Analysis of Geographic Areas
Western Digital Corp. operates in 4 regions: United States; China; Rest of Asia; and Europe, Middle East and Africa.
Area Asset Turnover
Western Digital Corp., asset turnover by geographic area
| Jun 30, 2023 | Jul 1, 2022 | Jul 2, 2021 | Jul 3, 2020 | Jun 28, 2019 | Jun 29, 2018 | |
|---|---|---|---|---|---|---|
| United States | 3.56 | 4.79 | 3.55 | 4.93 | 3.74 | 3.91 |
| China | 6.98 | 10.26 | 10.98 | 10.92 | 9.19 | 10.29 |
| Rest of Asia | 1.55 | 2.69 | 3.04 | 2.90 | 3.72 | 4.76 |
| Europe, Middle East and Africa | 44.68 | 62.43 | 69.57 | 57.37 | 57.57 | 65.39 |
Based on: 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-07-01), 10-K (reporting date: 2021-07-02), 10-K (reporting date: 2020-07-03), 10-K (reporting date: 2019-06-28), 10-K (reporting date: 2018-06-29).
The asset turnover ratios across the four geographic segments exhibit divergent performance patterns, with a general trend of declining efficiency observed in most regions by the end of the period. While some regions maintain significantly higher turnover rates than others, a systemic reduction in asset productivity is evident in the most recent fiscal years.
- Europe, Middle East and Africa
- This region consistently reports the highest asset turnover ratios of all analyzed areas. Although values remained relatively robust between 2018 and 2022, fluctuating between 57.37 and 69.57, a notable contraction occurred in 2023, where the ratio fell to 44.68. This suggests a significantly lower asset footprint relative to revenue generation compared to other regions, despite the recent downward shift.
- China
- China demonstrated strong and stable asset efficiency from 2018 through 2022, with ratios generally holding between 9.19 and 10.98. However, a sharp decline is observed in 2023, with the ratio dropping to 6.98, indicating a decrease in the revenue generated per unit of asset employed within this market.
- Rest of Asia
- A consistent and progressive downward trend is observed in the Rest of Asia. Starting at 4.76 in 2018, the ratio declined steadily over the subsequent years, reaching a period low of 1.55 by 2023. This represents a significant erosion of asset turnover efficiency over the six-year window.
- United States
- The United States market exhibits the most stability among the four regions, albeit with moderate volatility. The ratio fluctuated between a low of 3.55 and a peak of 4.93. The 2023 value of 3.56 is nearly identical to the 2021 low, suggesting a cyclical rather than a linear trend in asset productivity for this region.
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Area Asset Turnover: United States
Western Digital Corp.; United States; area asset turnover calculation
| Jun 30, 2023 | Jul 1, 2022 | Jul 2, 2021 | Jul 3, 2020 | Jun 28, 2019 | Jun 29, 2018 | |
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net revenue | 3,810) | 5,411) | 3,789) | 4,679) | 3,602) | 4,640) |
| Long-lived assets | 1,071) | 1,130) | 1,068) | 949) | 962) | 1,187) |
| Area Activity Ratio | ||||||
| Area asset turnover1 | 3.56 | 4.79 | 3.55 | 4.93 | 3.74 | 3.91 |
Based on: 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-07-01), 10-K (reporting date: 2021-07-02), 10-K (reporting date: 2020-07-03), 10-K (reporting date: 2019-06-28), 10-K (reporting date: 2018-06-29).
1 2023 Calculation
Area asset turnover = Net revenue ÷ Long-lived assets
= 3,810 ÷ 1,071 = 3.56
The financial performance within the United States market is characterized by significant volatility in revenue generation coupled with a relatively stable asset base, resulting in fluctuating asset turnover ratios over the six-year period ending June 30, 2023.
- Net Revenue Volatility
- Net revenue in the United States exhibited a cyclical pattern, with notable peaks in 2020 at US$ 4,679 million and 2022 at US$ 5,411 million. Significant contractions were observed in 2019, 2021, and 2023, with the most recent figure falling to US$ 3,810 million. These fluctuations indicate a high sensitivity to market demand or cyclical industry trends.
- Long-lived Asset Stability
- Long-lived assets remained comparatively stable relative to revenue, fluctuating between a low of US$ 949 million in 2020 and a high of US$ 1,187 million in 2018. Following a period of decline through 2020, asset values saw a steady increase up to 2022, before slightly retreating to US$ 1,071 million in 2023.
- Area Asset Turnover Trends
- The area asset turnover ratio closely mirrored the revenue cycles, oscillating between a peak of 4.93 in 2020 and a trough of 3.55 in 2021. The efficiency of asset utilization peaked in 2020 and 2022, suggesting periods where the existing asset base was leveraged highly effectively to drive sales. However, the decline to 3.56 by 2023 indicates a reduction in revenue-generating efficiency per unit of long-lived asset.
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Area Asset Turnover: China
Western Digital Corp.; China; area asset turnover calculation
| Jun 30, 2023 | Jul 1, 2022 | Jul 2, 2021 | Jul 3, 2020 | Jun 28, 2019 | Jun 29, 2018 | |
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net revenue | 2,773) | 4,525) | 4,339) | 4,075) | 3,861) | 4,393) |
| Long-lived assets | 397) | 441) | 395) | 373) | 420) | 427) |
| Area Activity Ratio | ||||||
| Area asset turnover1 | 6.98 | 10.26 | 10.98 | 10.92 | 9.19 | 10.29 |
Based on: 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-07-01), 10-K (reporting date: 2021-07-02), 10-K (reporting date: 2020-07-03), 10-K (reporting date: 2019-06-28), 10-K (reporting date: 2018-06-29).
1 2023 Calculation
Area asset turnover = Net revenue ÷ Long-lived assets
= 2,773 ÷ 397 = 6.98
The financial performance in the China region from June 2018 to June 2023 is characterized by a period of relative stability and growth in revenue efficiency followed by a significant contraction in the final fiscal year. While long-lived assets remained comparatively stable throughout the period, the volatility in net revenue directly dictated the fluctuations in the area asset turnover ratio.
- Net Revenue Trends
- Revenue exhibited a non-linear trajectory, beginning at US$ 4,393 million in 2018 and experiencing a dip to US$ 3,861 million in 2019. A recovery phase followed, with revenue increasing steadily over three years to reach a peak of US$ 4,525 million by July 2022. However, a sharp decline occurred in June 2023, with revenue falling to US$ 2,773 million, representing a decrease of approximately 38.7% from the previous year.
- Long-lived Assets Stability
- The asset base in the region demonstrated minimal volatility. Long-lived assets fluctuated within a narrow range, from a low of US$ 373 million in 2020 to a high of US$ 441 million in 2022. The closing value in June 2023 was US$ 397 million, indicating that the capacity and infrastructure investment in the region remained relatively constant despite the drastic change in revenue output.
- Area Asset Turnover Analysis
- The area asset turnover ratio remained high and efficient between 2018 and 2022, consistently staying above 9.0. The ratio peaked at 10.98 in July 2021, signaling a high capacity to generate revenue from the regional asset base. This efficiency deteriorated sharply in June 2023, dropping to 6.98. This decline is primarily attributable to the substantial reduction in net revenue rather than a significant increase in assets, suggesting a decrease in the utilization or productivity of long-lived assets within the China region.
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Area Asset Turnover: Rest of Asia
Western Digital Corp.; Rest of Asia; area asset turnover calculation
| Jun 30, 2023 | Jul 1, 2022 | Jul 2, 2021 | Jul 3, 2020 | Jun 28, 2019 | Jun 29, 2018 | |
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net revenue | 3,273) | 5,529) | 5,116) | 4,291) | 5,238) | 6,774) |
| Long-lived assets | 2,105) | 2,053) | 1,681) | 1,481) | 1,407) | 1,422) |
| Area Activity Ratio | ||||||
| Area asset turnover1 | 1.55 | 2.69 | 3.04 | 2.90 | 3.72 | 4.76 |
Based on: 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-07-01), 10-K (reporting date: 2021-07-02), 10-K (reporting date: 2020-07-03), 10-K (reporting date: 2019-06-28), 10-K (reporting date: 2018-06-29).
1 2023 Calculation
Area asset turnover = Net revenue ÷ Long-lived assets
= 3,273 ÷ 2,105 = 1.55
The financial performance in the Rest of Asia region is characterized by a significant decline in asset utilization efficiency over the six-year period ending June 30, 2023. While the asset base expanded steadily, revenue experienced volatility and an eventual sharp contraction, leading to a consistent erosion of the area asset turnover ratio.
- Net Revenue Trends
- Revenue exhibited a volatile trajectory, starting at 6,774 million USD in 2018 and declining to 4,291 million USD by 2020. A partial recovery occurred between 2021 and 2022, with revenue peaking at 5,529 million USD. However, a substantial decline was recorded in 2023, with revenue dropping to 3,273 million USD, representing the lowest point in the observed period.
- Long-lived Assets Growth
- Investment in long-lived assets showed a consistent upward trend. After remaining relatively stable between 2018 and 2019, assets grew from 1,481 million USD in 2020 to 2,105 million USD by 2023. This represents a steady increase in the capital intensity of the region's operations regardless of the fluctuations in top-line revenue.
- Area Asset Turnover Analysis
- The area asset turnover ratio decreased from a high of 4.76 in 2018 to 1.55 in 2023. The most pronounced decline occurred in the final year, where the ratio fell from 2.69 to 1.55. This downward trend indicates a diminishing ability to generate revenue from the region's long-lived asset base, driven by the divergence between increasing asset investments and decreasing net revenues.
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Area Asset Turnover: Europe, Middle East and Africa
Western Digital Corp.; Europe, Middle East and Africa; area asset turnover calculation
| Jun 30, 2023 | Jul 1, 2022 | Jul 2, 2021 | Jul 3, 2020 | Jun 28, 2019 | Jun 29, 2018 | |
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net revenue | 2,100) | 2,872) | 3,061) | 2,926) | 3,109) | 3,858) |
| Long-lived assets | 47) | 46) | 44) | 51) | 54) | 59) |
| Area Activity Ratio | ||||||
| Area asset turnover1 | 44.68 | 62.43 | 69.57 | 57.37 | 57.57 | 65.39 |
Based on: 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-07-01), 10-K (reporting date: 2021-07-02), 10-K (reporting date: 2020-07-03), 10-K (reporting date: 2019-06-28), 10-K (reporting date: 2018-06-29).
1 2023 Calculation
Area asset turnover = Net revenue ÷ Long-lived assets
= 2,100 ÷ 47 = 44.68
The financial performance within the Europe, Middle East, and Africa region is characterized by a significant contraction in net revenue coupled with a relatively stable base of long-lived assets, resulting in a general decline in asset efficiency over the observed six-year period.
- Net Revenue Trends
- A sustained downward trajectory in net revenue is evident, decreasing from 3,858 million US dollars in 2018 to 2,100 million US dollars by June 30, 2023. While a brief recovery occurred in 2021, the overall trend indicates a substantial reduction in regional sales volume or pricing power, with the final recorded value representing a decrease of approximately 45.5% from the 2018 peak.
- Long-lived Asset Stability
- Long-lived assets in the region have remained consistently low and relatively stable, fluctuating within a narrow range between 59 million US dollars in 2018 and 44 million US dollars in 2021, before ending at 47 million US dollars in 2023. This indicates a light-asset operational model in the EMEA region, where the revenue generation is not heavily dependent on significant local fixed infrastructure.
- Area Asset Turnover Analysis
- The area asset turnover ratio exhibits significant volatility, reflecting the impact of declining revenues against a static asset base. The ratio peaked at 69.57 in 2021, driven by a temporary increase in revenue and a reduction in assets. However, a sharp decline is observed by 2023, with the ratio falling to 44.68. This downward movement confirms that the decline in revenue has outpaced any reductions in long-lived assets, leading to a decrease in the efficiency with which regional assets are utilized to generate sales.
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Net revenue
Western Digital Corp., net revenue by geographic area
US$ in millions
| Jun 30, 2023 | Jul 1, 2022 | Jul 2, 2021 | Jul 3, 2020 | Jun 28, 2019 | Jun 29, 2018 | |
|---|---|---|---|---|---|---|
| United States | 3,810) | 5,411) | 3,789) | 4,679) | 3,602) | 4,640) |
| China | 2,773) | 4,525) | 4,339) | 4,075) | 3,861) | 4,393) |
| Rest of Asia | 3,273) | 5,529) | 5,116) | 4,291) | 5,238) | 6,774) |
| Europe, Middle East and Africa | 2,100) | 2,872) | 3,061) | 2,926) | 3,109) | 3,858) |
| Other | 362) | 456) | 617) | 765) | 759) | 982) |
| Total | 12,318) | 18,793) | 16,922) | 16,736) | 16,569) | 20,647) |
Based on: 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-07-01), 10-K (reporting date: 2021-07-02), 10-K (reporting date: 2020-07-03), 10-K (reporting date: 2019-06-28), 10-K (reporting date: 2018-06-29).
Total net revenue exhibits significant volatility over the analyzed six-year period, characterized by a period of fluctuation and moderate recovery between 2019 and 2022, followed by a sharp contraction in 2023.
- Aggregate Revenue Performance
- Overall net revenue peaked in 2018 at 20,647 million US$, followed by a decline in 2019 to 16,569 million US$. A gradual recovery was observed through 2022, where revenue reached 18,793 million US$. This upward trend was abruptly reversed in 2023, with total revenue falling to 12,318 million US$, representing a decrease of approximately 34% year-over-year.
- Asia-Pacific Market Dynamics
- The Rest of Asia and China segments have historically served as primary revenue drivers. The Rest of Asia was the largest single contributor in 2018 with 6,774 million US$, though it experienced a severe reduction to 3,273 million US$ by 2023. Revenue from China remained relatively stable between 2018 and 2022, maintaining a range between 3,861 million US$ and 4,525 million US$, before experiencing a significant drop to 2,773 million US$ in 2023.
- North American Market Volatility
- Revenue from the United States demonstrates a cyclical pattern. Significant peaks occurred in 2020 (4,679 million US$) and 2022 (5,411 million US$), which were interspersed with periods of decline. In 2023, the United States market mirrored the general downward trend, falling to 3,810 million US$.
- EMEA and Other Regional Trends
- The Europe, Middle East, and Africa (EMEA) region and the Other category exhibit consistent, long-term downward trajectories. EMEA revenue declined from 3,858 million US$ in 2018 to 2,100 million US$ in 2023. Similarly, the Other category saw a steady contraction from 982 million US$ in 2018 to 362 million US$ in 2023, indicating a diminishing contribution from these markets to the total revenue mix.
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Long-lived assets
Western Digital Corp., long-lived assets by geographic area
US$ in millions
| Jun 30, 2023 | Jul 1, 2022 | Jul 2, 2021 | Jul 3, 2020 | Jun 28, 2019 | Jun 29, 2018 | |
|---|---|---|---|---|---|---|
| United States | 1,071) | 1,130) | 1,068) | 949) | 962) | 1,187) |
| China | 397) | 441) | 395) | 373) | 420) | 427) |
| Rest of Asia | 2,105) | 2,053) | 1,681) | 1,481) | 1,407) | 1,422) |
| Europe, Middle East and Africa | 47) | 46) | 44) | 51) | 54) | 59) |
| Total | 3,620) | 3,670) | 3,188) | 2,854) | 2,843) | 3,095) |
Based on: 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-07-01), 10-K (reporting date: 2021-07-02), 10-K (reporting date: 2020-07-03), 10-K (reporting date: 2019-06-28), 10-K (reporting date: 2018-06-29).
The distribution of long-lived assets reveals a strategic shift in geographic concentration between 2018 and 2023. While total long-lived assets experienced an initial decline from US$ 3,095 million in 2018 to US$ 2,843 million in 2019, a sustained recovery followed, culminating in a total of US$ 3,620 million by June 30, 2023.
- Asian Market Expansion
- The "Rest of Asia" region has become the primary driver of asset growth. Long-lived assets in this area increased from US$ 1,422 million in 2018 to US$ 2,105 million in 2023. This expansion shifted the regional asset mix significantly, with the "Rest of Asia" growing from approximately 46% of the total asset base in 2018 to approximately 58% by 2023.
- United States Asset Volatility
- Domestic assets in the United States exhibited a fluctuating trend. A contraction occurred between 2018 and 2020, with values dropping from US$ 1,187 million to US$ 949 million. Although a recovery trend was observed through 2022, peaking at US$ 1,130 million, the period ended with a slight decrease to US$ 1,071 million in 2023.
- China and EMEA Regional Stability
- Assets located in China remained relatively stable with minor fluctuations, ranging between a low of US$ 373 million in 2020 and a peak of US$ 441 million in 2022. The Europe, Middle East, and Africa region maintained the smallest footprint throughout the period, with assets consistently remaining below US$ 60 million, indicating a minimal strategic reliance on long-lived infrastructure in that geography.
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