind of back to -- I mean it's not great, but we're procuring components again. And this is the first time in 10, 12 months where the component procurement actually is up. So would you -- can you sort of characterize like where you see your shipments versus demand? Are you shipping now to consumption, whereas before you were massively undership in consumption?

Yes. So let's split the markets one at a time. The consumer market, our bread and butter, we have a premier position. We upsell in that marketplace. We saw the consumer business starting to take a dip immediately after the war started in Europe in the March-April time period, we saw the weakening. That was the first indication of the market going down. The PC marketplace, as we were talking about, started dropping in the May-June time period, where, as you said, some of our OEM customers literally stopped buying overnight to clear out their inventory. The mobile marketplace has been sort of muddling along as long as the shutdowns in China have been happening and China demand has been weak in mobile phone. We don't play a lot in that marketplace. At the high end, it's still good but we watch the overall industry bit shipments what's going on. Over the last several weeks, later in the fall, we started seeing enterprise and data center customers go very, very sharp in inventory correction. We expect that these -- the recovery is also not going to follow a similar path. That consumer demand, we probably will get to see it because we are going into a strong seasonal quarter. And all the way through Chinese New Year, we'll see what's going on in the consumer business. PC business, I was just talking about as the first small, small green shoots are starting to see with respect to demand, even if it -- pricing is not up, we're starting to see some demand going up. The hyperscale business is still several quarters away. It is quarters away. Let me not say [indiscernible] number are quarters away before we think it will come back up.

Got it. Then can we talk about just the long-term supply-demand dynamic in NAND. We've had the consolidation -- well, we've had a consolidation of one, and we've had export restrictions that are -- bring another of the formerly 6 players. So can you talk about sort of the supply-demand dynamic. You do have -- well, two large Korean competitors. You have one that is talking like they want to exploit the downturn to potentially spend a good amount of money. So can you just talk about sort of how you assess the supply-demand dynamic as we kind of come out of this demand?

Each player behaves independently on their own with their own motivation. So I wouldn't want to talk to what people think and talk and what they say in public, et cetera. All I can go by is their actions and we do watch their actions very, very carefully. Another factor that you didn't mention is it's not just the U.S. government restrictions on exports into China. Not just affect one Chinese player. Even the Korean players have fabs in China that they need to figure out what to do with the 1-year license that has been granted, what do they do afterwards, they have to do. So when it comes out, then you have a pool of capital that you being -- all of us being public companies do have to be prudent in the way we deploy the capital. We need to watch where the capital goes. Either the capital goes, number one, into NAND or in DRAM or into foundry. If it goes into NAND, do you put it in greenfield or do you put it in some conversion? If it is, are you just expanding existing products or are you going into the newer nodes? These kinds of decisions are going to be dynamic. For our part, we are very, very clear. Our clarity in thought is we are not just trying to grow bits for the sake of growing bits. For us, cost reduction comes first. Cost reduction is driven by capital spending. We want to keep that as our north star when we do the development and planning. We want to make sure we spend the money in a way that we grow our bits with the lowest cost in the industry. We'll continue to do that going forward.

Yes. I mean there's actually been fairly for all the bluster sometimes from some of your competitors, but it's been fairly disciplined spending actually over the past 5, 6, 7, 8 years, right? So -- and now the elimination of potential longer-term disruptor ought to be good for the longer-term profitability of the business, which I guess brings me to my next question. So you said that -- or you suggested that the HDD business is a high 30s potentially gross margin business over time. What do you think is the profitability that you're -- and it's not entirely in your control in NAND, whereas it is more in your control in HDD, but what is the long-term profitability in NAND that you think you can -- that the industry can ultimately achieve?

So we have talked about this at length in our Investor Day. We actually showed a curve as to through cycle, how do you want to think about it? So actually in the cycle, you want to make sure our gross are higher than our competition's gross. We want to make sure that through cycle basis, 34% to 37% gross margin and improve from there. And the way we improve that is through several well-designed fashions. One, obviously improves operational efficiency, that's one. But second, portfolio management to make sure we are allocating our precious bits into those businesses that are going to be sustained more profitable than the others, making sure that we have well-defined share targets in individual businesses. As for example, we want to achieve the high teens in the enterprise data center drives. We want to make sure we maintain our 20 share in clients, et cetera, making sure they are all directed at the higher profitability. So net-net, we do expect that the mid- to high 30s as a target for true cycle profitability. It can be much higher during a constrained period. It could be lower during craft we did like we are now. But on an average, on a through cycle, that's what is needed for us to maintain the level of capital spending and continue to grow and deliver the value to the customers.

Do you think ultimately the HDD business and the NAND business ought to have similar profitability over time?

We treat these two businesses separately. And HDD business is on its own. We want to go take it as high of our profitability as possible. The NAND business has different dynamics with a number of players in it. So that's where I put these numbers where they are.

Got it. And is it fair to say -- Nick and I talk about this a lot, but is it fair to say that given the severity of this downturn and how the cloud customers in particular have pushed price much lower, I mean, so low, is it fair to say that -- and you can only speak to yourself, but is it fair to say that you and probably your peers are going to be a little more hesitant to expand CapEx out of this downturn because you felt some pain for the customers and maybe it's time for you to recapture some of the economics as you sort of come out of the downturn.

So in general, as you said, we have to act for ourselves and everybody else has to act on their best interest. We have become an -- over time, pretty cautious about our CapEx investment. We don't compete to go get share. We don't put capital in just so that I want to gain share. We want to maintain our share position that we have talked about all the time because we want to have a certain position in the marketplace, but we are not trying to invest to go gain share. We want to make sure that any capital investment I make is going to result in true differentiated profitability. You're absolutely right, our customers have consolidated. In the consolidation of our customers, the buying power on the true hyperscalers is very, very high. We are going through some serious pain. This has been a demand-driven down cycle where the fall in prices have been quite dramatic. Coming out of it, there are lessons for the longer term that we want to make sure we are able to do our part in making the supply-demand balance, right, because supply-demand does everything for our pricing. We want to make sure we invest our capital carefully so that we can get our value.

So I wanted to go back, I was just thinking about your comments about the long-term profitability in NAND. And at the time, I mean, I think some of us had a sense that the U.S. government would become a little more draconian toward your Chinese -- your emerging Chinese peer, but at this time, that hadn't happened. So does the comment that you think you can get to high 30s, that's the long-term profitability that you think that you can manage, too? Is that assuming -- or was that assuming that they keep growing? Or does now the handicapping of them as a longer-term competitor, does that potentially make that better?

Look, in NAND, we have to live and die by what we -- right? That overhang was always there. We were wondering about that company that may not be emphasizing profitability, but just be going on share. We were watching that. And the only solution we had for that is to run faster. We had to make sure our technology was getting better all the time. We now have not changed our posture in terms of you need run fast because it's not like the rest of the competition is standing still either. It is not an easy -- I mean, as you know, NAND marketplace is not for the weak of heart. It is not for someone who is not just running all the time on technology innovation. So we are watching that. Yes, the U.S. government actions have handicapped certain players in China, but we are not taking anything for granted.

And I guess, Peter, I'd be remiss if I didn't ask about the strategic review. I know that you can't say much about it, but I'd be remiss if I didn't ask about it. My -- knowing that you have an NDA there, I mean, no news, maybe it's good news. I don't know. But how do you kind of characterize the status of that? There are multiple things you're evaluating obviously.

Yes. I mean the key thing is, number one, we are out there talking to a number of different parties. I know some have been very public in terms of their involvement in the process, but there are others involved also beyond that. Number two is whenever you talk of interested parties, also adviser. So it's fair to assume that there's tons of eyes, tons of parties that were involved with, where the issue is and we're -- I think you were touching upon the timing, is with all these different eyes on it, there's different scenarios, there's different complexities, there's different things you need to consider, and so that's where we are in the process right now. We're going through all of it. We're trying to go through it expeditiously. But also we know we're going through this once, so we want to make sure it's being done right. That's really about as far as we can go right now because, as you mentioned, you start off the question, we are still under an NDA, so we've got to be a little bit more circumspect in terms of what we say.

Okay. Just back to the question about overall demand. So we talked about consumer. You talked about there being some potential green shoots. We're hearing about that elsewhere in the PC market, you're seeing some resumption of some normalcy, let's say. David and I were talking about this earlier. You're seeing some resumption of normalcy in that market even as demand will get worse next year. But what about in cloud? These are very sophisticated buyers. I mean some of the most sophisticated companies on the planet. And they understand the dynamics of your business. I mean, I finally understand the dynamics of the memory business better than we as analysts do. They're -- and they're very smart about how they buy the product and when they buy product. And it seems fairly obvious to us that there's a potential in both your HDD business and in your NAND business that when you get into the late part of 2023 and particularly into '24, that this could be a really big upturn in terms of pricing, really big, and I'm sure that they see the same thing. So I understand that right now, China cloud is weak and U.S. is going through some digestion. Predominantly, it seems like a second derivative. CapEx is growing this much and that CapEx is growing this much, so there's an envelope there that they need to digest. But at the end of the day, basically, what's happening, do you see signs when you talk to them that they're going to come back to the table maybe pretty quickly because they don't want to risk waiting too late to next year and getting on the wrong side of this?

Tim, we talk to them continuously, all of them. There is a constant conversation that happens at all levels. There are products being qualified, so technology guys are talking to each other. These guys are talking to their counterparts and architecture and trying to figure things out. Procurement guys are talking with procurement guys all the time. The one message that we constantly get both from our side and their side is that these are not ordinary times. It's been a while since big hyperscalers were laying off people, big hyperscalers are cutting down costs everywhere, big hyperscalers saying no travel, no hiring, let things go. Right now, things are not being run by individual groups, but at a corporate financial. They're saying, you have inventory, thou shall not buy anymore. It's not done by procurement specialists coming in and saying, hey, let me game this system for the longer. None of that is happening right now. From our side and on their side, we see corporate controls starting to kick in. We'll come out of this. This too, as we have seen in all of our cyclical businesses, shall pass. And that happens as you said, that engagement, the level of discussions will pick up very, very fast as we start the fall for the next set of drives that need to go in are components that need to be brought to big drives. They are going to see this, and we expect that. Trouble is none of us quantify the timing with which this is going to turn. That I am not yet ready to speculate on when this going to...

Great. I guess, maybe with the last 2 minutes left in the session. Your stock is obviously -- it doesn't take a lot of scientists to take what your peer trades at and take a discount to their market cap and apply it to your HDD sales, and you're not left with very much for your NAND business. That is not rocket science. But at the same time, something has to happen to unlock that value. So with that as a lead-in, what do you think -- I mean, you sit there and watch our stock all day and you're obviously probably frustrated where it trades at. But what are the key messages that you think investors are missing or the key attributes of the company that you think of it are missing given with the stock trading?

So I will leave the top trading question to Peter, but I'll tell you, from a corporate perspective, the big message is on the HDD side, clear technology leadership. We are executing a lot better. We have a sizable quantifiable lead in technology. These are being -- products being qualified as we come out of it, as we come out of our current downturn, we're going to be in a very, very well positioned the way to grow the HDD business. So HDD business, there should be no discount to start. On the flash side, we have not changed our philosophy. Our philosophy of making sure we are being the most capital efficient on all sides. The JV allows us to reduce our R&D spending. We share R&D spending. That's already an advantage. Capital efficiency and thinking about the road map long and about, we have done this a long time. We know how to do this. We will always have the best cost structure in the industry. That allows us to go with this idea of having -- making customer-specific products in the broadest channels to market that anyone has in the industry. Those are strong points for the flash industry coming out when we come out of this downturn backdrop.

Great. Well, that's all the time we have, but thank you for your time.

Thank you for having us.

Thank you.