Sandisk Corp (SNDK) June 9, 2026 Conference Transcript

Good afternoon, everybody. Thank you for joining us at the 2026 Mizzou Global Tech Conference. It's my distinct, absolute pleasure to welcome back CEO David Geckler and CFO Luis Felipe Misozo. I hope I got that right. That was great. Thank you. Perfect. Thank you for joining us at the Mizzou Tech Conference. Again, what an year it's been, David.

It's been a great year. Thanks for having us back.

Last year's stock was around $60 at this time.

Is that right?

It's 1,800 now, 30x. And I think that's a mic drop moment. I think the fireside is over. I think we should be gone from here.

It's kind of hard to drop the mic when it's on your ear.

I think, you know, if there is a Times Magazine for the best of the company and best management, it's right here, guys. And what can I say? I think thank you for joining us again. Welcome back. We really appreciate it. What did they say? AI is hungry for compute, but survives in storage. Oh, very nice. My team did some good work on you guys, trying to get these one-liners done. So let me start off.

Hey, Vijay, before we start, if you don't mind, just want to read this. We will be making forward-looking statements in today's discussions, including with respect to our technology, our products, our business plans and performance, market trends and opportunities, and our future financial results. These forward-looking statements are subject to risk and uncertainties and actual results may differ materially from expectations. Please refer to the risk factors outlined in our annual report on Forms 10-K and 10-Q and other findings with the SEC for more information. Thank you, Vijay.

VJAY DASKARANI- Fantastic. I think we got all of it. So I just want to start off with a quick run through the numbers. you know last year fiscal 25 June you guys are doing 7 billion this year fiscal 26 June 20 billion next year street consensus like 45 billion what's happening here just kidding but I mean I think I want to you know take a step back and David might be give us a little bit of the lay of the land what are you seeing on the supply-demand side, you know, non-bit growth has been growing low 20s, you know, how do you see that going forward? Demand is obviously accelerating, but maybe you can take a step back and, you know, give us a peek into what you are seeing, so.

Yeah, so your question, what's happening here, is like anything in market this dynamic, a lot of things are happening at the same time, so it's fun to be here, by the way, to be here with you and a year on. This is also the same room where we actually launched the company yes hopefully next day so it's good to be back here and if you look back to then we had the same level of conviction we have now i mean we see a market with sustained mid to high teens growth um and we always thought that the technology wasn't fully appreciated for the value that we were bringing and i think over the last year we've we've done a good job of figuring that out right and kind of understanding what the value of the technology is clearly there's a lot of AI demand that's helping that equation you know data center is now become or is quickly becoming the largest market in NAND and you know we've had many many revisions of data center capex going up I think Luis you were telling me earlier it's like 14 revisions now. 14 times. 14 times all going up and you know a lot of that is as AI moves into inference you know I think our customers are figuring out the architecture of how to our customers are working on what is the what is the architecture for inference and that's when NAND comes into NAND becomes a big part of that equation we've seen it with you know people talk about with kvcash or rag you know nand has always been the most scalable semiconductor technology so as you start to scale any architecture i think it's naturally going to come towards nand if you need storage and um you know i think that that answer it's a very difficult question i think our customers have which is what is the right architecture for scaling inference on a global basis. Yeah. And figuring out what's the right concentration of processing power, what's the right concentration of DRAM, HBM, what's the right concentration of NAND. It's very use case dependent. Trying to figure out what the use case is several years in the future is an issue all of its own. And I think that, you know, as our customers go through that equation and figuring that out they're coming to the conclusion that having longer-term relationships with suppliers of NAND is a very good idea yeah and I think that's what we're that's what we're putting together with these business agreements yeah and it's it's kind of changing the trajectory of our business I think in a very positive way got it and it's a very it's a very powerful relationship between us and our customers and it's very much of a win-win conversation yeah so uh yeah a lot has changed in the last year but i really do think we're we're just getting started yeah i mean we are i think ai is you know there's been a lot said about ai but uh you know extremely fundamental technology shift that were clearly in the very early innings and i think the productivity that that people are seeing out of this technology is nothing short of spectacular. And I think our technology is a big part of delivering that on a global basis.

I want to get to those LTAs and NBMs a little bit later so we can get Louis involved in that. But I want to get back to the technology roadmap. Obviously, your enterprise has grown massively. It's almost 25% of the revenues now. Used to be a much smaller number. might be mid single digit last year, it's grown 7x year on year, and it's just starting off because you guys are just starting to get qualified on enterprise SSD, QLCS, etc. How do you see that, you know, if you get to roll this forward 12 months, how do you see that market growing, how do you see your, you know, wins, you know, how sticky is this with the CSPs?

Yeah, I mean, so first of all, you're 100% correct, it all starts with the technology, right? If you don't have great products, I mean, we're a technology company, you have to have great products, that's like the basics. And we do have great products, all the way from the fundamental NAND, which we can talk about, into the portfolio we have. And, you know, it's been no secret, we've been investing heavily in enterprise SSD, it's a part of the market where we've been under-penetrated. and it's about building the right portfolio to increase our mix in that part of the market. There's really two major categories of products there. There's a performance-based TLC NAND product used a lot for KB Cash and a number of things. That's been the driver of the portfolio over the last year. The second part of the portfolio is the storage-based product, which is called Project Stargate. We talked about it again here back in February when we launched the company. This is the first quarter we'll recognize revenue on that product. So you're right, we're just getting started on that leg of the portfolio. So I would say we've got one side of the portfolio in kind of full bloom and deployed across multiple multiple customers and driving the significant growth you mentioned earlier and now we've got the second wave of that growth coming so where's that going to lead to over the next year I think you're going to see the mix of data center go higher yeah I'm not going to put a specific number on it because you know what we like to have is a lot of optionality in our portfolio absolutely every quarter is different it's changing a little bit now with the business models and we'll get into that But we believe that a robust portfolio where we can cover as much of the market as possible is the best for long-term profitability of our franchise. We're unique in the fact that we have a global consumer business that already gives us a great starting point. We have a great client business, and now we're building out that great enterprise SST business. So I think it puts the company in just a fantastic position as far as what options we're going to have in the future to get the best financial return.

Yeah, definitely. I think talking about optionality and trying to optimize the business to get the most profitability out of it, obviously when you're looking at the enterprise SSD market, it gives you good visibility. You have massive orders coming in from the CSPs. On the other side you have exposure to many of the conventional markets where you you have much better pricing power How do you decide where to allocate?

Yeah, so we we like all our customers right and we want them all to be successful and at the end of the day We produce a wafer and we have to make a decision where we are located We want to have a portfolio that's balanced across segments right because that's more sustainable over time we don't want to maximize value just for this quarter but over time but we're constantly making choices on where we allocate bids and the new business models are a foundation for that got it so let me flip that question you see pricing in conventional land going up when when when you look at these SSD you know LTA so the contacts that you get on the CSP side are those kind of tethered

to where market pricing would be because you don't want to leave money on the table either. I mean, you're not running a charity, you're running a business model. So how do those arguments work out?

Yeah, so in general, there are fixed price components within these new business models, which I believe are important. And then there are parts of the agreement are with, let's call it a floor and a ceiling of pricing. And the reason we did that is because none of us wanted to be unhappy, right? If prices go up, then we would be unhappy because we would not be capturing the upside. If prices go down, our customers would be uncompetitive because their peers would be paying lower prices. So we established this floor and ceiling concept for some of our contracts and for some of the time within that. Now, importantly, as we said in our earnings call, even in the low prices, we like the margins, right? This is how we structure them and margins would be consistent with the margins that we guided in for the fourth quarter for our fiscal fourth quarter You can assume we have somewhat unique insights into price being in the market.

We don't like to discuss price. And then the other thing I'll say, I think there's three things we're trying to do. And there's three things I think in any technology franchise we want to do. Number one, we want to get a fair price for our technology. We work very hard on it. People are professionals. You want to get a fair price. I think we've kind of gotten to that point. You can argue, could we get more? If we can get more, we'll get more. That's our job. We'll continue to have that conversation. Number two, we want to get rid of the volatility on the economics. And I think especially in our industry, this is an issue. There's been so much volatility up and down, cyclicality, I've said this many times, it's just corrosive on the industry. It makes it difficult to invest in the industry. It makes all the decisions harder, so we want to work on that. And then the third thing we want to do is we want to grow. We're a business. We want to grow as a business. Well, I think one of the most interesting things about our technology franchise is we have a built-in growth lever of more volume every year. We're talking about mid-to-high teens BitPro. That's more volume every year. I think that's fairly unusual in a large technology business. that you just like next year we know we're gonna have more volume yeah and we have a debate sometime about well should you be growing faster yeah and the issue is all three of these variables are related if you start growing faster you oversupply the market and then pricing comes down and volatility goes up yeah and so it's really about balancing all three of these and that's really what we're trying to do as a management team let's get all all those three balance to your point, not leave anything on the table, but the future is uncertain, so you can get to the future and you find out the tips in the other direction. And so that's where the new business models are really getting at that second issue. How do we put, and that's why we call them new business models, and that was Luis's name, he came up with that.

Very innovative.

And it's like, how do we put a new business model around this, our business with our customers, in a way that we can achieve all of these things? And I think we're not done yet, but I think we're making good progress on that.

Got it. Going back to the cyclicality point that you just raised, it's a very interesting point because this industry has been plagued with that whole, you know, it's kind of labeled very cyclical and so it comes with a much lower multiple, I guess. How do you convince the investor base that this time it's different? You have better visibility, there is a technology roadmap here. The players are more rational, more disciplined. There is more of a focus on making profit than being cyclical as supply.

Yeah, well, there's nothing I can do about other players in the market or anything else. I only, you know, we only manage our company. and what we can do is be transparent about what we're doing and explain what we're doing and why do we think that the way we're doing it is better than the way it's been done in the past yeah i think generally that's what we do all the time right we're innovators we invent things we do things differently we have the confidence that we can change things and get a better outcome in the future we're not prisoners to the past yeah and you know believe me i've been told many many times about the cyclicality in this industry. Whenever you bring up the word LTA, the first thing they're pressing across the table is all the reasons they won't work.

They start rolling their eyes.

There's so much scar tissue and there's so much history. I get it. How do I disprove something? It's very hard to disprove something except you just keep putting points on the board. That's what we do. We keep putting the numbers up. Again, we were here back in February 25 and we stood on the stage in this very room and we made the case for our company and you know it's did people believe us I don't know if they did or not they gave us like a six or seven billion dollar evaluation now they have a little more belief so for the people that believed a year and a half ago it's turned out very very well for them absolutely everybody has to make their own decisions we've clearly made our decisions I mean I spend every day all day at the company, managing this company, and we're fully invested in it, and we have a lot of confidence in what the future is going to hold, and we're going to keep being transparent, and we're going to keep doing what we think are very smart things, we're

going to be open, we're going to keep coming to meeting, you know, we had great meetings all day where we hear feedback from the people that own our company, we factor that in, and then, you know, we move forward and make the best decisions we can, and we think we have tremendous franchise and you know we're very focused on getting the most out of it we can this very very great to hear so I remember last since you brought it up talking about things being done better last February the analyst day asked you a question why did you move from WD to SanDisk and he said because you saw much better innovation a much more exciting roadmap at SanDisk and I guess you proved it right so but to that point you know as you look at Q you know your whole TLC SSDs and QLC SSDs on the enterprise SSD side you guys have lagged the market but now you're catching up what changed what what is the differentiation in your SSD roadmap today that is giving you that design and win-win-right versus your peers that was not there last year.

So it really started more than last year. I mean, these are long design cycles. These are like three or four years, at least. Building an ASIC is not easy. And then getting qualified and a major customer can be a two-year process. So this started years and years ago. And if I think of SanDisk and kind of, just to the big picture, there's all these different episodes of SanDisk, if you will. I mean, it was just a tremendous consumer company, tremendous IP. I think it went into Western Digital and inside of Western Digital, what you would have expected happened, which is it became a great client business. And it was like the rise of client. And why was that? I mean, in my opinion, you were, and I wasn't there, I didn't witness all of it, but I'm just looking at the history, you know, NAND was replacing the hard drive in the client. So you knew the customer, you knew the use case, you knew how to test it, you knew what all the features were and you could build a tremendous portfolio there and a lot of innovations and systems were the first DRAM-less client, all these innovations. And all of this expertise on building systems for consumer brought into building systems for clients. And then you had a new management team come in six years ago that had more of an enterprise background and started bringing an enterprise bent to this. Like how do we get the right engineering teams? How do we get the right projects? And projects are very, very difficult. They go on for years and it's the culmination of hundreds of decisions that happen every week that eventually lead you to having the right portfolio for the right market. And we've just run that play long enough now with an unbelievable internal team that has all of the expertise in how to build NAND controllers, applying all of that to the enterprise market. And when you do that for long enough, you end up with great products. And we're very, very, very happy with where we are.

Last one, last question on the SST side, and then we'll move on to something more exciting, HPF. But first on the SST side, as you look at KV cash demand and some of the CMX racks that Nvidia talks about, are you seeing that gain a lot of traction? You obviously have agentic AI and all that demand coming in as well, but that's supposedly going a different route. But from the KiwiCache side itself, are you seeing a very big pull through from the CSPs?

Yeah, I think undoubtedly this is a very big backdrop in the industry where, as I said earlier, right, I think, you know, AI, there was just a huge focus in the early days, appropriately so, on model training, right, you don't really have AI until you have a model. Yeah, and so enormous amount of focus on building out the systems for training models And then I think we've all learned in over the past several years that these models are extremely valuable Right that they can you can do amazing things with them. I mean, I'm an enterprise software guy for 30 plus years The amount of the amount of change that's happening to the discipline of writing software is almost spectacular Yeah, of what's happening with these models You have pieces of software that people have worked on for decades and all of a sudden you can run a model against it and find and defects that have been there for years and years. It's just, as a professional, it's just kind of crazy the amount of productivity. So then, once you get that, you have to scale it. You have to scale inference, and I think this is really, you know, there's now a number of spectacular companies in the world that can scale technology globally in a way that's never happened before. You know, cloud-based computing is unbelievable. I mean, it used to be that to scale technology, you actually had to ship the technology to every single, I mean, I'm old enough to understand this, right, you used to have to ship technology to every single person, now you just point your device to the cloud that has the most sophisticated technology in the world and you're up and running. So the friction of deploying technology in the world has just almost been completely removed. Except for the people that are doing that work. It's extraordinary work to build a global infrastructure to distribute technology. And I think those companies are very focused on how do I scale inference globally. And to do that, it's got to be, you've got to know the use case you're scaling for, it's got to be done in an economic way, and you have to be able to do it in a predictable time frame. And I think as those conversations have been going, people have been going through those conversations, they've been, what is the right mix of compute? What's the right mix of DRAM? What's the right mix of HBM? What's the right mix of NAND? And that's a very dynamic question that changes based on what use case you're assuming. What's the power of the model? How big is it? So this is a very dynamic equation and it's kind of happening in real time. And I think the big picture answer to that question is, you need a lot more NAND. Because NAND is the most scalable semiconductor technology. And if you're going to scale something economically, you're going to want to use as much of the most scalable technology that you possibly can. And I think that's led to this whole process of discovering what is the true value of this technology to the world is the capacity versus cost question how much capacity versus cost and yeah and you know NAND has been something where it's been almost always focused on density yeah and you know now it's focused more on high performance right it's a much more multi-dimensional yeah equation talking about high performance I want to go to this HPF there's obviously a lot of excitement around it high bandwidth flash which is similar to HBM in the sense that you stack 16 layers of NAND you have a logic based I a CMOS bonded area at the bottom might be you can talk to

how you see that technology evolving because it starts to deliver the bandwidth of DRAM at a cost that's one tenth of DRAM but it has its challenges whether it's right or endurance speed endurance etc so maybe you can talk to where you see your roadmap. You guys have talked about HPF in the second half of 26 and might be the controller hardware in the first half of 27, but maybe you can give us some more color there.

Yeah, so I think that the original, the whole original idea from HPF came out of the conversation we just had, except it happened like years ago by a bunch of very, very smart people inside the company that were basically, if you were a NAND designer for your whole life, you've been told give me more density like more density more density more density that was kind of the whole idea of designing new nanos but now you have this you know I think they saw this well I don't think they know they saw this like inference use case coming we're having these very large models and so I need a lot of storage but for nan to be to work in that inference use case you had to solve some other problems like you had to make the you know the one good thing about inference is a very deterministic equation like you know what the model is it's not like training where you're building model you know what the model is you just need you need to load it into a CPU as fast as you can so the team started thinking about how do I re-architect NAND for higher bandwidth higher right bandwidth yes how do I get to some of the endurance questions right and an enormous amount of intellectual property was developed over those years obviously we don't talk about that that's our intellectual property that basically said hey at some point the world is going to need more storage for inference yeah and can we design a man die that solves that problem and that's what's kind of I think the genesis of HPF we were working on it for quite a long time before we launched the company last year we thought that was the right time to start talking about it because we were launching the company. And I think one of the most satisfying things that's happened over the last year and a half since we launched the company is I think there was a lot of skepticism when we first started talking about it. And I think that there's a lot less now. I think it's like people can see, hey, like inference is a memory-bound problem as much as it's bound by GPU bound. So how can we bring more memory more storage to inference and that's what hbf is all about and so we're in the pro now the challenging side of it is it's not just a plug compatible replacement for something in the current ai inference architecture it's a system play you have to change other parts of the system to get the whole thing to work and that's the process we're in now is talking to customers about how they're going to design inference whether it's on a device or whether whether it's in the cloud, and how does our technology plug into that, and that's an iterative process, right? They're trying to figure out what the use case is, what they wanna build, we're telling them what the capabilities are, and then you're constantly changing both sides of that equation. In the meantime, we're off building the DAI, which we expect to have later this year, and then we're building the controller that actually controls the DAI and actually delivers a product, and we'll have that available sometime next year. got it and we're going through that process and we're iterating on that process with our customers to get it to lock in to a specific use case which then we can commercialize got it and so we're in that process right now got it so even you think about you working with the customers is that you're getting a lot of interest on the CSPs customers and we don't want to talk about that just So, you know, we think it plays across the device all the way to the cloud. I think that's what's really good about the technology. And so as models get bigger, as context lengths get bigger, as agentic comes, mixture of expert models, all of these things are tailwinds for that kind of technology becoming more relevant.

And this would be more of like an on-die HPF, similar to like an HPM. Is that fair?

It's like a Bix8 product that's a new die type for that that's optimized for this use The one other pushback we hear is the bandwidth seems to, you seem to have solved the bandwidth problem.

Maybe the bandwidth is 1.6 terabit or higher, similar to an HPM, but it has latency. What's your thoughts around that?

The latency is higher than typical now. into a very technical conversation very quickly but that's the last question we go on to easier ones you're you're you're in a deterministic read here so it's like a pipeline like you know what you're gonna you know the latency is only at the beginning yeah like once you get going you're going yeah got it that's a that's a very high level very very simplistic okay i won't be liberate Thank you. We understand that issue, and that's part of the issue of why we work as a system level. You're not just going to plug it in for something else that was in the system. Everybody needs to change a little bit to get a much better answer.

What's technology without a challenge, right?

Well, I mean, that's where the value is. If anybody could do it, if you could just wake up and build this stuff, that would be worth it. Because it takes a long time and a lot of very smart people. yeah and it's very very valuable absolutely that's why it that's why all these people here want to invest in our company hopefully we're doing stuff and waiting for the next 10x i guess it's not just that there's an economic benefit for us that's like the second order issue the first order issue is it provides to our customers a very very very compelling value proposition that allows them to build a more economic business or allows them to build to deliver a better service to their customers yeah that's the first step and they have spectacular businesses that's why you asked me what you know you said earlier about why did i come to the nan business i mean their business is incredible it's like every device in the world uses nan at some level yeah and our customers are just like a who's who of every single spectacular technology company in the world those are all the people we get to work with every single day yeah and figure out how we can innovate so they can deliver an incredible product yeah I think it's the satisfaction of solving a problem and the opening the next absolutely I want to quickly pivot to those here I think Louis sure eagerly waiting to might be on the NBM side you obviously announced one couple of engagements there how do you see that pipeline growing on the NBM side you know might

give us some broad strokes on how these are structured um i mean obviously supply is tight everybody's trying to get on the nbm um sort of this lta thing um but maybe you can tell us you know how do you see that mix of uh you know a proportional revenue is going out as you totally when we closed the quarter we said we had signed five deals right and we're very happy about that know we talked about the financial profile of those deals and and as i just mentioned it's a win-win relationship with our customers they are great they're coming back and we're in constant negotiations with them as i also mentioned last quarter there are several conversations going on and they're progressing well and we're talking to customers across all segments right you know from data centers to edge customers obviously the consumer our consumer business is more transactional So it doesn't really apply there, but we're talking to all other customers and as long as we're willing to operate in this new business model, we're open for business.

Got it. I want to ask you a slightly tougher question. You have big stand coming. It's 300 layer plus. It's what's out there. Things are tight now. It's great. But at some point you're adding CapEx. You have to add CapEx. You'll add CapEx.

Industry adds CapEx. how do you decide on that capex roadmap you have a partner kiosha you know you have other peers in the industry um how do you how do you think through that dynamic of how you add capacity how much do you add capacity yeah i would start by saying we're adding capacity all the time we're adding we're growing capacity in the mid to high teens right that's what we've said so we're investing you see that in our financials we've also said that we made the most cost efficient transition of the big state transition so far next year we're going to be continuing that transition to big state and then we're going to start building some capacity for big stand it will be a little bit more expensive per bit right so same growth but but a little bit more cost a higher cost but it will still be lower percentage of revenue obviously as our prices have continued to to go up what we do is we look we take a long-term view of the market You know, we talk to our customers, we understand what that growth is, and that's what we're planning to. We can't react to a one-quarter of what's happening today, right? It takes 110 days to produce a wafer, so we really take a long-term view, and we want to make sure that we're there to source profitable and sustainable bets.

Got it. One last question. I've got a minute here. So your earnings for next year, consensus is close to $200 earnings per share. That's a massive cash flow. What are you going to do with all that cash?

Yeah, I think, you know, it's just an easy question. We've been very consistent on that. Number one, we need to invest in the business. You know, the capex that's required, we need to continue to fund the business. And we've made some strategic investments to strengthen our supply chain. You know, we invested in NANIA to get more access to DRAM, which is very important to us, particularly as we expand into a data center, which consumes more DRAM. We extended the JV agreement for another few years. so that's your great investments in the business we said we wanted to pay down our debt so we started with two billion dollars that's all gone and the third thing to do which is really the role of our company is to return cash to our shareholders we announced a six billion dollar share buy back program with earnings as you can imagine we should be executing on that and we'll give you an update at the end of the quarter and then what's next right what a fantastic story thank you um any Any last questions?

One last question? That's it. Fantastic. Appreciate it.