Company Profile
Founding
Western Digital (ticker: WDC) was Founded in 1970 by a Motorola employee, Wittek is a leading global manufacturer of hard disk drives (HDDs), solid-state drives (SSDs), and flash memory products.
Business
A company specializing in the research and development and production of computer hard disk drives and storage devices, Wittek, after acquiring Cintiq, also gained a foothold in integrated circuits and SSDs.
AI Boosts HDD Industry
High-capacity storage still relies on HDDs
The demand for high-specification and high-profit chips such as HBM directly squeezes the production capacity of conventional consumer-grade chips, naturally further exacerbating the supply crisis of consumer-grade flash chips. Moreover, don’t assume that the AI industry only needs high-end production capacity; to store the data required for AI training and enterprise AI model data, data centers worldwide are purchasing large quantities of storage hard drives to expand server capacity.
The top rival
Western Technology, besides maintaining a strong cash flow base in its HDD business, can also benefit from the flash memory cycle through its NAND business. Even though SanDisk’s spin-off reduced its NAND exposure, Western Technology still possesses the ability to balance across product categories.
In contrast, Seagate Technology focuses more on high-capacity HDD technology upgrades, concentrating on the cold storage market, with a robust cash flow as its core value.
Global Data Center Storage Volume
According to Cybersecurity Ventures’ estimates, the global data center storage volume in 2025 will be approximately 100 ZB, which translates to 1,073,741,824 TB.
The Hard Disk Drive Industry
Only Three HDD Manufacturers Remain
In the 1990s, there were approximately 40 HDD manufacturers. After several consolidations and mergers, the market is now dominated by a three-way oligopoly: Western Digital, Seagate Technology, and Toshiba Electronic Devices & Storage (a subsidiary of Toshiba). According to Techno Systems Research, in 2024, Western Digital held the top spot with a 40.8% global HDD market share, followed by Seagate at 40.1% and Toshiba at 19.2%.
Advantages of HDDs
80% of data in data centers is stored on HDDs. Compared to SSDs, they offer advantages such as cost-effectiveness and larger capacity.
In the traditional HDD market, Western Digital and Seagate Technology hold a highly concentrated market share, wielding significant pricing power. In recent years, due to profit pressures, hard disk drive (HDD) manufacturers have proactively reduced production, and the tightening supply has further enhanced their pricing power.
For large data center operators such as Amazon, Google Cloud, and Meta, HDDs remain the choice for balancing cost and capacity.
Hitachi Global Storage Technologies
Acquisition of HGST
On March 7, 2011, Western Digital and Hitachi Global Storage Technologies (HGST) jointly announced their merger, with Western Digital remaining as the surviving company. Corresponding to Seagate’s later acquisition of Samsung Electronics’ hard disk business, this left only Seagate and Western Digital as the major manufacturers of hard disk drives. This marked the beginning of an oligopoly era in the hard disk drive industry.
Antitrust Rejection
However, the merger between Western Digital and Hitachi Global Storage Technologies (HGST) raised concerns from antitrust agencies in various countries. Antitrust regulators in various countries, especially in China and the United States, demanded that Western Digital divest some of HGST’s 3.5-inch hard disk manufacturing assets.
Outcome
2012: Toshiba acquired some of the hard drive manufacturing assets of Western Digital/HGST, including a factory in Thailand and related intellectual property rights, to solidify its position in the hard drive market.
Subsequently, Toshiba’s hard drive business operated independently under the name Toshiba Electronic Devices & Storage Corporation, while Western Digital continued to operate its hard drive and solid-state drive divisions independently.
SenDisk
Mergers & Acquisitions
On October 21, 2015, Western Digital announced the acquisition of SenDisk for US$16 billion. The acquisition was officially completed on May 12, 2016. SenDisk was subsequently delisted from the US stock market.
Unsuccessful Acquisition of Kioxia
Following the failed merger attempt between WD and Japanese memory manufacturer Kioxia in 2023, WD announced in October of the same year that it would spin off its flash memory business unit, continuing to operate in the flash memory market under the SenDisk brand.
Spin-off
In March 2025, WD officially spun off its NAND Flash memory business, meaning the company would no longer produce NAND Flash memory or SSDs. Going forward, WD will focus on its own hard disk drive (HDD) market, while its original NAND Flash memory and SSD businesses will be taken over by SanDisk.
On March 7, 2025, Western Digital announced its complete exit from the solid-state drive (SSD) market, with its original SSD business being taken over by SenDisk. SenDisk In the traditional hard disk drive (HDD) market, the market is highly concentrated between two companies, Western Digital and Seagate Technology, which have strong pricing power.was relisted on the US stock market.
Operating Performance
Past Five Years
Over the past five years, Western Digital experienced weak demand, with revenue declining by an average of 9.4% annually, below industry standards, indicating relatively low business quality.
Over the past two years, Western Digital’s annualized revenue growth rate was 1.8%, higher than the five-year trend, but overall performance still fell short of expectations.
Notably, the company has achieved five consecutive quarters of growth, indicating that Western Digital is in the upward phase of the industry cycle.
Third Quarter 2025 Results
Revenue in Q3 increased by 27.4% year-over-year to $2.82 billion, exceeding analysts’ expectations of $2.74 billion by 2.8%. Adjusted earnings per share (EPS) were $1.78, exceeding analysts’ expectations of $1.58 by 12.9%.
Adjusted operating profit was $856 million, exceeding analysts’ expectations of $756.4 million (operating profit margin 30.4%, exceeding expectations by 13.2%). Operating profit margin: 28.1%, higher than 15.1% in the same period last year.
Free cash flow was $599 million, a significant improvement from -$61 million in the same period last year. Inventory turnover days: 80 days, an increase from 76 days in the previous quarter.
Following the earnings release, the company’s stock price rose by as much as 12.6%.
Remaining Performance Obligations (RPOs)
AI drives hard drive demand! Western Digital secured significant Remaining Performance Obligations (RPO) orders from hyperscale customers. CEO Irving Tan revealed at the Q3 2025 earnings call that Western Digital’s top seven customers’ purchase orders are already booked until at least the first half of 2026, with one of the largest hyperscale cloud customers signing an agreement extending to 2027.
Capital Market Performance
Stock Price Performance
Western Digital’s stock surged 8.77% on October 1, 2025, closing at $130.59, a record closing high. Western Digital has already surged 207% this year.
Outlook
Looking ahead, sell-side analysts expect Western Digital’s revenue to grow by 14.9% over the next 12 months, an improvement over the growth rate of the past two years. This forecast is particularly noteworthy for a company the size of Western Digital, suggesting that its new products and services will provide stronger momentum for revenue growth.
This is attributed to strong capital expenditures by technology companies in AI and data centers. With no signs of these investments slowing down, the company’s current shift towards higher-capacity hard drives is expected to support continued gross margin expansion.
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