Sandisk (SNDK) Bernstein 42nd Annual Strategic Decisions Conference summary

Market demand and growth drivers

• NAND demand is robust across diverse sectors including data center, smartphones, PCs, IoT, and automotive, with data center growth forecasts rising from mid-20s to mid-60s percent for 2026 exabyte growth.

• AI-driven inference workloads are accelerating NAND demand, as global scaling of inference requires highly scalable, economic storage solutions.

• Customers are increasingly seeking long-term supply commitments, planning years ahead for critical NAND supply to support AI and data center expansion.

• Edge and on-device AI are expected to further reinforce NAND’s growth trajectory, reflecting the technology’s ubiquity and adaptability.

• The company maintains a mid to high teens bit growth target, supported by ongoing investments in R&D and capacity.

Pricing environment and business model evolution

• NAND pricing has surged, with recent ASPs up approximately 140% quarter-on-quarter, reflecting demand outpacing supply.

• Management is focused on making pricing and returns more sustainable by reducing cyclicality through new business models and long-term agreements.

• Over a third of volume is now under long-term agreements, providing multi-year visibility and aligning incentives between supplier and customer.

• These agreements include financial commitments and escrow structures to ensure predictability and mitigate risks from unforeseen events.

• The company aims to further increase the share of business under such agreements, while maintaining a diverse customer and product portfolio.

Supply, capacity, and innovation

• Capacity expansion is ongoing, with growth driven by both fab investments and R&D productivity, increasing bits per wafer without excessive CapEx.

• The partnership with Kioxia extends through 2034, supporting long-term supply planning.

• High Bandwidth Flash (HBF) is under development, targeting inference workloads with high-density, read-optimized NAND solutions, with initial systems expected next year.

• The company is working closely with customers to integrate new technologies into their architectures, emphasizing system-level innovation.

• Management is committed to smoothing out industry boom-bust cycles by aligning business models and incentives, learning from past volatility.