Seagate Technology Holdings Plc

Company Overview

Business Model: Seagate Technology Holdings public limited company is a leading global provider of data storage technology and infrastructure solutions. Its core business revolves around hard disk drives (HDDs), which serve as the primary medium for mass data storage due to their performance, reliability, high capacities, quality, and cost-effectiveness. Complementing HDDs, the Company also produces a broad range of solid state drives (SSDs) and storage subsystems. Furthermore, it offers comprehensive storage solutions, including a scalable edge-to-cloud mass data platform that features data transfer shuttles and a storage-as-a-service cloud offering. The Company employs a vertically integrated approach, designing and manufacturing critical components such as read/write heads and recording media.

Market Position: Seagate Technology Holdings public limited company holds a leading position in the data storage industry, driven by the rapid growth of data generation, the intelligent application of data, and the increasing value of data. The global datasphere is forecasted by International Data Corporation to grow at a compound rate of 25% over the next five years, reaching 527 zettabytes annually by 2029. Hard drives are a foundational element, storing 87% of exabytes in large data center deployments according to the IDC 2025 Cloud Infrastructure Index. The Company anticipates continued demand for higher capacity storage solutions, fueled by generative artificial intelligence, machine learning, fifth-generation wireless technology, edge computing, and the Internet of Things. Its high-capacity HDDs are expected to remain the most cost-effective solution for cloud, edge, and traditional enterprise storage. The Company has implemented a strategy requiring longer-term demand forecasts and commitments from customers for its high-capacity HDDs to enhance supply predictability. Original Equipment Manufacturers, including hyperscale data center companies and cloud service providers, accounted for 80% of the Company's revenue in fiscal year 2025.

Recent Strategic Developments: In fiscal year 2025, Seagate Technology Holdings public limited company acquired Intevac, Inc., a supplier of thin-film processing systems, for a net cash outlay of $47 million, aligning with its strategy to integrate key components and manufacturing processes. In fiscal year 2024, the Company divested certain intellectual property, equipment, and other assets related to its System-on-Chip operations to Avago Technologies International Sales Pte. Limited (a subsidiary of Broadcom Inc.) for a total consideration of $600 million, resulting in a pre-tax net gain of $313 million. The Company continues to advance its technology leadership with the launch of the Mozaic platform, which incorporates heat-assisted magnetic recording (HAMR) technology to enable higher capacity hard drives, and the multi actuator MACH.2 technology for throughput optimization. The Company also established Singapore as its principal executive offices in fiscal year 2024.

Geographic Footprint: Seagate Technology Holdings public limited company operates globally, with its principal executive offices located in Singapore. Its primary manufacturing facilities are situated in China, Malaysia, Northern Ireland, Singapore, Thailand, and the United States. Product development centers are located in California, Colorado, Minnesota, and Singapore. In fiscal year 2025, the Americas region accounted for 49% of total revenue, Asia Pacific for 41%, and EMEA for 10% (based on bill from location). Long-lived assets are primarily concentrated in the United States ($672 million), Thailand ($546 million), and Singapore ($411 million) as of June 27, 2025.

Financial Performance

Revenue Analysis

Profitability Metrics (FY2025):

• Gross Margin: 35% (vs. 23% in FY2024)
• Operating Margin: 21% (vs. 6% in FY2024)
• Net Margin: 16% (vs. 4% in FY2024)

Investment in Growth (FY2025):

• R&D Expenditure (Product Development): $0.724 billion (8% of revenue)
• Capital Expenditures (Acquisition of property, equipment and leasehold improvements): $0.265 billion
• Strategic Investments: Net cash outlay of $47 million for the acquisition of Intevac, Inc.

Business Segment Analysis

Seagate Technology Holdings public limited company operates as a single reportable segment, encompassing the manufacture and distribution of data storage solutions. The Chief Executive Officer, as the Chief Operating Decision Maker, evaluates performance and makes investment decisions based on consolidated results.

Market Overview:

• Financial Performance (FY2025):
  • Revenue: $9.097 billion (+39% YoY)
  • Gross Margin: 35%
  • Operating Margin: 21%
• Key Growth Drivers: The Company experienced a significant increase in demand for its high-capacity nearline drives, particularly from cloud customers, contributing to a 39% increase in total revenue. This growth is underpinned by the rapid expansion of the global datasphere, driven by generative artificial intelligence, machine learning, 5G technology, edge computing, and the Internet of Things. The Company's strategic focus on high-capacity HDDs, which offer superior total cost of ownership, is a key enabler for cloud and enterprise storage.
• Product Portfolio: The Company's portfolio includes:
  • Mass Capacity Storage: Enterprise Nearline HDDs (up to 35TB, including HAMR-based Mozaic drives and SMR technology), Enterprise SSDs (up to 30TB, SATA, SAS, and NVMe interfaces), Enterprise Systems (modular storage arrays, storage server platforms, JBODs, expansion shelves), Video and Image Applications (VIA) HDDs (up to 30TB), and Network-Attached Storage (NAS) HDDs (up to 30TB) and SSDs (up to 4TB).
  • Legacy Applications: Mission Critical HDDs (10,000 RPM, up to 2.4TB) and SSDs (up to 30TB), Consumer Solutions (external storage up to 24TB under Seagate Ultra Touch, One Touch, Expansion, Basics, and LaCie brands, with Seagate Recovery Services), and Client Applications (3.5-inch desktop drives up to 24TB, 2.5-inch notebook drives up to 5TB HDD / 4TB SSD, DVR HDDs up to 8TB, gaming SSDs up to 4TB).
  • Lyve Edge-to-Cloud Mass Capacity Platform: An as-a-service platform offering modular hardware and software, including data transfer shuttles and Lyve Cloud Object Storage (S3 compatible cloud) for frictionless mass capacity storage at the metro edge.
• Market Dynamics: Mass capacity markets accounted for 81% of total revenue in fiscal year 2025, up from 72% in fiscal year 2024, with HDD exabytes shipped increasing to 552 exabytes from 355 exabytes. Legacy markets represented 12% of revenue, with HDD exabytes shipped remaining flat at 43 exabytes. The Lyve platform contributed 7% of revenue. The Company continues to prioritize investment in mass capacity solutions while maintaining sales in legacy markets without significant additional investment.

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: In fiscal year 2025, approximately 0.5 million ordinary shares were repurchased, primarily for statutory tax withholdings related to the vesting of employee equity awards, totaling $54 million. The publicly announced share repurchase program was paused in December 2022 and remained paused through the end of fiscal year 2025.
• Dividend Payments: The Company paid $600 million in dividends in fiscal year 2025, equating to $2.86 per ordinary share.
• Future Capital Return Commitments: As of June 27, 2025, $5.0 billion remained available under the existing share repurchase authorization limit, which was increased by the Board of Directors on May 21, 2025. The Company expects to resume the share repurchase program in the first quarter of fiscal year 2026. A quarterly cash dividend of $0.72 per share was declared on July 29, 2025, payable on October 9, 2025.

Balance Sheet Position (as of June 27, 2025):

• Cash and Equivalents: $0.891 billion
• Total Debt (gross principal amount): $5.027 billion
• Net Cash Position: -$4.136 billion
• Debt Maturity Profile: The Company's future principal payment obligations on long-term debt total $5.046 billion. Key maturities include $1.500 billion in 2028 (2028 Notes), $0.470 billion in 2029, $0.638 billion in 2030, and $2.438 billion thereafter. The conditional conversion feature of the 2028 Notes was triggered as of June 30, 2025, making them exchangeable through September 30, 2025.

Cash Flow Generation (FY2025):

• Operating Cash Flow: $1.083 billion
• Free Cash Flow: $0.818 billion (Operating Cash Flow of $1.083 billion minus Capital Expenditures of $0.265 billion)
• Cash Conversion Metrics: Operating cash flow was positively impacted by an increase of $207 million in accrued employee compensation, partially offset by an increase of $513 million in accounts receivable (due to higher revenue and lower factoring), a decrease of $242 million in accounts payable (due to timing of payments), and an increase of $201 million in inventory (due to increased purchased materials and finished goods).

Operational Excellence

Production & Service Model: Seagate Technology Holdings public limited company's operational philosophy is rooted in vertical integration, designing and manufacturing critical components such as read/write heads and recording media. This approach aims to lower costs and enhance component functionality. The Company prioritizes manufacturing efficiency and flexibility through automation, machine learning algorithms, and artificial intelligence. It integrates its supply chain with suppliers and customers to improve demand visibility and reduce working capital. Coordination between manufacturing and research and development organizations is crucial for rapid volume manufacturing. While this model offers advantages, it can lead to higher unit costs and factory underutilization charges during periods of declining demand, as experienced in fiscal years 2024 and 2023. The Company also outsources the manufacturing and assembly of certain components and products, including printed circuit board assemblies, to third parties globally.

Supply Chain Architecture: Key Suppliers & Partners:

• Components: The Company relies on a limited number of direct and indirect suppliers for critical components such as read/write heads, substrates for recording media, application specific integrated circuits, spindle motors, printed circuit boards, suspension assemblies, and NAND flash memory.
• Rare Earth Elements: Certain rare earth elements, critical for manufacturing, are primarily sourced from China.
• Manufacturing Equipment: Specialized manufacturing equipment is often custom-made and procured from a few suppliers, with significant lead times.
• Contract Manufacturing: Third parties in various countries worldwide are utilized for the manufacturing and assembly of certain components and products.
• Technology Partners: The Company engages in strategic collaborations, such as with Microsoft’s Xbox and Sony’s PlayStation for consumer solutions, and relies on third-party hosted infrastructure partners for certain business operations and services.

Facility Network (as of June 27, 2025):

• Manufacturing: Key production locations include Springtown, Northern Ireland (recording heads, 479,000 sq ft); Wuxi, China (drives and drive subassemblies, 707,000 sq ft); Johor, Malaysia (substrates, 631,000 sq ft); Woodlands, Singapore (media, administrative, operational offices, 1,543,000 sq ft); Korat, Thailand (drives and drive subassemblies, 2,706,000 sq ft); and Teparuk, Thailand (drive subassemblies, 453,000 sq ft). Recording head manufacturing also occurs in Minnesota, United States (1,168,000 sq ft).
• Research & Development: R&D centers are located in Northern Ireland, Singapore, Thailand, and in the U.S. in California, Colorado, and Minnesota.
• Distribution: The Company's global operations imply a comprehensive distribution network, though specific facilities are not detailed.

Operational Metrics (FY2025):

• HDD storage capacity shipped: 595 exabytes (an increase from 398 exabytes in FY2024).
• HDD Price per Terabyte: $14 (a decrease from $15 in FY2024).
• Warranty cost related to new shipments: 0.7% of revenue (compared to 0.8% in FY2024).
• Factory underutilization charges: Did not recur in fiscal year 2025, following $160 million in fiscal year 2024.
• Accelerated depreciation expense for capital equipment: Did not recur in fiscal year 2025, following $13 million in fiscal year 2024.

Market Access & Customer Relationships

Go-to-Market Strategy: Distribution Channels:

• Direct Sales: The Company primarily sells its products to major Original Equipment Manufacturers (OEMs), including large hyperscale data center companies and cloud service providers. These relationships typically involve master purchase agreements. As of fiscal year 2024, the Company began requiring longer-term demand forecasts and commitments from key global OEM customers, with potential cancellation charges, to improve supply predictability and align with demand.
• Channel Partners: Sales to distributors are conducted under non-exclusive agreements, with distributors typically providing non-binding indications of near-term requirements. These agreements often include limited rights of return and price protection, along with quarterly and periodic sales programs.
• Digital Platforms: Branded storage products are sold to retailers either directly or through distributors, requiring greater marketing support, sales incentives, and price protection periods.

Customer Portfolio: Enterprise Customers:

• Tier 1 Clients: Large hyperscale data center companies and cloud service providers represent a significant portion of revenue in the mass capacity markets.
• Customer Concentration: In fiscal year 2025, one customer accounted for approximately 10% of consolidated revenue. As of June 27, 2025, one customer also accounted for more than 10% of accounts receivable.
• Strategic Partnerships: The Company partners with leading brands such as Microsoft’s Xbox and Sony’s PlayStation to offer consumer solutions.

Geographic Revenue Distribution (FY2025, based on bill from locations):

• Americas: 49% of total revenue
• Asia Pacific: 41% of total revenue
• EMEA: 10% of total revenue
• Growth Markets: The Company is actively addressing emerging use cases such as generative artificial intelligence, machine learning, 5G technology, edge computing, and the Internet of Things, which are driving increased demand for its storage solutions.

Competitive Intelligence

Market Structure & Dynamics

Industry Characteristics: The data storage industry is characterized by rapid technological change, frequent new product introductions, and evolving customer demands for increased storage capacity, enhanced security, energy efficiency, improved performance, reliability, and lower cost. The global datasphere is projected to grow at a 25% compound annual rate over the next five years. Hard disk drives remain critical, storing 87% of exabytes in large data center deployments. The industry experiences price erosion for comparable products, particularly during economic downturns, periods of few new product introductions, or when supply exceeds demand. However, the Company believes HDD supply and demand were well balanced in fiscal year 2025, supporting a healthy pricing environment. The economics of storage infrastructure are evolving, with cloud and open-source solutions reducing total cost of ownership.

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors: Seagate Technology Holdings public limited company competes with other major manufacturers of storage solutions, including hard disk drives, solid state drives, and storage subsystems. Key competitors include Kioxia Holdings Corporation, Micron Technology, Inc., Samsung Electronics, Sandisk Corporation, SK hynix, Inc., Toshiba Corporation, and Western Digital Corporation.

Emerging Competitive Threats: The Company faces competition from alternative storage technologies, particularly flash memory, where increasing capacity, decreasing cost, energy efficiency, and performance improvements have led to solid state drives offering increased competition in lower capacity and smaller form factor HDD markets, contributing to declining demand in legacy markets. The industry has also experienced consolidation, which may result in new or stronger competitors.

Competitive Response Strategy: The Company's strategy focuses on maintaining its areal density leadership in mass capacity hard disk drives through continuous research and development of innovative magnetic recording technologies and adjacent scalable, high-availability storage products. It aims to offset price erosion by improving product mix with higher capacity, better performance, and additional feature sets, alongside ongoing product cost reductions. The Company's requirement for longer-term customer commitments for high-capacity HDDs is a strategic response to manage supply and demand dynamics.

Risk Assessment Framework

Strategic & Market Risks

Market Dynamics: The Company faces risks from rapid technological change, uncertain product life cycles, and evolving customer demands. Failure to timely introduce new products that meet customer requirements for capacity, security, energy efficiency, performance, and cost could adversely affect results. The concentration of key customers, including large hyperscale data center companies and cloud service providers, poses a risk of reduced or canceled purchases. Inaccurate demand forecasting, particularly for products requiring significant upfront investment, can lead to excess inventory, higher carrying costs, and factory underutilization. Declines in demand for computer systems and consumer electronic devices, exacerbated by macroeconomic conditions or shifts to alternative technologies like flash memory, can reduce product demand. The long and unpredictable sales cycle for nearline storage solutions further complicates demand forecasting. Intense price competition and industry oversupply can lead to significant price erosion. Acquisition & Divestiture Execution: Risks associated with acquisitions (e.g., Intevac, Inc.) and divestitures (e.g., System-on-Chip operations) include not fully realizing anticipated benefits, incurring significant costs, integration challenges, and potential adverse impacts on tax rates or financial condition.

Operational & Execution Risks

Supply Chain Vulnerabilities: The Company relies on a sole or limited number of direct and indirect suppliers for critical components (e.g., read/write heads, recording media substrates, ASICs, NAND flash memory) and rare earth elements, many sourced from China. This concentration makes the supply chain vulnerable to shortages, delays, cost increases, and regional disruptions (e.g., severe weather, geopolitical tensions, export restrictions). Manufacturing equipment is often custom-made with long lead times. Failure of suppliers to meet capacity or delivery requirements can impact new product ramps and market share. The Company's long-term, non-cancelable purchase commitments with suppliers expose it to risks of damages or penalties if demand significantly decreases. Product Quality & Manufacturing Complexity: The complexity of products means defects may only be detectable after deployment, leading to increased costs, production delays, warranty expenses, and potential legal actions. Challenges in efficiently restarting or fully utilizing production equipment during demand fluctuations can result in missed revenue opportunities and increased operational costs.

Financial & Regulatory Risks

Market & Financial Risks: Macroeconomic conditions, including inflation, elevated interest rates, and economic slowdowns, can negatively impact consumer and enterprise spending, leading to reduced demand and price volatility. The Company's leveraged position requires significant cash flow to service outstanding indebtedness, which could limit funds for strategic investments and operations. Debt covenants, such as the net leverage ratio, impose restrictions. Quarterly results are subject to significant fluctuations due to various factors, including global economic conditions, competitive pressures, and fixed costs. Counterparty default risks exist with financial institutions for various financial instruments. Regulatory & Compliance Risks: The Company is subject to a wide array of U.S. and foreign laws and regulations, including those related to data privacy, protection, security, environmental protection (e.g., EU RoHS, REACH), and international trade. Changes in these laws or non-compliance can result in significant expenses, operational limitations, fines, and reputational damage. Export control laws (EAR, OFAC) and U.S. trade policies (tariffs, sanctions) pose risks to sales and supply chain continuity, as evidenced by the Settlement Agreement with BIS regarding Huawei sales. Legal Proceedings: The Company is involved in various legal proceedings, including patent infringement lawsuits (e.g., Lambeth Magnetic Structures LLC v. Seagate Technology (US) Holdings, Inc., et al., Godo Kaisha IP Bridge 1 v. Seagate Technology LLC, et al.), antitrust litigation (Seagate Technology LLC, et al. v. Headway Technologies, Inc., et al.), and securities class action lawsuits (In re Seagate Technology Holdings plc Securities Litigation). These can incur substantial costs, divert management attention, and potentially result in adverse judgments or settlements.

Geopolitical & External Risks

Geopolitical Exposure: Global operations expose the Company to risks from disruptions in international markets due to economic, environmental, political, legal, or regulatory instability, including conflicts (e.g., Ukraine and Russia, Middle East). Natural Disasters & Public Health Issues: Business operations are vulnerable to interruptions from natural disasters (e.g., earthquakes, floods, fires, power shortages), public health issues (e.g., pandemics), and other events beyond control, which can decrease demand, disrupt supply chains, and impact manufacturing. Climate change may exacerbate these risks.

Innovation & Technology Leadership

Research & Development Focus: Seagate Technology Holdings public limited company's Research & Development organization is strategically focused on advancing storage solutions, particularly leveraging its areal density leadership in mass capacity hard disk drives. Core Technology Areas:

• Magnetic Recording Technologies: The Company is dedicated to developing innovative magnetic recording technologies.
• HAMR Technology (Mozaic platform): The Mozaic platform represents the industry's first implementation of heat-assisted magnetic recording (HAMR) technology, providing a foundation for scaling to increasingly higher capacity hard drive storage products and extending areal density leadership.
• Shingled-Magnetic-Recording (SMR) Technology: This technology is utilized to increase the available storage capacity of drives.
• Multi Actuator MACH.2 Technology: Focused on throughput optimization for enhanced performance.
• Perpendicular Magnetic Recording (PMR): Ongoing optimization of PMR product development and manufacturing processes.
• Adjacent Technologies: Research extends to adjacent technologies essential for developing scalable, high-availability storage products.
• Solid State Drive (SSD) Technology: Development includes SSDs with Serial Advanced Technology Attachment, Serial Attached SCSI, and Non-Volatile Memory Express interfaces.
• Machine Learning and Artificial Intelligence: Machine learning algorithms and AI are employed in manufacturing and for emerging use cases. Innovation Pipeline: The Company's R&D centers are located globally in Northern Ireland, Singapore, Thailand, and in the U.S. in California, Colorado, and Minnesota, driving new technology development and commercialization.

Intellectual Property Portfolio:

• Patent Strategy: As of June 27, 2025, the Company held approximately 3,273 U.S. patents and 243 patents in various non-U.S. jurisdictions, with approximately 221 U.S. and 38 non-U.S. patent applications pending. The Company actively manages its patent portfolio to protect its intellectual property.
• Trade Secrets & Know-how: Beyond patents, the Company relies on improving existing products, protecting trade secrets, and developing new products to maintain a competitive advantage.
• IP Litigation: The data storage industry is characterized by significant intellectual property litigation. The Company is currently involved in patent infringement lawsuits, including Lambeth Magnetic Structures LLC v. Seagate Technology (US) Holdings, Inc., et al. and Godo Kaisha IP Bridge 1 v. Seagate Technology LLC, et al.

Technology Partnerships: The Company engages in strategic alliances, such as partnerships with Microsoft’s Xbox and Sony’s PlayStation for consumer solutions, and collaborates with third-party hosted infrastructure partners to serve customers and operate certain business aspects.

Leadership & Governance

Executive Leadership Team (as of August 1, 2025)

Board Composition: The Board of Directors considers cybersecurity risk as part of its risk oversight function. The Audit and Finance Committee of the Board has delegated oversight of cybersecurity and other information technology risks, receiving regular reports from the Chief Information Security Officer and Chief Information Officer. The Board also receives annual briefings on the cyber risk management program.

Human Capital Strategy

Workforce Composition (as of June 27, 2025):

• Total Employees: Approximately 30,000 full-time employees worldwide.
• Geographic Distribution: Approximately 25,000 employees are located in Asia.

Talent Management: Acquisition & Retention: The Company's future success depends on its ability to attract, retain, and motivate highly skilled management, marketing, sales, and product development personnel. The Total Rewards program, encompassing base pay, annual bonuses, commissions, equity awards, an employee share purchasing plan, retirement savings, and health/wellness benefits, is designed to attract, motivate, and retain talent. Diversity & Development: The Company fosters a culture of belonging and inclusion through 32 Employee Resource Group chapters across seven countries. Its performance management system emphasizes continuous dialogue and feedback between managers and employees. A comprehensive portfolio of learning and training opportunities, including mentoring, e-learning, and internal mobility tools, supports employee development. Health & Safety: All manufacturing sites are certified to the International Organization for Standardization 45001 standard and audited to Responsible Business Alliance health and safety standards. The Company maintains global health and safety standards that often exceed country or industry-level guidelines, supported by Environment, Health and Safety management systems and comprehensive e-learning based training.

Environmental & Social Impact

Environmental Commitments: Climate Strategy: Not explicitly detailed in the provided filing. Supply Chain Sustainability: Not explicitly detailed in the provided filing.

Social Impact Initiatives:

• Community Investment: The Company's community engagement program focuses on supporting local communities, with an emphasis on science, technology, engineering and mathematics (STEM). Initiatives include "Take Our Children to Work Day" at eight major sites, engaging over 330 children in educational activities. The Company also promotes sustainability and environmental programs, such as Earth Day activities (litter cleanups, tree planting), and supports various non-profit organizations, including food banks, blood drives, and Habitat for Humanity. Employees in Singapore maintain a rooftop garden, donating produce to a local home for the elderly.

Business Cyclicality & Seasonality

Demand Patterns:

• Seasonal Trends: The Company's legacy markets, particularly consumer storage applications, traditionally experience seasonal variability in demand. Higher demand levels are typically observed in the first half of the fiscal year, driven by the back-to-school season (late summer to fall) and the traditional holiday shopping season (fall to winter). Conversely, seasonal reductions in business activities of customers during international holidays (e.g., Lunar New Year) and summer months (especially in Europe) typically result in lower sales during the second half of the fiscal year.
• Economic Sensitivity: Demand for the Company's products is highly dependent on cloud, enterprise, and consumer spending. Its mass capacity markets are subject to sales variability influenced by the timing of IT spending and cyclical demand from cloud service providers, which is tied to their procurement and deployment requirements and their ability to acquire other necessary components for data center infrastructure build-outs. Unexpected slowdowns in demand for computers, data storage subsystems, or consumer electronic devices can lead to sharp declines in demand for the Company's products.
• Industry Cycles: The data storage industry has historically experienced periods of imbalance between supply and demand. During periods when demand exceeds supply, the Company typically benefits from better pricing power. Conversely, when industry supply surpasses demand, price erosion tends to be more pronounced. The Company has observed extended production lead-times for its latest generation of high-capacity HDDs, necessitating longer-term demand forecasts and commitments from customers to improve supply predictability and align supply with demand.

Planning & Forecasting: The Company's manufacturing process requires significant product-specific investments in inventory for production at least three to six months in advance of anticipated sales. This necessitates incurring inventory and manufacturing costs before customer orders materialize or market conditions are fully known. Inaccurate demand forecasts or significant decreases in customer demand can result in excess and obsolescence of inventory, higher inventory carrying costs, factory underutilization charges, and manufacturing rework costs. The long and often unpredictable sales cycle for complex nearline storage solutions, which can exceed one year, further impairs the Company's ability to accurately forecast product demand and manage inventory effectively.

Regulatory Environment & Compliance

Regulatory Framework: Industry-Specific Regulations: The Company's business, particularly its Lyve products and related offerings, is subject to a complex and evolving landscape of state, federal, and international laws and regulations concerning data privacy, data protection, and data security. These include requirements for security breach notification, data retention, transfer, and localization, which can impose conflicting obligations and costly compliance requirements. Operations are also subject to U.S. and foreign environmental laws and regulations, including those governing pollutant discharges, hazardous substance management, and restrictions on certain substances in electronic products (e.g., EU RoHS, EU REACH Directive). Compliance with these diverse and changing regulations across multiple jurisdictions (e.g., China, Malaysia, Northern Ireland, Singapore, Thailand, U.S., European Union) can be onerous and increase the cost of doing business. International Compliance: The Company faces challenges in navigating multi-jurisdictional requirements and achieving harmonization across different regulatory frameworks.

Trade & Export Controls:

• Export Restrictions: The Company is subject to U.S. import and export restrictions and regulations, including the Export Administration Regulations (EAR) administered by the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) and trade and economic sanctions regulations administered by the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC). These regulations impose restrictions on the sale or export of certain products and services to specific countries, persons, entities, and for particular end-uses (e.g., military, weapons of mass destruction). Products incorporating encryption technology require specific export authorizations.
• Sanctions Compliance: The U.S. government's imposition of sanctions through executive orders restricts business activities with specified individuals and companies.
• BIS Settlement: On April 18, 2023, Seagate Technology LLC and Seagate Singapore International Headquarters Pte. Ltd entered into a Settlement Agreement with BIS, resolving allegations regarding sales of hard disk drives to Huawei between August 17, 2020, and September 29, 2021. Under the agreement, the Company is required to pay $300 million in quarterly installments of $15 million over five years (commencing October 31, 2023) and complete three audits of its compliance with EAR license requirements. Failure to comply could result in significant penalties, including the loss of the suspension of the denial order.
• U.S. Trade Policy: The Company faces ongoing uncertainty regarding global trade policy, including tariffs on certain non-U.S. goods (e.g., information and communication technology products). These measures can increase costs, reduce demand, or disrupt supply chains. Retaliatory trade measures by other countries could also impact the business.

Legal Proceedings: The Company is involved in various legal, regulatory, and administrative proceedings. Material litigation includes:

• Lambeth Magnetic Structures LLC v. Seagate Technology (US) Holdings, Inc., et al.: A patent infringement lawsuit filed April 29, 2016, alleging infringement of U.S. Patent No. 7,128,988. Judgment was entered in favor of Seagate on April 19, 2022, with an appeal to the Federal Circuit pending.
• Seagate Technology LLC, et al. v. Headway Technologies, Inc., et al.: An antitrust and breach of contract lawsuit filed February 18, 2020, against suppliers of HDD suspension assemblies. Claims against TDK Corporation and Hutchinson Technology Inc. were dismissed with prejudice after settlement. A motion for Partial Summary Judgment under the Foreign Trade Antitrust Improvement Act by NHK Spring Co. Ltd. was granted on reconsideration on November 17, 2023, denying the majority of Seagate’s antitrust claims. The Court’s FTAIA decision is on appeal with the Ninth Circuit.
• In re Seagate Technology Holdings plc Securities Litigation: Consolidated securities class action lawsuits filed July 10 and July 26, 2023, alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and SEC Rule 10b-5 for a class period between September 14, 2020, and April 19, 2023. A motion to dismiss the operative complaint was granted in part and denied in part on May 12, 2025. Defendants moved to certify the order for interlocutory appeal on June 9, 2025.
• Godo Kaisha IP Bridge 1 v. Seagate Technology LLC, et al.: A patent infringement action filed March 15, 2024, alleging infringement of nine U.S. patents. The case was transferred to the District Court of Minnesota on September 4, 2024.

Tax Strategy & Considerations

Tax Profile:

• Effective Tax Rate: For fiscal year 2025, the Company reported a provision for income taxes of $44 million on income before income taxes of $1,513 million, resulting in an effective tax rate of approximately 2.9%. This compares to an effective tax rate of approximately 24.7% in fiscal year 2024.
• Geographic Tax Planning: The Company's worldwide operating income is subject to varying rates of income tax or benefits from tax incentive programs in Singapore and Thailand. The Singaporean statutory tax rate of 17% is used for reconciliation purposes. The net impact of these tax incentive programs increased net income by approximately $285 million ($1.32 per share, diluted) in fiscal year 2025 and $40 million ($0.19 per share, diluted) in fiscal year 2024. These tax incentives are scheduled to expire at various dates into fiscal year 2036.
• Tax Reform Impact:
  • OECD Pillar Two Global Minimum Tax: The enactment of Pillar Two legislation did not materially affect the Company's financial statements in fiscal year 2025. However, starting in fiscal year 2026, the Pillar Two framework is expected to materially increase income tax, particularly in jurisdictions where the Company currently benefits from tax incentives, such as Singapore and Thailand.
  • U.S. One Big Beautiful Bill Act (OBBBA): Enacted on July 4, 2025, this U.S. legislation includes significant provisions impacting tax laws, with certain provisions effective in fiscal year 2026 and others through fiscal year 2028. The Company is currently assessing its impact on consolidated financial statements.
• Deferred Tax Assets and Liabilities: As of June 27, 2025, the Company reported $1.053 billion in total net deferred tax assets (gross deferred tax assets of $1.540 billion, offset by a valuation allowance of $423 million). The valuation allowance decreased by $7 million in fiscal year 2025.
• Tax Loss and Credit Carryforwards: As of June 27, 2025, the Company had U.S. tax net operating loss carryforwards of approximately $3.0 billion and tax credit carryforwards of approximately $726 million. Approximately $7 million of U.S. net operating losses and $24 million of U.S. tax credits are scheduled to expire in fiscal year 2026 if not utilized. Non-U.S. tax net operating loss carryforwards totaled approximately $300 million, all of which are indefinite-lived. Gross U.S. capital loss carryforwards were $288 million, expiring by fiscal year 2029.
• Unrecognized Tax Benefits: As of June 27, 2025, the Company had approximately $107 million of unrecognized tax benefits (excluding interest and penalties). No material change to these unrecognized tax benefits is expected in the next 12 months due to the expiration of certain statutes of limitation.

Insurance & Risk Transfer

Risk Management Framework:

• Insurance Coverage: Seagate Technology Holdings public limited company maintains insurance coverage designed to address certain data security risks, although the sufficiency of such coverage for all potential claims or losses is not assured. The Company also carries director and officer insurance.
• Risk Transfer Mechanisms:
  • Foreign Currency Hedging: The Company utilizes foreign currency forward exchange contracts to manage exposure to foreign currency commitments and anticipated expenditures. These contracts are not for speculative or trading purposes and are designed to hedge portions of foreign currency denominated balance sheet positions, with all contracts maturing within 12 months.
  • Counterparty Credit Risk Management: Credit risk associated with foreign currency forward exchange contracts and the fixed income portfolio is actively monitored and limited through ongoing credit evaluations, managing notional amounts with individual counterparties, and diversifying investments across highly-rated securities and multinational financial institutions.
  • Total Return Swap (TRS): A Total Return Swap is employed to manage equity market risks linked to the liabilities of the non-qualified deferred compensation plan (SDCP). This swap is structured to substantially offset fluctuations in SDCP liabilities resulting from changes in the value of employee investment options.
  • Capped Call Transactions: In connection with the issuance of the 2028 Notes, the Company entered into privately negotiated capped call transactions with financial institutions. The cost of these transactions, $95 million, is accounted for within Additional Paid-in Capital.