Western Digital (WDC): The Great Divorce

1. Executive Summary

Western Digital is essentially two companies: a Flash/SSD business (NAND) and a Hard Drive business (HDD). The thesis is purely an "Event-Driven" play: the imminent spin-off of the Flash business will unlock shareholder value by removing the conglomerate discount.

Key Thesis Points

1. The Split: Separating volatile Flash from steady HDD allows investors to value each asset correctly.
2. HDD Duopoly: Along with Seagate (STX), WDC controls the booming data center HDD market. AI generates data, but storing that data economically requires HDDs, not just expensive SSDs.
3. Cyclical Recovery: Both NAND and HDD pricing are recovering from a historic glut.

2. Business Overview

• Flash (SanDisk): Consumer SSDs, Enterprise SSDs. Highly competitive.
• HDD (HGST/WD): Near-line drives for cloud hyperscalers. High barrier to entry.

3. Risks

• Deal Failure: If the spin-off is blocked or taxes are prohibitive, the stock dumps.
• Flash Pricing: Chinese competition (YMTC) is driving NAND prices to zero over the long term.