Seagate Technology Holdings plc

Seagate Technology Holdings plc is a leading provider of data storage technology and infrastructure solutions whose principal products are hard disk drives, commonly referred to as disk drives, hard drives or HDDs. The data storage industry includes companies that manufacture components or subcomponents designed for data storage devices, as well as providers of storage solutions, software and services, addressing data storage needs for cloud, enterprise and other edge markets. The global datasphere is forecasted to grow at a compound rate of 25% over the next five years to reach 527 zettabytes annually by 2029, according to IDC. According to IDC’s 2025 Cloud Infrastructure Index, hard drives store 87% of exabytes in large data center deployments. The Company believes the proliferation and creation of media-rich digital content, further enabled by generative AI, machine learning, fifth-generation wireless technology, the edge and the Internet of Things will continue to create demand for higher capacity storage solutions.

The Company competes primarily with manufacturers of hard drives used in the mass capacity storage and legacy markets, and with other companies in the data storage industry that provide SSDs and systems. Principal competitors named in the filing include Kioxia Holdings Corporation, Micron Technology, Inc., Samsung Electronics, Sandisk Corporation, SK hynix, Inc., Toshiba Corporation, and Western Digital Corporation. The Company believes its HDDs’ supply and demand remained well balanced during fiscal year 2025, supporting a healthy pricing environment. The Company believes its products are competitive with respect to many of the principal factors used by customers to differentiate among data storage solutions manufacturers, including storage capacity, product performance, product quality and reliability, price per unit and price per TB, storage/retrieval access times, data transfer rates, form factor, product warranty and support capabilities, supply continuity and flexibility, power consumption, total cost of ownership and brand.

The Company generates revenue primarily from the sale of its principal products, which are hard disk drives, as well as solid state drives, storage subsystems, and storage solutions such as a scalable edge-to-cloud mass data platform that includes data transfer shuttles and a storage-as-a-service cloud. Revenue is recognized upon transfer of control to customers, which typically occurs upon shipment, and is recorded net of sales taxes and estimated variable consideration consisting of expected rebates for sales incentive programs such as price protection and volume incentives. The Company sells its products to major OEMs, distributors and retailers, with OEM customers including large hyperscale data center companies and CSPs typically entering into master purchase agreements, while distributors generally enter into non-exclusive agreements for resale and the retail channel consists of branded storage products sold to retailers either directly or by distributors.

The Company’s HDD products are designed for mass capacity storage in the cloud and at the edge as well as legacy market applications. Mass capacity storage involves well-established use cases such as hyperscale data centers and private and public clouds as well as quickly emerging use cases such as machine learning and artificial intelligence. The Company’s HDD and SSD product portfolio includes Serial Advanced Technology Attachment, Serial Attached SCSI and Non-Volatile Memory Express based designs. The Company’s systems portfolio includes storage subsystems for enterprises, cloud service providers, scale-out storage servers and original equipment manufacturers, with capacity-optimized systems featuring multiple scalable configurations that can accommodate up to 2.5 petabytes of HDDs per chassis. The Lyve portfolio includes a shuttle solution that enables enterprises to transfer massive amounts of data from endpoints to the core cloud and a storage-as-a-service cloud offering that provides frictionless mass capacity storage at the metro edge. The Company’s high-capacity enterprise HDDs, including HAMR-based Mozaic drives, ship in capacities of up to 35TB, while enterprise SSDs are offered in capacities up to 30TB. Video and image HDDs are built to support the high-write workload of always-on, always-recording video systems with capacities up to 30TB, and NAS HDD solutions are available in capacities up to 30TB with NAS SSDs up to 4TB. Mission critical HDDs are offered in capacities up to 2.4TB, consumer external storage solutions ship with capacities up to 24TB, 3.5-inch desktop drives offer up to 24TB, 2.5-inch notebook drives offer up to 5TB for HDD and up to 4TB for SSD, DVR HDDs have capacities up to 8TB, and gaming SSDs have capacities up to 4TB.

The Company’s core technology platforms focus on the areal density of media and read/write head technologies, including the Mozaic platform, which is the industry’s first implementation of the high-capacity enabling heat-assisted magnetic recording technology as well as innovations like shingled-magnetic-recording technology and the throughput-optimizing multi actuator MACH.2 technology. The Company designs, fabricates and assembles a number of the most important components in its disk drives, including read/write heads and recording media, and performs all primary stages of design and manufacture of read/write heads at its facilities. The Company’s manufacturing operations are based on technology platforms used to produce various disk drive products that serve multiple data storage applications and markets, with disk drive assembly and machine learning operations occurring primarily at facilities located in China and Thailand, and subassembly and component manufacturing operations at facilities in China, Malaysia, Northern Ireland, Singapore, Thailand and the United States. As of June 27, 2025, the Company had approximately 3,273 U.S. patents and 243 patents issued in various non-U.S. jurisdictions, as well as approximately 221 U.S. and 38 non-U.S. patent applications pending.

During fiscal year 2025, the Company issued $400 million principal amount of senior notes, repaid $479 million principal amount of the 2025 Notes and $505 million of the 2027 Notes, as well as repurchased $99 million principal amount of certain senior notes. The Company acquired Intevac, Inc., a supplier of thin-film processing systems, for a net cash outlay of $47 million. The Company’s Board of Directors increased the authorization for the repurchase of its outstanding shares to $5 billion on May 21, 2025, and as of June 27, 2025, $5.0 billion remained available for repurchase. The Company’s share repurchase program was paused in the December 2022 quarter and remained paused through the end of fiscal year 2025, though the Company expects to resume the program in the first quarter of fiscal year 2026. The Company paid $600 million in dividends during fiscal year 2025.

In fiscal year 2025, the Company generated revenue of approximately $9.1 billion with a gross margin of 35% and net income of $1.5 billion, compared to revenue of $6.6 billion, gross margin of 23%, and net income of $335 million in fiscal year 2024. Operating cash flow was $1.1 billion. The Company shipped 595 exabytes of HDD storage capacity in fiscal year 2025, compared to 398 exabytes in fiscal year 2024. Revenue increased approximately 39%, or $2.5 billion, from fiscal year 2024, primarily due to an increase in mass capacity exabytes shipped as the Company experienced higher demand in particular for its nearline cloud products and favorable pricing actions. Gross margin increased by 12 percentage points compared to the prior fiscal year primarily driven by favorable product mix and pricing actions, a decrease of $96 million of supply related purchase order cancellation fees, as well as $160 million of factory underutilization charges and $13 million of accelerated depreciation expense for certain capital equipment that did not recur in fiscal year 2025.

The Company expects that the rapid growth of data generation, the intelligent application of data and the rise in data value will continue to drive demand for data storage, with the global datasphere forecasted to grow at a compound rate of 25% over the next five years to reach 527 zettabytes annually by 2029. The Company believes that as more data is created at endpoints outside traditional data centers, the need for real-time decision making will drive an increase in processing at the edge and in the cloud, and that the resulting mass data ecosystem is expected to require increasing amounts of data storage at the edge, in the cloud and in between. The Company expects that the adoption of generative AI applications will accelerate the creation of digital content such as text, images and video over the long term, and that these trends will have a positive impact on storage demand. The Company also expects that increased data creation will lead to the expansion of the need for storage in the form of HDDs, SSDs and systems, and that in the foreseeable future, cloud, edge and traditional enterprise that require high-capacity storage solutions will be best served by HDDs due to their ability to deliver reliable, scalable, energy-efficient and the most cost-effective mass storage devices.

The Company expects that as HDD capacities continue to increase, demand for higher capacity drives will grow due to their better total cost of ownership compared with lower capacity drives, allowing the Company to address higher exabyte demand with fewer HDD units that have higher average capacity per drive. The Company believes that its HAMR based Mozaic platform reflects its ability to productize complex nanoscale technologies, create a foundation for scaling to increasingly higher capacity hard drive storage products, and extend its areal density leadership. The Company continues to develop innovative magnetic recording technologies as well as conduct research on adjacent technologies necessary for the development of scalable, high-availability storage products, with primary R&D centers located in Northern Ireland, Singapore, Thailand and in the U.S. in California, Colorado and Minnesota.

The filing does not contain a specific margin and cost outlook for the upcoming period.

The Company expects capital expenditures for fiscal year 2026 to be higher than fiscal year 2025. The Company’s manufacturing efficiency and flexibility are critical elements of its integrated business strategy, and it continuously seeks to improve manufacturing efficiency and reduce manufacturing costs by employing manufacturing automation, employing machine learning algorithms and AI, improving product quality and reliability, integrating its supply chain with suppliers and customers to enhance demand visibility and reduce working capital requirements, coordinating between manufacturing and research and development to rapidly achieve volume manufacturing, and operating facilities at optimal capacities. As of June 27, 2025, the Company employed approximately 30,000 full-time employees worldwide, of which approximately 25,000 were located in Asia.

The Company’s Board of Directors increased the authorization for the repurchase of its outstanding shares to $5 billion on May 21, 2025, and as of June 27, 2025, $5.0 billion remained available for repurchase under the existing repurchase authorization limit. The Company’s share repurchase program was paused in the December 2022 quarter and remained paused through the end of fiscal year 2025, though the Company expects to resume the program in the first quarter of fiscal year 2026. On July 29, 2025, the Board of Directors declared a quarterly cash dividend of $0.72 per share, payable on October 9, 2025 to shareholders of record as of September 30, 2025. The Company paid $600 million in dividends during fiscal year 2025. Research and development expenses for fiscal year 2025 were $724 million, and the Company expects its R&D spending to depend on several factors including the stage of technological development and product qualification timelines.

The Company faces significant and ongoing uncertainty with regard to global trade policy, particularly in light of recently announced and potential additional actions by the U.S. government and its trading partners, including tariffs on certain non-U.S. goods, including information and communication technology products, which may materially increase costs for goods imported from key supply chain jurisdictions into the United States. The Company also faces risks from changes in U.S. trade policy that have resulted in, and could result in more, foreign jurisdictions adopting responsive trade policies, including imposition of new or increased tariffs, quotas, duties, or other restrictions targeting U.S. products, which could materially disrupt operations and impair the Company’s ability to efficiently manage its global supply chain. The Company continues to monitor trade developments and evaluate risk mitigation strategies but may not be able to fully, or even partially, offset the effects of these evolving trade dynamics.

The Company has experienced and may continue to experience a dynamic macroeconomic environment marked by rapid shifts in trade policies and increasing geopolitical tensions, which may impact its business and results of operations. The Company also faces risks from changes in macroeconomic conditions that may affect consumer and enterprise spending, causing customers to postpone or cancel spending in response to volatility in credit and equity markets, negative financial news and/or declines in income or asset values, all of which may have a material and adverse effect on demand for the Company’s products and/or result in significant changes in product prices. The Company expects that the Pillar Two framework for the global minimum tax, beginning in fiscal year 2026, will materially increase the level of income tax, especially for jurisdictions in which the Company currently has tax incentives, such as Singapore and Thailand.

The Company’s ability to increase revenue and maintain market share depends on its ability to successfully introduce and achieve market acceptance of new products on a timely basis, and if its transitions to more advanced technologies, including the transition to HDDs utilizing HAMR technology, require longer development, qualification or production cycles than anticipated, the Company may lose sales and market share. The Company operates in highly competitive markets and faces competition from manufacturers of alternative storage technologies such as flash memory, where increasing capacity, decreasing cost, energy efficiency and improvements in performance have resulted in SSDs that offer increased competition with its lower capacity, smaller form factor HDDs. The Company has been and may be adversely affected by reduced, delayed, loss of or canceled purchases by one or more of its key customers, including large hyperscale data center companies and CSPs, and one customer accounted for more than 10% of the Company’s accounts receivable as of June 27, 2025 and June 28, 2024. The Company is subject to export control laws and other laws affecting the countries in which its products may be sold, and on April 18, 2023, it entered into a Settlement Agreement with BIS that resolved allegations regarding sales of hard disk drives to Huawei, agreeing to pay $300 million to BIS in quarterly installments of $15 million over five years beginning October 31, 2023, with $60 million expected to be paid within one year and $135 million thereafter as of June 27, 2025. The Company may not be able to generate sufficient cash flows from operations to meet its liquidity requirements, including servicing its indebtedness of $5.0 billion in future principal payment obligations as of June 27, 2025, and its high level of debt requires a substantial portion of cash flows to service debt, reducing availability for other purposes.

Management’s message in the filing emphasizes that during fiscal year 2025, the Company experienced a significant increase in demand for its high capacity nearline drives primarily from cloud customers, while continuing to operate in a dynamic macroeconomic environment marked by rapid shifts in trade policies and increasing geopolitical tensions. Management states that over the long-term the Company expects its hard drive storage business to benefit from future growth in data demand and data value, including from the adoption of Generative AI applications. Management highlights that the Company shipped 595 exabytes of HDD storage capacity, generated revenue of approximately $9.1 billion with a gross margin of 35% and net income of $1.5 billion, and that operating cash flow was $1.1 billion. Management also notes that the Company issued $400 million principal amount of senior notes, repaid $479 million principal amount of the 2025 Notes and $505 million of the 2027 Notes, repurchased $99 million principal amount of certain senior notes, and acquired Intevac, Inc. for a net cash outlay of $47 million.