Western Digital CEO Irving Tan Talks AI Storage Demand

Summary

---

Podcast Summary: Western Digital CEO Irving Tan Talks AI Storage Demand

Podcast: Bloomberg Talks
Host: Bloomberg
Guest: Irving Tan (Western Digital CEO)
Date: August 6, 2026

---

Episode Overview

In this episode, Bloomberg interviews Irving Tan, CEO of Western Digital, to explore the surging demand for data storage driven by artificial intelligence (AI) and cloud computing. Tan discusses Western Digital’s financial performance, the technological innovation behind increasing hard disk drive (HDD) capacities, and the evolving industry dynamics—especially as long-term storage agreements shape corporate planning. He also provides his take on why HDDs remain a cornerstone of modern infrastructure, contrary to assumptions that solid state drives (SSDs) or other technologies would eliminate their relevance.

---

Key Discussion Points & Insights

1. Western Digital’s Strong Performance and AI-Driven Demand

• Financial Highlights (00:57):

  • Over 40% revenue growth in Q4 fiscal 2026.

  • Gross margins above 54%; strong ongoing cash flow generation.

  • AI and new cloud providers are driving demand, with a projected CAGR of over 25% for the next five years.

    Quote:
    “If you take a step back, really, the fundamentals for ongoing revenue growth, margin expansion, cash flow generation remain very strong.”
    —Irving Tan (00:57)

• Investor Expectations:

  • Some market pressure comes from high expectations regarding exabyte supply.
  • Tan asserts fundamentals remain robust despite such pressures.

---

2. Unique Storage Challenges vs. Memory (01:57–02:24)

• HDD vs. Memory:

  • Storage is fundamentally different from memory; memory (like NAND or DRAM) is constantly recycled for computation, while storage accumulates data that isn’t deleted as quickly.

  • The result: ever-growing storage demand.

    Quote:
    “The data that's being generated continues to be stored. It isn't getting deleted. So the amount of data storage requirements is just compounding over time...”
    —Irving Tan (02:24)

---

3. Engineering Breakthroughs in HDD Capacity (02:24–03:40)

• Technology Focus:

  • Western Digital invests in advancing the technology within each drive—specifically, “heads and media”—rather than simply increasing unit production.

  • Recently began shipping industry-leading 32 terabyte (TB) drives, with 40 TB drives rolling out this quarter (a leap of >30% capacity per drive).

    Quote:
    “We are currently shipping a 32 terabyte hard drive as our top of the line drive. But starting this quarter we’ll be shipping a 40 terabyte drive.”
    —Irving Tan (02:24)

• Customer Adaptation:

  • Customers undergo rigorous qualification processes for each generation to ensure reliability.

  • The engineering uses “two thirds of the periodic table,” underscoring device complexity.

    Quote:
    “Hard drives are actually, as an engineer, I always do hard drives as a marvel of engineering. We use two thirds of the periodic table in our product.”
    —Irving Tan (03:40)

---

4. Managing Long-Term Agreements (LTAs) Amid Uncertainty (04:17–05:49)

• LTAs to 2029–2031:

  • Major customers want to lock in storage supply through 2031.

  • Customers have strong long-term visibility because storage needs are tied to the scale of their entire infrastructure (GPUs, CPUs, memory, storage, etc.).

    Quote:
    “Customers are coming to us to put LTA’s in place to support demand for 29, 30, and 31…so we are working very closely with them.”
    —Irving Tan (04:37)

• Pricing Complexity:

  • The pricing structure is still under negotiation. Likely a mix of fixed base price and tiered pricing as volume increases.

    Quote:
    “We might have a base price for a percentage of that volume and then a tip stop tier pricing structure as we increase the capacity we deliver to them.”
    —Irving Tan (05:30)

---

5. The “Make Hard Disk Drives Great Again” Moment (05:49–06:28)

• Perception Shift:

  • There’s a renewed appreciation for HDDs as essential to computing infrastructure, especially as 80% of cloud data today (and in the foreseeable future) still resides on hard drives.

    Quote:
    “People thought that…hard drives were a thing of the past, but it’s shown to be a fundamental piece of the infrastructure stack.”
    —Irving Tan (06:02)

• Responsibilities and Excitement:

  • Tan views this as a once-in-a-lifetime opportunity created by AI and emphasizes his team’s sense of responsibility.

    Quote:
    “It’s a great responsibility that we have to deliver to the industry to enable this once in a lifetime opportunity that AI is creating.”
    —Irving Tan (06:02)

---

Notable Quotes & Memorable Moments

• Engineering Feat:
  “We use two thirds of the periodic table in our product.” —Irving Tan (03:40)

• AI’s Opportunity:
  “It’s a great challenge and I always tell my teams it’s a great responsibility that we have to deliver to the industry to enable this once in a lifetime opportunity that AI is creating.” —Irving Tan (06:02)

• Cloud Storage Share:
  “80% of all storage in the cloud…continuing to reside on hard drives both today and going forward.” —Irving Tan (06:02)

---

Timestamps for Key Segments

• Financial Results & Market Performance: 00:57–01:57
• Storage vs. Memory Demand: 01:57–02:24
• HDD Technology & Capacity Breakthroughs: 02:24–03:40
• Customer Infrastructure Adaptation: 03:40–04:17
• Long-Term Agreements & Pricing: 04:17–05:49
• The Role and Perception of HDDs: 05:49–06:28

---

Summary

Irving Tan’s interview spotlights Western Digital’s resilience and innovation at a time when rapid data growth driven by AI continues to redefine storage requirements. HDDs, far from obsolete, are evolving technologically and remain critical to supporting hyperscale data centers and cloud storage. The episode showcases how Tan and his team are adapting to market demands, leveraging engineering expertise, and negotiating complex long-term contracts—all while embracing the challenge of sustaining and expanding the backbone of the digital infrastructure era.

---

Transcript

[Amazon Health AI Narrator]

Amazon Health AI presents Painful Thoughts I I can't stop scratching my downtown. Mm, yeah, but I'm not itching to go downtown and tell a receptionist I'm here to talk about my downtown. Some things you'd rather type than say out loud. There's no question too embarrassing for Amazon Health AI. Chat your symptoms and get virtual care 24. 7 Health care just got less painful.

[Bloomberg Audio Studios Announcer]

Bloomberg Audio Studios Podcasts Radio News we're

[Interviewer / Host]

getting back to the AI hard disk drive story. It's great to have you back on the show. You know, like investors still believe in that story. I hard disk drive, your stock is under some pressure. Just reflect on like the moment that you tried to outline in this in this earnings print.

[Irving (Hard Disk Drive Industry Executive)]

Yeah, well, first of all, thank you very much for having me back. If you look at the results that we delivered in Q4 fiscal 26, they were very strong. We had over 40% revenue growth, gross margin was above 54%. Very strong cash flow generation as well. If anything, probably the expectations were very high in terms of the increased amount of exabytes that we could supply into the market. But if you take a step back, really, the fundamentals for ongoing revenue growth, margin expansion, cash flow generation remain very strong. On the demand side, demand from hyperscalers, new clouds, physical remains very robust and we continue to see over 25% CAGR demand from a demand perspective over the next five years. Similarly, on the supply side, we have a very robust roadmap that we have put in place that will be able to meet this demand. And so it's pretty much a function of just quarterly transitions that we're going through.

[Interviewer / Host]

I think what you're touching on there is, you know, storage is distinct in many ways from what's happening in memory. In some ways highly analogous. Right. There is a pricing story there, there is a demand outpacing supply story. And your industry facing the balancing act of expanding output manufacturing capacity on it on a permanent basis or not. How are you managing all of that?

[Irving (Hard Disk Drive Industry Executive)]

Yeah, so first of all, thank you for highlighting that. It's a clear distinction between memory, which is like NAN and dram versus storage because memory and like compute is being recycled all the time for different workloads. But the data that's being generated continues to be stored. It isn't getting deleted. So the amount of data storage requirements is just compounding over time, which puts a lot of more demand on our products on an ongoing basis. And how we're trying to solve for that is really to technology. We're not in investing in increasing the number of drive units we are producing. We continue to invest in technology to increase the amount of hits and media that we produce because that's the big driver of capacity in a drive. So we are currently shipping a 32 terabyte hard drive as our top of the line drive. But starting this quarter we'll be shipping a 40 terabyte drive. So that's an ability to drive over 30% capacity to customers without adding any unit capacity.

[Interviewer / Host]

Could you go into into how that works? You know, bring a 40 terabyte drive to market, the engineering complexity of it and how much do the customers have to sort of re architect their infrastructure to accommodate for that new generation of of hdd?

[Irving (Hard Disk Drive Industry Executive)]

Yeah, well, hard drives are actually as an engineer, I always do hard drives as a marvel of engineering. We use two thirds of the periodic table in our product. So as we move from capacity point to capacity point, there's a lot of re engineering that goes on into the of our media designs, the recipe of our head design. So it's quite an engineering feat. Obviously we have great teams that have years of experience doing that. At the same time, we work very closely with our customers to make sure we go through very robust qualification processes because customers are very sensitive to the quality and reliability of their data storage capability.

[Interviewer / Host]

The other sort of highly analogous factor that is in front of you is long term agreements. With the memory market, we see long term agreements coming in as well. So you have these in place like 2029, 2030, 2031. How do you know how to price an agreement today going that far into the future?

[Irving (Hard Disk Drive Industry Executive)]

It's a really good question. We do have LTA is in place locked in till 29. We have customer demand. Customers are coming US to put LTA's in place to support demand for 29, 30 and 31. They have really good visibility in terms of the storage requirements they need because they're looking at the entire infrastructure stack, everything from GPUs to CPUs to HBMs to NAND. Yes, to storage. And they realize it has to take a much longer term time horizon in terms of how they plan. So we are working very closely with them. We're definitely locking in the sort of exabyte supply that they need. But what we're working through with them is still the commercial construct of how we would price something further out into.

[Interviewer / Host]

Right. So let me look at it another way. Somebody comes to you and says, Irving, I'm a big customer and I want to lock you in until 2031. Why might you Say no.

[Irving (Hard Disk Drive Industry Executive)]

Well, what we are saying is if you need 600 exabytes of storage in 2031, we will deliver that to you. How we actually price it. We're still in negotiations with them where we might have a base price for a percentage of that volume and then a tip stop tier pricing structure as we increase the capacity we deliver to them.

[Interviewer / Host]

I don't mean to trivialize this in any way, but you know, like it's the hard disk drive moment, you know, make hard disk drive great again. What's, what's that been like for you to put the technology at the forefront of discussion at the moment?

[Irving (Hard Disk Drive Industry Executive)]

Well, it's really exciting. I mean, people thought that, you know, hard drives were a thing of the past, but it's shown to be a fundamental piece of the infrastructure stack with 80% of all storage in the cloud and ISE continuing to reside on hard drives both today and going forward. So it's a very exciting time for us. It's a great challenge and I always tell my teams it's a great responsibility that we have to deliver to the industry to enable this once in a lifetime opportunity that AI is creating.

[Bloomberg Audio Studios Announcer]

Healthcare doesn't always work great. If you've ever waited on a refill or couldn't schedule an appointment, you get it. That's the kind of stuff Optum is changing. They're using data and technology to integrate patient care, pharmacy and everything else. So healthcare is connected, not complicated. What's that look like? Cheaper prescriptions that are easier to get and care that looks at the whole person how you need it. Optum is helping make healthcare work as one for everyone. Learn [e-mail].