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Segment Information | 9 Months Ended
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Apr. 01, 2022
Segment Reporting [Abstract] |
Segment Information | Segment Information The Company manufactures, markets, and sells data storage devices and solutions in the U.S. and in foreign countries through its sales personnel, dealers, distributors, retailers, and subsidiaries. Historically, the Company had been managed and reported under a single operating segment. Late in the first quarter of fiscal 2021, the Chief Executive Officer, who is the Company’s Chief Operating Decision Maker (“CODM”), announced a decision to reorganize the Company’s business by forming two separate product business units: flash-based products (“Flash”) and hard disk drives (“HDD”). To align with the new operating model and business structure, the Company made management organizational changes and implemented new reporting modules and processes to provide discrete information to manage the business. Effective July 3, 2021, the Company’s management finalized its assessment of the Company’s operating segments and concluded that the Company now has two reportable segments: Flash and HDD. The CODM evaluates performance of the Company and makes decisions regarding allocation of resources based on each operating segment’s net revenue and gross margin, which are summarized below. Because of the integrated nature of the Company’s production and distribution activities, separate segment asset measures are not available or reviewed by the CODM to evaluate the performance of or to allocate resources to the segments. The following table summarizes the operating performance of the Company’s reportable segments:
| Three Months Ended |  | Nine Months Ended
| April 1, 2022 |  | April 2, 2021 |  | April 1, 2022 |  | April 2, 2021
Net revenue: |  |  |  |  |  |  |
Flash | $ | 2,243 |  |  | $ | 2,175 |  |  | $ | 7,353 |  |  | $ | 6,287 |
HDD | 2,138 |  |  | 1,962 |  |  | 6,912 |  |  | 5,715 |
Total net revenue | $ | 4,381 |  |  | $ | 4,137 |  |  | $ | 14,265 |  |  | $ | 12,002 |
Gross profit: |  |  |  |  |  |  |
Flash | $ | 798 |  |  | $ | 653 |  |  | $ | 2,665 |  |  | $ | 1,752 |
HDD | 592 |  |  | 491 |  |  | 2,061 |  |  | 1,462 |
Total gross profit for segments | 1,390 |  |  | 1,144 |  |  | 4,726 |  |  | 3,214 |
Unallocated corporate items: |  |  |  |  |  |  |
Contamination related charges | (203) |  |  | — |  |  | (203) |  |  | — |
Stock-based compensation expense | (13) |  |  | (14) |  |  | (36) |  |  | (41) |
Amortization of acquired intangible assets | — |  |  | (39) |  |  | (65) |  |  | (293) |
Recoveries from a power outage incident | 7 |  |  | — |  |  | 7 |  |  | 75 |
Total unallocated corporate items | (209) |  |  | (53) |  |  | (297) |  |  | (259) |
Consolidated gross profit | $ | 1,181 |  |  | $ | 1,091 |  |  | $ | 4,429 |  |  | $ | 2,955 |
Gross margin: |  |  |  |  |  |  |
Flash | 35.6 | % |  | 30.0 | % |  | 36.2 | % |  | 27.9 | %
HDD | 27.7 | % |  | 25.0 | % |  | 29.8 | % |  | 25.6 | %
Consolidated gross margin | 27.0 | % |  | 26.4 | % |  | 31.0 | % |  | 24.6 | %
Disaggregated Revenue The Company’s broad portfolio of technology and products address multiple end markets. In the fiscal first quarter of 2022, the Company refined the end markets it reports to be Cloud, Client and Consumer. Cloud represents a large and growing end market comprised primarily of products for public or private cloud environments and end customers, which the Company believes it is uniquely positioned to address as the only provider of both flash and hard drive products. Through the Client end market, the Company provides its original equipment manufacturer (“OEM”) and channel customers a broad array of high-performance flash and hard drive solutions across personal computer, mobile, gaming, automotive, virtual reality headsets, at-home entertainment, and industrial spaces. The Consumer end market is highlighted by the Company’s broad range of retail and other end-user products, which capitalize on the strength of the Company’s product brand recognition and vast points of presence around the world. The Company’s disaggregated revenue information is as follows:
| Three Months Ended |  | Nine Months Ended
| April 1, 2022 |  | April 2, 2021 |  | April 1, 2022 |  | April 2, 2021 |  |
| (in millions)
Revenue by End Market |  |  |  |  |  |  |  |  |
Cloud | $ | 1,774 |  |  | $ | 1,423 |  |  | $ | 5,919 |  |  | $ | 3,728 |  |  |
Client | 1,732 |  |  | 1,767 |  |  | 5,439 |  |  | 5,386 |  |  |
Consumer | 875 |  |  | 947 |  |  | 2,907 |  |  | 2,888 |  |  |
Total Revenue | $ | 4,381 |  |  | $ | 4,137 |  |  | $ | 14,265 |  |  | $ | 12,002 |  |  |
Revenue by Geography |  |  |  |  |  |  |  |  |
Asia | $ | 2,400 |  |  | $ | 2,215 |  |  | $ | 7,685 |  |  | $ | 6,702 |  |  |
Americas | 1,377 |  |  | 1,009 |  |  | 4,398 |  |  | 3,033 |  |  |
Europe, Middle East and Africa | 604 |  |  | 913 |  |  | 2,182 |  |  | 2,267 |  |  |
Total Revenue | $ | 4,381 |  |  | $ | 4,137 |  |  | $ | 14,265 |  |  | $ | 12,002 |  |  |
The Company’s top 10 customers accounted for 44% and 43% of its net revenue for the three and nine months ended April 1, 2022, respectively, and 42% and 40% of its net revenue for the three and nine months ended April 2, 2021, respectively. For the three and nine months ended April 1, 2022 and April 2, 2021, no single customer accounted for 10% or more of the Company’s net revenue. Goodwill In connection with the Company’s determination of its reportable segments, effective July 3, 2021, the Company allocated its goodwill between its segments based on the estimated relative fair values of the business units. In addition, management performed a goodwill impairment assessment for each segment and concluded there were no impairment indicators as of both the beginning and end of the nine months ended April 1, 2022. The following table provides a summary of goodwill activity for the period:
| Flash |  | HDD |  | Total
| (in millions)
Balance at July 3, 2021 | $ | 5,738 |  |  | $ | 4,328 |  |  | $ | 10,066 |
Foreign currency translation adjustment | (3) |  |  | (2) |  |  | (5) |
Balance at April 1, 2022 | $ | 5,735 |  |  | $ | 4,326 |  |  | $ | 10,061 |

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 31 -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8924-108599 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 34 -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8981-108599 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 21 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8721-108599 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 40 -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e9031-108599 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (f) -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8933-108599 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (e) -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8933-108599 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 26 -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8844-108599 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 41 -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e9038-108599 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -Subparagraph (d) -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8933-108599 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 22 -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8736-108599 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 42 -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e9054-108599 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8657-108599 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 21 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8721-108599 Reference 14: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI http://asc.fasb.org/topic&trid=2134510 + Details
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