SanDisk Corp Q3 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Joseph Moore - Morgan Stanley - Analyst : Great, thank you. Congrats on first quarter as a stand-alone company. Can you talk about the supply/demand a little bit? You said that you sort of took additional supply side actions in the quarter. Give us some sense of magnitude there. And then just do you think that as we move into the second half that we could be fully utilized and that the market would rebalance? Or just how are you thinking about the longer-term view there?

Question: Joseph Moore - Morgan Stanley - Analyst : Great. And for my follow-up, I think enterprise SSD sort of had a little bit of a digestion window in March. It seems like it's getting better to me, and I just wanted to see how you guys are seeing those trends. And are you guys still confident in your ramp, kind of getting to the levels of market share that you've described in that space over time?

Question: Joseph Moore - Morgan Stanley - Analyst : Thank you.

Question: Christopher Muse - Evercore Inc., - Analyst : Cantor Fitzgerald. May I say congrats again in your first quarter out.

Question: Christopher Muse - Evercore Inc., - Analyst : Yes. I guess maybe if we could drill down into gross margins, you talked about kind of taking utilization lower, yet you're still guiding up 355 bps sequentially. So could you help us kind of understand what the headwind is specifically into Q2 and how we should think about that headwind kind of unwinding through the calendar year? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 07, 2025 / 8:30PM, SNDK.OQ - Q3 2025 SanDisk Corp Earnings Call

Question: Christopher Muse - Evercore Inc., - Analyst : Perfect. And then maybe a focus on enterprise SSD and CapEx. And so you talked about the investment in BiCS 8. At the same time, we're seeing a concerted effort by some players in the industry pushing to 200-layer plus QLC and moving to [MLC] to really support kind of the AI enterprise SSD. So I guess, where are you in kind of that transition? And how do you go about bringing on kind of optimized capacity for the enterprise yet, at the same time, limiting bit growth. It seems to be in our form right now where we are in the cycle for NAND.

Question: Aaron Rakers - Wells Fargo & Company - Analyst : Also my congrats on the first quarter out of the gate. Kind of sticking with the gross margin, maybe thinking a little bit of a different way, it looks like if I adjust for some of these underutilization and start-up cost charges that your cost on a per bit basis was maybe more or less flattish sequentially this last quarter, and it looks like based on the guidance, again, with those charges considered, it looks like you're assuming maybe the cost improves, right? Your cost structure declines maybe in the low to mid-single digit on a bit basis this next quarter. So I guess my question is, how do we think about, as BiCS 8 matures, the cost down that you expect to see as we move out into the second half of the year and into '26? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 07, 2025 / 8:30PM, SNDK.OQ - Q3 2025 SanDisk Corp Earnings Call

Question: Karl Ackerman - BNP Paribas - Analyst : I was hoping you could address the outlook for NAND bit shipments in the June quarter and if you still anticipate NAND bit volume to grow low double digits this calendar year. And as you address that question, perhaps you can discuss the level of order visibility that you have across your various end markets.

Question: Vijay Rakesh - Mizuho Financial Group, Inc. - Analyst : Hey, thanks. It's just a quick question on the cloud side. I saw it's growing almost 100% year-on-year, I guess. But can you talk to how many enterprise hyperscale customers you have, how you're approaching that market? What are the milestones that you expect to hit?

Question: Vijay Rakesh - Mizuho Financial Group, Inc. - Analyst : Got it. And I think when you look at the SSD segment, a lot of this is still shipping on TLC, but you're starting to see QLC SSD pick up. Can you talk to how that ramp is going? Where is Sandisk on that road map in terms of qualification or ramping up shipments on QLC?

Question: Vijay Rakesh - Mizuho Financial Group, Inc. - Analyst : Thank you.

Question: Steven Fox - ResearchFox - Analyst : Hey, good afternoon. I had two questions, if I could. First of all, I was curious about how we think about underutilization charges beyond this quarter, how quickly they sort of dissipate. And then just thinking about the full supply chain, you've mentioned that there's not a lot of direct exposure to tariffs at this point and even like it sounds like demand is holding up pretty well, too. But is there any other bottlenecks that you're worried about with your customers, where they're moving around supply chains or anything else that could either help you versus competition or maybe become sort of a pushout going forward?

Question: Steven Fox - ResearchFox - Analyst : That's very helpful. Thank you.

Question: Nam Hyung Kim - Arete Research Services LLP - Analyst : Hey, thank you. Thank you for taking my question. One more question on NAND pricing. Compared to a few months ago before tariff impact, the overall sentiment on price outlook seems to be more conservative. But you mentioned that you assume mid-, high single ASP built into your guidance this quarter. Is this mainly driven by transactional market or across the board? If you can give me any color on the OEM market, that would be great. And then if I can add one more question, since your fabs are all located in Japan, I just wonder how Japanese yen exchange rate against dollar impact your cost structure? Is there any framework to share with us for our modeling purpose?

Question: Nam Hyung Kim - Arete Research Services LLP - Analyst : Yes, thank you so much.