
	2023			2022			2021
	(in millions, except percentages)
Net revenue:
Flash	$	6,063		$	9,753		$	8,706
HDD	6,255			9,040			8,216
Total net revenue	$	12,318		$	18,793		$	16,922
Gross profit:
Flash	$	433		$	3,527		$	2,611
HDD	1,505			2,661			2,221
Total gross profit for segments	1,938			6,188			4,832
Unallocated corporate items:
Stock-based compensation expense	(49)			(48)			(55)
Amortization of acquired intangible assets	—			(66)			(331)
Contamination related charges	—			(207)			—
Recoveries from a power outage incident	—			7			75
Other	(2)			—			—
Total unallocated corporate items	(51)			(314)			(311)
Consolidated gross profit	$	1,887		$	5,874		$	4,521
Gross margin:
Flash	7.1		%	36.2		%	30.0		%
HDD	24.1		%	29.4		%	27.0		%
Consolidated gross margin	15.3		%	31.3		%	26.7		%

The Company’s broad portfolio of technology and products address multiple end markets. Cloud is 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 HDD. 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:


	2023		2022		2021
	(in millions)
Revenue by End Market
Cloud	$	5,252	$	8,017	$	5,723
Client	4,328		7,076		7,281
Consumer	2,738		3,700		3,918
Total Revenue	$	12,318	$	18,793	$	16,922

The Company’s operations outside the United States include manufacturing facilities in China, Japan, Malaysia, the Philippines and Thailand, as well as sales offices throughout the Americas, Asia Pacific, Europe, the Middle East, and Africa. The following tables summarize the Company’s operations by geographic area:


	2023		2022		2021
	(in millions)
Net revenue (1)
United States	$	3,810	$	5,411	$	3,789
China	2,773		4,525		4,339
Hong Kong	1,829		3,645		3,624
Rest of Asia	1,444		1,884		1,492
Europe, Middle East and Africa	2,100		2,872		3,061
Other	362		456		617
Total	$	12,318	$	18,793	$	16,922

(1) Net revenue is attributed to geographic regions based on the ship-to location of the customer. License and royalty revenue is attributed to countries based upon the location of the headquarters of the licensee.


	2023		2022
	(in millions)
Long-lived assets (1)
United States	$	1,071	$	1,130
Malaysia	861		831
China	397		441
Thailand	851		816
Rest of Asia	393		406
Europe, Middle East and Africa	47		46
Total	$	3,620	$	3,670

The Company sells its products to computer manufacturers and OEMs, cloud service providers, resellers, distributors and retailers throughout the world. For each of 2023, 2022 and 2021, no customer accounted for 10% or more of the Company’s net revenue. For 2023, 2022 and 2021, the Company’s top 10 customers accounted for 43%, 45%, and 39%, respectively, of the Company’s net revenue.

The Company performs ongoing credit evaluations of its customers’ financial condition to manage collection risk, in some cases supplemented by collateral. The Company maintains allowances for potential credit losses, and such losses have historically been within management’s expectations. At any given point in time, the total amount outstanding from any one of a number of its customers may be individually significant to the Company’s financial results. As of June 30, 2023, the Company had net accounts receivable of $1.60 billion, and two customers, Arrow Electronics, Inc. and Apple, Inc., accounted for 15% and 13%, respectively, of the Company’s outstanding accounts receivable. As of July 1, 2022, the Company had net accounts receivable of $2.80 billion, and no customer accounted for more than 10% or more of the Company’s net accounts receivable. Reserves for potential credit losses were not material as of each period end.

The Company also has cash equivalent and investment policies that limit the amount of credit exposure to any one financial institution or investment instrument and requires that investments be made only with financial institutions or in investment instruments evaluated as highly credit-worthy.

All of the Company’s Flash require silicon wafers for the memory and controller components. The Company’s flash memory wafers are currently supplied almost entirely from Flash Ventures (as defined in Note 10) and the Company’s controller wafers are all manufactured by third-party sources. The failure of any of these sources to deliver silicon wafers could have a material adverse effect on the Company’s business, financial condition and results of operations.

In addition, some key components are purchased from single source vendors for which alternative sources are currently not available. Shortages could occur in these essential materials due to an interruption of supply or increased demand in the industry. If the Company was unable to procure certain of such materials, the Company’s sales could decline, which could have a material adverse effect on its results of operations. The Company also relies on third-party subcontractors to assemble and test a portion of its products. The Company does not have long-term contracts with some of these subcontractors and cannot directly control product delivery schedules or manufacturing processes. This could lead to product shortages or quality assurance problems that could increase the manufacturing costs of the Company’s products and have material adverse effects on the Company’s operating results.

Goodwill is not amortized. Instead, it is tested for impairment annually as of the beginning of the Company’s fourth quarter, or more frequently if events or changes in circumstances indicate that goodwill may be impaired. The Company uses qualitative factors to determine whether goodwill is more-likely-than-not impaired and whether a quantitative test for impairment is considered necessary. If the Company concludes from the qualitative assessment that goodwill is more-likely-than-not-impaired, the Company is required to perform a quantitative approach to determine the amount of impairment.

Management performed its annual goodwill impairment assessment for both reporting units as of the first day of its fourth quarter ended June 30, 2023. During 2023, after considering changes in industry and macroeconomic conditions, management performed quantitative analyses of impairments for both the Flash and HDD reporting units as of the end of the first and second quarter of 2023 and again as part of its annual impairment assessment as of the first day of the Company’s fourth quarter ended June 30, 2023. In each of these analyses, the fair value of each operating segment was based on a weighting of two valuation methodologies: an income approach and a market approach.

The income approach was based on the present value of the projected discounted cash flows (“DCF”) expected to be generated by the operating segment. Those projections required the use of significant estimates and assumptions specific to the reporting unit as well as those based on general economic conditions, which included, among other factors, revenue growth rates, gross margins, operating costs, capital expenditures, assumed tax rates and other assumptions deemed reasonable by management. The present value was based on applying a weighted average cost of capital (“WACC”) which considered long-term interest rates and cost of equity based on the Company’s risk profile.

The market approach was based on a guideline company method, which analyzed market multiples of revenue and earnings before interest, taxes, depreciation and amortization (“EBITDA”) for a group of comparable public companies.

The Company reconciled the aggregated estimated fair value of both operating segments to the Company’s market capitalization, including consideration of a control premium representing the estimated amount a market participant would pay to obtain a controlling interest in the Company.

In connection with the Company’s annual goodwill impairment assessment performed as of the first day of the fourth quarter ended June 30, 2023, the fair value derived from those valuation methodologies exceeded the carrying value by 20% and 35% for Flash and HDD, respectively. Accordingly, there were no impairment charges recorded in 2023. The Company also did not incur any impairment charges for 2022 or 2021.

The Company is required to use judgment when assessing goodwill for impairment, including evaluating the impact of industry and macroeconomic conditions, the determination of the fair value of each reporting unit and the assignment of assets and liabilities to reporting units. In addition, the estimates used to determine the fair value of reporting units as well as their actual carrying value may change based on future changes in the Company’s results of operations, macroeconomic conditions or other factors. Changes in these estimates could materially affect the Company’s assessment of the fair value and goodwill impairment. In addition, if negative macroeconomic conditions continue or worsen or the Company’s stock price decreases for a sustained period of time, goodwill could become impaired, which could result in an impairment charge and materially adversely affect the Company’s financial condition and results of operations.