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Business Segments, Geographic Information, and Concentrations of Risk
 6 Months Ended
Dec. 30, 2022
Segment Reporting [Abstract]  
Business Segments, Geographic Information, and Concentrations of Risk Business Segments, Geographic Information, and Concentrations of Risk
The following table summarizes the operating performance of the Company’s reportable segments:
Three Months EndedSix Months Ended
December 30,
2022		December 31,
2021		December 30,
2022		December 31,
2021
$ in millions
Net revenue:
Flash$1,657 $2,620 $3,379 $5,110 
HDD1,450 2,213 3,464 4,774 
Total net revenue$3,107 $4,833 $6,843 $9,884 
Gross profit:
Flash$240 $946 $662 $1,867 
HDD300 677 874 1,469 
Total gross profit for segments540 1,623 1,536 3,336 
Unallocated corporate items:
Stock-based compensation expense(12)(14)(26)(23)
Amortization of acquired intangible assets— (26)(1)(65)
Total unallocated corporate items(12)(40)(27)(88)
Consolidated gross profit$528 $1,583 $1,509 $3,248 
Gross margin:
Flash14.5 %36.1 %19.6 %36.5 %
HDD20.7 %30.6 %25.2 %30.8 %
Consolidated gross margin17.0 %32.8 %22.1 %32.9 %

Disaggregated Revenue

The Company’s broad portfolio of technology and products address multiple end markets. Cloud represents a large and growing end market comprised primarily of products for public or private cloud environments and end customers, which the Company believes it is uniquely positioned to address as the only provider of both Flash and HDD. Through the Client end market, the Company provides its original equipment manufacturer (“OEM”) and channel customers a broad array of high-performance flash and hard drive solutions across personal computer, mobile, gaming, automotive, virtual reality headsets, at-home entertainment, and industrial spaces. The Consumer end market is highlighted by the Company’s broad range of retail and other end-user products, which capitalize on the strength of the Company’s product brand recognition and vast points of presence around the world.
The Company’s disaggregated revenue information is as follows:
Three Months EndedSix Months Ended
December 30,
2022		December 31,
2021		December 30,
2022		December 31,
2021
(in millions)
Revenue by End Market
Cloud$1,224 $1,920 $3,053 $4,145 
Client1,089 1,854 2,318 3,707 
Consumer794 1,059 1,472 2,032 
Total Revenue$3,107 $4,833 $6,843 $9,884 
Revenue by Geography
Asia$1,494 $2,610 $3,180 $5,285 
Americas1,090 1,407 2,513 3,021 
Europe, Middle East and Africa523 816 1,150 1,578 
Total Revenue$3,107 $4,833 $6,843 $9,884 

The Company’s top 10 customers accounted for 47% and 48% of its net revenue for the three and six months ended December 30, 2022, respectively, and 46% and 44% of its net revenue for the three and six months ended December 31, 2021, respectively. For the three and six months ended December 30, 2022 and December 31, 2021, no single customer accounted for 10% or more of the Company’s net revenue.

Goodwill

The following table provides a summary of goodwill activity for the period:
FlashHDDTotal
(in millions)
Balance at July 1, 2022$5,718 $4,323 $10,041 
Foreign currency translation adjustment— — — 
Balance at December 30, 2022$5,718 $4,323 $10,041 

Goodwill is not amortized. Instead, it is tested for impairment annually as of the beginning of the Company’s fourth quarter, or more frequently if events or changes in circumstances indicate that goodwill may be impaired. The Company uses qualitative factors to determine whether goodwill is more-likely-than-not impaired and whether a quantitative test for impairment is considered necessary. If the Company concludes from the qualitative assessment that goodwill is more likely than not impaired, the Company is required to perform a quantitative approach to determine the amount of impairment.

As of December 30, 2022, management identified several continuing factors, including changes in macroeconomic conditions and recent declines of the Company’s market stock price, that warranted quantitative analyses of impairments for both the Flash and HDD reporting units as of such date. The fair value of each operating segment was based on a weighting of two valuation methodologies: an income approach and a market approach.

The income approach was based on the present value of the projected discounted cash flows (“DCF”) expected to be generated by the operating segment. Those projections required the use of significant estimates and assumptions specific to the reporting unit as well as those based on general economic conditions, which included, among other factors, revenue growth rates, gross margins, operating costs, capital expenditures, assumed tax rates and other assumptions deemed reasonable by management. The present value was based on applying a weighted average cost of capital (“WACC”) which considered long-term interest rates and cost of equity based on the Company’s risk profile.
The market approach was based on a guideline company method, which analyzed market multiples of revenue and earnings before interest, taxes, depreciation and amortization (“EBITDA”) for a group of comparable public companies.

The Company reconciled the aggregated estimated fair value of both operating segments to the Company’s market capitalization, including consideration of a control premium representing the estimated amount a market participant would pay to obtain a controlling interest in the Company.

As of December 30, 2022, the fair value derived from those valuation methodologies exceeded the carrying value by 9% and 28% for Flash and HDD, respectively. There were no impairment charges recorded for the three and six months ended December 30, 2022.

The Company is required to use judgment when applying the goodwill impairment test, including the assignment of assets and liabilities to reporting units, and determination of the fair value of each reporting unit. In addition, the estimates used to determine the fair value of reporting units as well as their actual carrying value may change based on future changes in the Company’s results of operations, macroeconomic conditions or other factors. Changes in these estimates could materially affect the Company’s assessment of the fair value and goodwill impairment. In addition, if negative macroeconomic conditions continue or worsen or the Company’s stock price decreases further for a sustained period of time, goodwill could become impaired, which could result in an impairment charge and materially adversely affect the Company’s financial condition results of operations.