SanDisk Corp at Cantor Global Technology Conference Summary

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

Question: CJ Muse - Cantor Fitzgerald - Analyst : <_ALACRA_META_ABSTRACT>Okay, thank you. Well, it's great to have you both. I'm almost waiting for [Kipp Bedard] to walk in the room, but that's a whole other story. So Luis, congratulations on the completion of the recent spin. Maybe that's a great place to start, with a postmortem on what you see as the biggest benefit for the separation, as well as high level overview of how operations may change now that SanDisk is a completely separate entity.

Question: CJ Muse - Cantor Fitzgerald - Analyst : Perfect. So, maybe to start with the NAND environment, at the your recent analyst day you expressed really clear confidence in the second half recovery in NAND. Curious if you can kind of expand on that. And I don't know if you will or won't comment on the recent news of you raising pricing 10% as of April 1, but perhaps if you could kind of weave all of those trends, into an answer in terms of what you're seeing right now from a demand perspective.

Question: CJ Muse - Cantor Fitzgerald - Analyst : So if we can stay on the pricing side, it seemed to come a little earlier, at least in my view, in that it feels like you and your peers all maybe on average cut utilization by about 15 points, give or take. But that takes a good six, seven months to kind of flow through in terms of actually impacting wafers out, and so I guess, I would have thought that the pricing would have come maybe mid-year increases, I guess what gave you the confidence to kind of increase pricing today, is it seeing leaner inventory in the channel? Is it a focus on, kind of a normalized model and just having a pricing, can you kind of walk through --

Question: CJ Muse - Cantor Fitzgerald - Analyst : Perfect. And maybe just to hit on the consumer side of your business, where do you see inventories today in terms of NAND for both PCs and smartphones?

Question: CJ Muse - Cantor Fitzgerald - Analyst : On the cloud side, we've heard kind of differing comments so you just talked about kind of cloud healthy, I think Micron has noted enterprise SSD softness on the margin. How do you kind of think about that variance? Is it customer mix? Is it depending on, who's spending when, any other thoughts?

Question: CJ Muse - Cantor Fitzgerald - Analyst : And given that comment, should we be inferring from the price increase that it's more consumer increase, not enterprise SSD. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 11, 2025 / 12:40PM, SNDK.OQ - SanDisk Corp at Cantor Global Technology Conference

Question: CJ Muse - Cantor Fitzgerald - Analyst : Perfect. Obviously, the enterprise SSD market's a major focus for SanDisk. How are you thinking about your market share evolving over time? Are there kind of milestones that you're focused on over the near to medium term?

Question: CJ Muse - Cantor Fitzgerald - Analyst : Perfect. Maybe something that's more difficult to get your arms around tariffs, obviously tremendous geopolitical turmoil. How are you seeing the landscape evolve? Are you seeing sort of any impact to demand trends, or market share shifts related to where manufacturing is being done?

Question: CJ Muse - Cantor Fitzgerald - Analyst : Makes sense. Sticking on geopolitics, how are you thinking about US, China relations and I guess, a couple of thoughts there. One, it sounds like you have kind of the back end manufacturing kind of footprint where, you can build locally in China to support local demand in China, but at the same time you have YMTC obviously, pushing ahead and being aggressive. How do you see things kind of playing out over the kind of one, three, five year time frame?

Question: CJ Muse - Cantor Fitzgerald - Analyst : Makes sense. This might be before your time, but in November I think, the vision for bid growth for NAND this year was 20%-plus and then pretty quickly over kind of four to six weeks that evolved to kind of mid-teens I guess. Do you have a view on kind of what led to that change statement?

Question: CJ Muse - Cantor Fitzgerald - Analyst : Makes sense. As you think about kind of this slowdown in CapEx and one of your competitors kind of talked about in the world of 3D NAND and in a lower bid environment in the kind of mid to high teens. You really only want to kind of do shrink or next transition every three years instead of every two to mitigate oversupply and I guess within that as the context and if everyone kind of doesn't REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 11, 2025 / 12:40PM, SNDK.OQ - SanDisk Corp at Cantor Global Technology Conference do that, as a backdrop, historically SanDisk has been the kind of cost leader in that and considering kind of the slowdown in CapEx that you and your partner Kioxia, have kind of done over the last kind of three years, can you speak to the ability to maintaining that cost leadership?

Question: CJ Muse - Cantor Fitzgerald - Analyst : And is there a target for cost down that you have over kind of the next five year period or whatever kind of time frame you want to discuss?

Question: CJ Muse - Cantor Fitzgerald - Analyst : Makes sense. I guess the CapEx world while WFE and I'm modeling up a $1 billion this year, which is I think I'm going $7 billion to $8 billion which is incredibly low overall, but we are seeing Samsung be more aggressive in terms of upgrading. I guess do you get the sense that everyone is kind of playing appropriately in this NAND Sandbox or do you worry at all about, one player becoming more aggressive?

Question: CJ Muse - Cantor Fitzgerald - Analyst : Makes sense. And is there any reason to be more aggressive on adopting moly or, upgrading to cryo chambers from a cost perspective that perhaps might not add that many bids?

Question: CJ Muse - Cantor Fitzgerald - Analyst : Perfect. And maybe just kind of sticking on the topic of technology leadership, can you kind of walk through BiCS 8, what are some of the new advances such as CBA, that gets you excited around your tech portfolio?

Question: CJ Muse - Cantor Fitzgerald - Analyst : It may be a bit of a longer term technology focus, but, at your analyst day, you talked about high bandwidth Flash 3D matrix memory, can you kind of speak to when -- what are the key milestones when you see kind of broader adoption, when we'll hear more from a technology progressive perspective?

Question: CJ Muse - Cantor Fitzgerald - Analyst : Okay. Maybe move to your financial model, at the analyst day you talked about ASP is increasing, high single digits to low double digits, in the July kind of December time frame. Obviously the price increase you just discussed is a great start, was that -- is that enough to get us kind of where we're going or you're going to need further increases in that time frame?

Question: CJ Muse - Cantor Fitzgerald - Analyst : And then maybe from a mixed perspective, how do you see that evolving as part of your overall NAND portfolio kind of first half, second half?

Question: CJ Muse - Cantor Fitzgerald - Analyst : And would you view that kind of share shift as margin accretive?

Question: CJ Muse - Cantor Fitzgerald - Analyst : And I guess maybe more technical question just around, coming out as a new public entity, are there kind of one off -- kind of expenses or whatnot that we should be thinking about impacting OpEx or gross margins in the March quarter and progressing into the June quarter.

Question: CJ Muse - Cantor Fitzgerald - Analyst : Maybe just to isolate an OpEx, I believe they're -- just because of kind of --I don't know, sale rules that more of the OpEx in the March quarter will accrue to Western Digital versus SanDisk. So optically OpEx will look lower in March and then push higher in June. Is that accurate?

Question: CJ Muse - Cantor Fitzgerald - Analyst : Yeah. And then just going back to gross margins, can you comment, I guess a little more detail around kind of how you're thinking about when underutilization rolls off, and is there a way to quantify the startup costs related to Kioxia?

Question: CJ Muse - Cantor Fitzgerald - Analyst : Okay, perfect. Cognizant of time. Maybe let's sit on kind of the balance sheet and capital returns. So I guess, when do you expect to be kind of -- in your view kind of optimal capital structure in terms of gross debt? Or are you there already?

Question: CJ Muse - Cantor Fitzgerald - Analyst : Perfect. And maybe last question, in terms of capital returns, philosophically, how are you thinking about dividends versus buybacks?

Question: CJ Muse - Cantor Fitzgerald - Analyst : Perfect. Well, I think we've run out of time. Thank you both for joining us. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 11, 2025 / 12:40PM, SNDK.OQ - SanDisk Corp at Cantor Global Technology Conference