Sandisk (SNDK) Morgan Stanley Technology, Media & Telecom Conference summary

Strategic transformation and industry outlook

• Completed separation from Western Digital, now operating as a pure-play NAND company with renewed focus and opportunities.

• Emphasizing smarter supply-side management and profitability over growth at all costs, reflecting industry maturation.

• Industry has shifted from rapid node transitions to more disciplined supply-demand balancing to avoid oversupply and support pricing.

• Market expected to grow from $65 billion to $100 billion by 2029, with strong long-term demand drivers in cloud, PCs, AI, and smartphones.

• Near-term market setup is strong due to constrained supply and robust demand, with stabilization expected in Q2 and improvement in the second half of the year.

Technology leadership and product innovation

• Joint venture with Kioxia has delivered industry-leading NAND technology and CapEx efficiency for over 25 years.

• Transitioning from BiCS 5 to BiCS 8, leveraging wafer bonding for higher performance and future optionality.

• Launching Ultra QLC node, targeting 10% of output by year-end and 30-40% by fiscal year-end, with strong performance in enterprise SSDs.

• New enterprise SSDs combine advanced nodes and proprietary controllers, aiming for increased market share and qualification with customers.

• R&D continues to drive foundational innovation, including new memory technologies like Matrix NAND and high bandwidth flash.

Financial model and operational efficiency

• Targeting a sustainable 35% gross margin, based on extensive scenario modeling and aiming to avoid past cycle lows.

• Gross margins and operating margins are comparable to JV partner Kioxia, with CapEx efficiency as a key differentiator.

• OpEx expected to remain stable as revenue scales, with ongoing focus on efficiency and prioritizing innovation.

• Long-term free cash flow margin projected in the low teens, with profit as the main driver and increased focus on cash generation.