Sandisk CFO at Citi TMT Conference: NBM Contract Renewals, HBF Alliance Expansion, and Still-Low Data Center Revenue Mix
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Sandisk CFO Luis Visoso disclosed at Citi's TMT conference that NBM contracts are already seeing renewals and volume increases, the HBF alliance has grown to four parties including SK Hynix, Google, and Meta; data center revenue sits at just 38% of total — still below the industry average — and the company is catching up.
What do the NBM contract renewals tell us?
NBM — a new business model where Sandisk signs longer-term contracts with customers, locking in volume and price — landed its first deal in January. Two customers have already come back: one extended the term, the other added significant volume.
This means → Sandisk has moved from "tactical backup supplier" to "strategic partner" — when customers have to choose, Sandisk gets priority.
NBM bit share is expected to reach 50% this year and two-thirds by fiscal 2028. But Visoso noted some customers will never accept NBM and will keep buying at spot prices.
Contracts include floor and ceiling prices. In plain terms = there's a safety net on the downside and a cap on the upside — management says margins hold even in a bear case.
Why is the data center business still playing catch-up?
Data center currently accounts for 38% of Sandisk's total revenue, while the industry-wide mix is expected to hit 50% soon — Sandisk remains underweight.
This reflects a legacy problem: during earlier financial difficulties, the company prioritized edge and consumer businesses over data center.
The turning point is BiCS8 — Sandisk's latest-generation 3D NAND flash technology. Its compute product Carrera and QLC storage product Stargate delivered $3 billion in revenue last quarter, with gains in performance, density, and power efficiency.
On competition from Chinese rivals such as YMTC, Visoso said Sandisk's relationships with hyperscalers are "very strong and growing."
Where does 100% of the bit growth come from?
Mid-to-high double-digit bit growth comes entirely from node transitions — each new generation packs more storage cells onto the same wafer — not from adding wafer capacity.
In plain terms = Sandisk isn't building more factories; it's fitting more data on every wafer. That's the core productivity engine.
As Sandisk moves from BiCS8 to BiCS10 and BiCS11, capital expenditure per new node keeps falling, driving lower depreciation and lower unit cost.
One caveat: as the mix shifts toward data center, unit costs rise due to product-mix effects (more DRAM components), though margins remain attractive.
What does the HBF alliance expansion signal?
After Sandisk announced HBF — high-bandwidth flash, a new memory tier that uses NAND to replace some DRAM/HBM functions and sits close to the CPU/GPU — SK Hynix reached out to co-develop standards, followed by Google and Meta, forming a four-party alliance of two manufacturers and two potential end users.
This means → it's not just Sandisk pushing; demand-side hyperscalers also see this path as worth pursuing.
HBF is designed to manage the full memory needed for inference. The two most sensitive variables are concurrent users and context retention duration — both are rising steadily.
Delivery to customers is planned for 2027. HBF currently covers only operating expenses, with no revenue or margin guidance yet. The good news: it's built on existing BiCS8 technology — no new node required.
How aggressive is the capital return?
Last quarter Sandisk generated $5 billion in free cash flow and repurchased $4.5 billion in stock — returning nearly all excess cash to shareholders.
Management views buybacks as the most tax-efficient return method; the board authorizes additional capacity every quarter.
On M&A, Visoso said the company likes its current portfolio but remains open-minded.
Separately, Sandisk invested $1 billion in Nanya Technology for DRAM access; that stake's market value had nearly doubled to $2 billion by quarter-end and was still rising.
What is the next key validation milestone?
Whether the HBF alliance can deliver product to customers on schedule in 2027 and receive positive feedback will be the first critical proof point for this technology's commercial viability.
Whether NBM bit share reaches two-thirds by fiscal 2028 as planned will determine how much substance the "strategic partner" upgrade carries.
The pace at which data center share closes from 38% toward the industry average of 50% will directly affect Sandisk's leverage with hyperscale customers.
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