SanDisk Corp. (NASDAQ:SNDK) wants to break the cycle that has long defined its industry.
NAND memory has historically swung between shortages, oversupply and volatile pricing, making it difficult for suppliers and customers alike to plan beyond the next few quarters.
During the company’s fourth-quarter earnings call, management outlined a strategy centered on replacing quarterly supply negotiations with multi-year customer agreements that lock in future demand. The goal, executives said, is to build a more predictable business with greater visibility, more durable customer relationships and steadier cash flows—rather than one driven by the industry’s traditional boom-and-bust cycles.
Replacing Quarterly Negotiations With Long-Term Commitments
Historically, NAND suppliers and customers have negotiated pricing and supply on a relatively short-term basis, leaving both sides exposed to sudden shifts in demand and pricing.
SanDisk’s new business models, or NBMs, establish multi-year purchase commitments with strategic customers. This gives the company clearer visibility into future demand while helping customers secure long-term supply for their infrastructure needs.
SanDisk now has eight NBMs in place with data center and edge customers, with a weighted average duration of more than four years. Management expects those agreements to account for more than half of its NAND shipments in fiscal 2027 and roughly two-thirds in fiscal 2028.
CEO David Goeckeler said the objective extends well beyond improving margins. “We want to get this kind of… boom and bust out of it. It doesn’t work for anybody,” Goeckeler said.
From Three Months of Visibility to Four Years
Management believes the biggest benefit of the new approach is visibility.
Just a year ago, the company was planning around only a few months of committed demand. Today, those agreements provide years of forward visibility into customer requirements, allowing SanDisk to better align manufacturing, technology investments and capacity planning.
“A year ago we were talking about visibility in this business of three months and now we’re talking over four years of committed financials and understanding the mix,” Goeckeler said.
That visibility is particularly important as hyperscale customers continue investing in AI infrastructure, where storage requirements are expected to grow over multiple years rather than quarter by quarter.
Management also noted that some customers have already returned to increase their commitments only months after signing their initial agreements, reinforcing its confidence in long-term demand.
SanDisk: Longer-Term Customer Deals Reduce Volatility
Goeckeler said the new agreements have also changed the nature of SanDisk’s customer relationships.
“This used to be, quite frankly, just a supply chain conversation every quarter in a price negotiation,” he said, describing how discussions have evolved beyond transactional purchasing.
Today, he said, those conversations increasingly involve long-term planning with senior executives. “We are literally talking to the CFOs, the CEOs of the largest companies in the world,” Goeckeler said.
For investors, SanDisk isn’t arguing that the NAND market will suddenly stop being cyclical. Instead, management believes longer-term customer commitments and deeper strategic partnerships can reduce the volatility that has historically defined the industry, making the business more predictable than it has been in the past. It seems to have broken the boom-bust cycle.
Image via Shutterstock
Login to comment