Sandisk NDR with head of investor relations emphasizes Al demand drivers and enhanced margin durability

Research evidence excerpt

Sandisk NDR with head of investor relations emphasizes Al demand drivers and enhanced margin durability

UpdateMto that market if PC/mobile is softer.

The big picture view around demand destruction is that Sandisk believes some

legacy business models may need to adjust to a new normal around higher NAND

pricing, particularly where customers were marking up NAND 5-10x as normal

course of business.

The company continues to invest for mid- to high-teens bit growth, achieved

primarily through technology transitions. That's a forecast the company has had

for some time, and while they do acknowledge that the growth outlook in

datacenter has improved materially, mid- to high-teens is still what they view as

sustainable long term. With only "more than 1/3rd" of FY27 bits allocated under

NBMs, the company has a majority of bits available for any customers willing to

make longer term commitments, commitments that would give Sandisk the visibility

they need to contemplate a higher growth rate. But for now a higher level of growth

is not something the company is considering.

On the competitive landscape, management is not especially concerned about

Chinese competition given their restrictions. Sandisk has the view that as long as

YMTC is on the entity list, it will continue to be a 'China for China' story - and they

will serve a growing portion of that market over time. In the long run, they will

saturate that market, at which point Sandisk sees that creating a more bifurcated

market for NAND vs a cause of global oversupply. And in the interim, the NAND

market in China today is growing fast (although not as fast as ROW) and is

significantly undersupplied, giving YMTC a long runway for growth before those

limits start to have an effect.