SanDisk Long-term Agreement Expansion, Hopeful for Locking over 50% Shipment Volume in 2027

SanDisk is upgrading its long-term contracts from industry standards to strategic moats.

Recently, SanDisk disclosed in its financial report conference call that the company has signed 5 long-term supply agreements with customers, expecting these contracts to cover more than one-third of its NAND shipments (in bits) for the fiscal year 2027.

CEO David Goeckeler stated that this percentage has exceeded the initial guidance of "at least one-third" and will continue to rise with additional contracts in subsequent quarters, "有望突破50%".

This means that SanDisk's revenue visibility is significantly increasing—the long-term contracts lock in not only the volume shipped but also a strong binding structure that includes minimum revenue guarantees, collateral mechanisms, and penalty clauses for breach of contract.

Contract Scale and Structure: $42 billion in Minimum Revenue, Customers Pay Billions in Collateral

SanDisk's 10-Q filing shows that the 3 contracts signed in the third quarter have a total minimum contract revenue of about $42 billion.

CFO Luis Visoso revealed that the company signed 3 agreements in the third quarter, and 2 more this quarter to date, while still actively negotiating with more customers. The contract durations vary, with the longest lasting up to 5 years.

In terms of pricing mechanisms, SanDisk uses a mixed structure of fixed and floating prices: short-term contracts are primarily based on fixed pricing, while long-term contracts contain a higher proportion of floating pricing. According to the company, the floating mechanism aims to capture upside gains when market prices rise, while providing some protection to customers when prices fall.

In terms of risk control, customers have paid billions of dollars in collateral, backed by various financial instruments, covering the entire contract period. If a customer fails to fulfill their quarterly purchase obligations, the relevant financial guarantees will immediately convert into compensation for the unfulfilled commitment.

The binding force of this mechanism far exceeds traditional supply agreements. According to MoneyToday, Samsung also emphasized in its financial report conference call last week that unlike the supply agreements based on trust in the past, these new contract structures have "stronger binding forces", with prepayments, minimum revenue guarantees, and financial collateral becoming the new industry standards.

Long contracts drive capital expenditure: NAND manufacturers accelerate production expansion and technology upgrades

Tom's Hardware analyzed that with multi-year contracts and locked demand as support, manufacturers like SanDisk, Seagate, and Western Digital are now more confident in investing billions of dollars in wafer fabs, backend capacity, and next-generation technologies such as higher-layer NAND and HAMR.

The logic is straightforward: long-term contracts are equivalent to locking in revenue in advance, reducing the uncertainty of large-scale capital expenditures, making manufacturers more willing to place big bets on technology and capacity.

HBF Progress: Prototype line to start within the year, complete solution by 2027

Another market focus is the progress of SanDisk in the high-bandwidth flash memory (HBF) field.

According to previous ETNews reports, SanDisk has started contacting material, component, and equipment partners to build an HBF prototype production line ecosystem, with the goal of launching a prototype in the second half of this year, with Japan being the main candidate for the production base.

CEO David Goeckeler confirmed in the financial report conference call that the company is actively communicating with customers about the deployment plan of HBF and continuously advancing in full-stack development, covering NAND wafer itself and controllers.

On the timeline, Goeckeler stated that SanDisk maintains the previously disclosed pace: the NAND silicon wafer is expected to be ready at the end of 2026, and the complete system-level solution integrating the controller is expected to be launched in the first half of 2027.

Additionally, in March this year, Taiwan DRAM manufacturer Nanya Technology completed a $2.5 billion private placement, with investors including SanDisk, Kioxia, Solidigm under SK Hynix, and Cisco Systems.