For decades, the NAND memory business has been a rollercoaster. Prices soar, prices crash, suppliers scramble, customers hedge, and nobody really knows what's coming next quarter, let alone next year. SanDisk Corp. (SNDK) thinks it has found a way off that ride.
On the company's fourth-quarter earnings call, management laid out a strategy that sounds almost boring in its simplicity: instead of haggling over supply and price every few months, sign multi-year deals with customers that lock in future demand. The pitch is that this creates a more predictable business, with better visibility, stronger customer relationships, and steadier cash flows. No more whiplash from the industry's traditional boom-and-bust cycles.
From Quarterly Haggling to Long-Term Commitments
Historically, NAND suppliers and their customers have negotiated on a short-term basis, leaving everyone exposed to sudden swings in demand and pricing. SanDisk's new business models, or NBMs, change that by establishing multi-year purchase commitments with strategic customers. The company gets a clearer picture of future demand, and customers get the security of long-term supply for their infrastructure needs.
So far, SanDisk has signed eight NBMs with data center and edge customers, and the weighted average duration is more than four years. Management expects these agreements to account for more than half of its NAND shipments in fiscal 2027 and roughly two-thirds in fiscal 2028. That's a big shift from the old way of doing business.
CEO David Goeckeler made it clear that this isn't just about improving margins. "We want to get this kind of… boom and bust out of it. It doesn't work for anybody," he said.
From Three Months of Visibility to Four Years
The biggest benefit, according to management, is visibility. Just a year ago, SanDisk was planning around only a few months of committed demand. Now, those agreements provide years of forward visibility into customer requirements, allowing the company to align manufacturing, technology investments, and capacity planning much more effectively.
"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 kind of visibility is especially valuable as hyperscale customers keep pouring money into AI infrastructure, where storage needs are expected to grow over multiple years, not quarter by quarter. Management also noted that some customers have already come back to increase their commitments just months after signing their initial agreements, which reinforces confidence in long-term demand.
Longer-Term Deals, Deeper Relationships
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.
Now, 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 claiming the NAND market will suddenly stop being cyclical. Instead, management believes that 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.
