On May 8th local time in the United States, Western Data released its financial results for the third quarter of the 2023 fiscal year (as of March 31st, 2023).

Western Data's revenue for the quarter was 2.8 billion US dollars, a 10% decrease compared to the previous quarter; The gross profit margin was 10.2%, a decrease of 16.8% month on month. Among them, the revenue of flash memory products is about 1.3 billion US dollars, and the shipment volume of flash memory bits decreased by 14% month on month; HDD's revenue was $1.496 billion.

In terms of the terminal market, due to the decline in flash memory prices and the decrease in flash memory product shipments, the revenue of the three major departments of Western Data has declined. Among them, the revenue of the cloud department was 1.2 billion US dollars, accounting for 43% of the total revenue, a decrease of 2% month on month; The revenue of the client department was 975 million US dollars, accounting for 35% of the total revenue and a decrease of 10% month on month; The consumer business revenue was $623 million, accounting for 22% of the total revenue, a decrease of 22% month on month.

Western Data Further Lowers Capital Expenditure

Due to continued weak market demand, Western Data further lowered its capital expenditure budget for the 2023 fiscal year. In its latest financial report released in May, the company expects a capital expenditure budget of $2.2 billion for the 2023 fiscal year, with cash capital expenditures including factories and equipment reduced to $800 million.

△ Source: Western Data Official Website

Previously, in January, Western Data predicted a total capital expenditure of $2.3 billion in the 2023 fiscal year, including approximately $900 million in cash capital expenditure for factories and equipment.

Under the impact of factors such as poor overall economic situation and high inflation, the demand for consumer electronics market is sluggish, and the storage market is also facing challenges. The latest survey by global market research firm TrendForce Chibang Consulting shows that due to the slower production reduction of DRAM and NAND Flash suppliers than the weakening demand, the average price decline of some products in the second quarter has an expanding trend, with DRAM expanding to 13-18% and NAND Flash expanding to 8-13%.

In response to the "cold winter" of the storage market, large factories continue to reduce capital expenditures and adjust inventory.

In addition to Western Data, Micron Technology has previously stated in its financial reports that it will maintain conservative capital expenditure, with Micron's capital expenditure remaining at approximately $7 billion in the 2023 fiscal year, a 40% year-on-year decrease. SK Hynix stated in its financial report in January this year that its investment scale will maintain a tone of over 50% reduction compared to last year's 19 trillion won.

Does the storage market demand improve in the second half of the year?

In the context of continuous weak demand, when will the storage market usher in dawn? Regarding this, major storage companies have expressed their respective opinions.

Western Data predicts that the market will tend to balance in the second half of this year, and the company is closely monitoring the changes in supply and demand in the market, making wafer utilization close to actual demand.

Major manufacturers such as Samsung, SK Hynix, and Micron are also optimistic about the future storage market. Samsung stated that due to inventory adjustments since the second half of last year, customer inventory levels will decrease, and it is expected that demand will gradually recover in the second half of this year.

SK Hynix believes that as customer inventory turns to a downward trend in the first quarter and the reduction in storage production from the second quarter will lead to supplier inventory depletion, it is expected that the market environment will improve in the second half of the year.

Meiguang Technology believes that the inventory of end market customers is gradually decreasing, and it is expected that the supply and demand balance will gradually improve, with continuous revenue growth.

The latest survey by global market research firm TrendForce Chibang Consulting shows that due to the slower production reduction of DRAM and NAND Flash suppliers than the weakening demand, the average price decline of some products in the second quarter has an expanding trend, with DRAM expanding to 13-18% and NAND Flash expanding to 8-13%.