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Business Segments, Geographic Information, and Concentrations of Risk | 12 Months Ended
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Jun. 28, 2024
Segment Reporting [Abstract] |
Business Segments, Geographic Information, and Concentrations of Risk | Business Segments, Geographic Information, and Concentrations of Risk The following table summarizes the operating performance of the Company’s reportable segments:
| 2024 |  | 2023 |  | 2022 |  |
| (in millions, except percentages) |  |
Revenue, net: |  |  |  |  |  |  |
Flash | $ | 6,687 |  |  | $ | 6,063 |  |  | $ | 9,753 |  |  |
HDD | 6,316 |  |  | 6,255 |  |  | 9,040 |  |  |
Total net revenue | $ | 13,003 |  |  | $ | 12,318 |  |  | $ | 18,793 |  |  |
Gross profit: |  |  |  |  |  |  |
Flash | $ | 1,079 |  |  | $ | 433 |  |  | $ | 3,527 |  |  |
HDD | 1,881 |  |  | 1,505 |  |  | 2,661 |  |  |
Total gross profit for segments | 2,960 |  |  | 1,938 |  |  | 6,188 |  |  |
Unallocated corporate items: |  |  |  |  |  |  |
Stock-based compensation expense | (49) |  |  | (49) |  |  | (48) |  |  |
Amortization of acquired intangible assets | (3) |  |  | — |  |  | (66) |  |  |
Recovery from contamination incident | 37 |  |  | — |  |  | — |  |  |
Contamination related charges | — |  |  | — |  |  | (207) |  |  |
Recoveries from a power outage incident | — |  |  | — |  |  | 7 |  |  |
Other | — |  |  | (2) |  |  | — |  |  |
Total unallocated corporate items | (15) |  |  | (51) |  |  | (314) |  |  |
Consolidated gross profit | $ | 2,945 |  |  | $ | 1,887 |  |  | $ | 5,874 |  |  |
Gross margin: |  |  |  |  |  |  |
Flash | 16.1 | % |  | 7.1 | % |  | 36.2 | % |  |
HDD | 29.8 | % |  | 24.1 | % |  | 29.4 | % |  |
Consolidated gross margin | 22.6 | % |  | 15.3 | % |  | 31.3 | % |  |
Disaggregated Revenue 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. Through the Client end market, the Company provides its original equipment manufacturer (“OEM”) and channel customers a broad array of high-performance HDD and Flash 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:
| 2024 |  | 2023 |  | 2022
| (in millions)
Revenue by end market |  |  |  |  |
Cloud | $ | 5,378 |  |  | $ | 5,252 |  |  | $ | 8,017 |
Client | 4,647 |  |  | 4,328 |  |  | 7,076 |
Consumer | 2,978 |  |  | 2,738 |  |  | 3,700 |
Total revenue | $ | 13,003 |  |  | $ | 12,318 |  |  | $ | 18,793 |
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:
| 2024 |  | 2023 |  | 2022
| (in millions)
Net revenue (1) |  |  |  |  |
United States | $ | 3,585 |  |  | $ | 3,810 |  |  | $ | 5,411 |
China | 3,037 |  |  | 2,773 |  |  | 4,525 |
Hong Kong | 2,375 |  |  | 1,829 |  |  | 3,645 |
Rest of Asia | 1,490 |  |  | 1,444 |  |  | 1,884 |
Europe, Middle East and Africa | 2,130 |  |  | 2,100 |  |  | 2,872 |
Other | 386 |  |  | 362 |  |  | 456 |
Total | $ | 13,003 |  |  | $ | 12,318 |  |  | $ | 18,793 |
(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.
| 2024 |  | 2023
| (in millions)
Long-lived assets (1) |  |  |
United States | $ | 897 |  |  | $ | 1,071 |
Malaysia | 718 |  |  | 861 |
China | 338 |  |  | 397 |
Thailand | 825 |  |  | 851 |
Rest of Asia | 353 |  |  | 393 |
Europe, Middle East and Africa | 36 |  |  | 47 |
Total | $ | 3,167 |  |  | $ | 3,620 |
(1) Long-lived assets include property, plant and equipment and are attributed to the geographic location in which they are located. Customer Concentration and Credit Risk The Company sells its products to computer manufacturers and OEMs, cloud service providers, resellers, distributors and retailers throughout the world. For 2024, 2023 and 2022, no customer accounted for 10% or more of the Company’s net revenue. For 2024, 2023 and 2022, the Company’s top 10 customers accounted for 39%, 43% and 45%, 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 condition. As of June 28, 2024 and June 30, 2023, net accounts receivable were $2.17 billion and $1.60 billion, respectively, and reserves for potential credit losses were not material. As of June 28, 2024, one customer accounted for 15% of the Company’s net accounts receivable and as of June 30, 2023, two customers accounted for 15% and 13% of the Company’s net accounts receivable. 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. Supplier Concentration 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 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 The following table provides a summary of goodwill activity for the period:
| Flash |  | HDD |  | Total
| (in millions)
Balance at June 30, 2023 | $ | 5,716 |  |  | $ | 4,321 |  |  | $ | 10,037 |
Foreign currency translation adjustment | (3) |  |  | (2) |  |  | (5) |
Balance at June 28, 2024 | $ | 5,713 |  |  | $ | 4,319 |  |  | $ | 10,032 |
Management performed its annual goodwill impairment assessment for both reporting units as of the first day of its fourth quarter ended June 28, 2024 and concluded that there were no impairment indicators as of June 28, 2024. The Company also did not incur any impairment charges for 2023 or 2022.

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