⚠ A Company With No FabHigh threat

Sandisk (SNDK) — threat to the moat

Sandisk cannot make flash memory. It is contractually forbidden, and can only buy its share of somebody else's.

1. ReportedWhile Flash Ventures is operating, Sandisk and its affiliates may not work with third parties to manufacture flash-based memory, may not fabricate flash beyond the capacity specified in the agreements, and may not manufacture flash themselves — except by acquiring a Flash Ventures entity outright through its dissolution or purchase. Substantially all of its flash must come from the ventures.
   Sandisk Corporation, Form 10-K FY2026 — Item 1A, Risk Factors, and the New Business Models discussion in Item 7. Sandisk states that the terms of its agreements with Kioxia require that substantially all of its flash-based memory be obtained from Flash Ventures, which limits its ability to respond to market demand and supply changes; that it is contractually obligated to pay for 50% of the fixed costs of Flash Ventures regardless of whether it orders any flash-based memory and that orders placed on a rolling basis are binding; that while Flash Ventures is operating its agreements contain limitations on its ability to work with third parties to manufacture flash-based memory, to fabricate beyond the capacity specified in the agreements, or to manufacture flash itself except to the extent it acquires manufacturing capacity of a Flash Ventures entity through dissolution, termination or acquisition; and that this could also impair its ability to consolidate with other industry participants who manufacture flash-based memory. It notes that in 2023 Western Digital incurred $296 million in charges for unabsorbed manufacturing overhead from reduced utilisation and $108 million of inventory write-downs, and that in 2025 Sandisk incurred $75 million of underutilisation charges and $24 million of inventory write-downs. It states that although the operating period has been extended every time since the ventures began, there is a risk that Sandisk and Kioxia will be unable to agree on a further extension of one or more entities, and that it cannot unilaterally direct most of Flash Ventures' activities. A separate risk factor states that provisions in the joint venture agreements with Kioxia may deter, prevent or delay an acquisition of Sandisk, listing restrictions limiting its ability and that of its affiliates to manufacture or have a third party fabricate flash memory outside Flash Ventures' Yokkaichi and Kitakami facilities, restrictions limiting fabrication beyond its share of Flash Ventures' capacity, and restrictions limiting transfers of equity in the Flash Ventures entities, particularly partial transfers; an acquirer would need Kioxia's consent or waiver with no guarantee of obtaining it, and the provisions could substantially impede the ability of public stockholders to benefit from future strategic transactions and adversely affect the market price. On the New Business Models, Sandisk states that these long-term agreements commit it to deliver and customers to purchase a stated volume of products mostly over multi-year periods, with pricing mechanisms consisting of fixed and variable components supported by financial guarantees; that NBMs are expected to become its predominant way of doing business, contributing to greater predictability of revenue, supporting production planning and enhancing supply assurance; and that while the agreements do not eliminate the risks associated with customer demand, market conditions or operational execution, it believes they reduce certain elements of industry cyclicality. The risk factor warns that if it is unable to deliver products in the quantities, at the times, or meeting the specifications required, it may face contractual damages, other financial penalties or early termination; that if a customer breaches its purchase obligations it may need to find alternative customers and may be unable to resell those products at comparable prices, or at all, resulting in reduced revenue, lower margins, excess inventory, or manufacturing underutilisation or asset impairment charges; that the agreements may constrain a portion of its available supply and limit its flexibility to respond to changes in market conditions, including shifts in demand, pricing opportunities, or customer requirements; and that the financial guarantees are intended to offset a portion of revenue that may be lost but may not fully offset such lost revenue depending on the specific circumstances, when during the contract term the failure occurs, and other factors. Further risk factors cover rising customer credit risk, loss of revenue from a key customer or customer base consolidation, and that the share repurchase programme may not enhance shareholder value and could affect the stock price and reduce financial flexibility. Sandisk discloses pending investigations initiated by the United States under Section 232 of the Trade Expansion Act of 1962 and Section 301 of the Trade Act of 1974 that may impact tariff rates; the majority of its products sold in the US are currently exempt from tariffs, and additional tariff increases or loss of exemptions would increase cost of goods sold and could reduce demand. On the Nanya investment made in March 2026, it warns that increases in the value of the investment could influence financial results in accordance with GAAP accounting in a manner that is not representative of its core business. — FY2026 · publ. 2026-08-17 · source ↗
2. ReportedSubstantially all of its flash must come from the ventures. The obligations run in one direction more than the other.
   Sandisk Corporation, Form 10-K FY2026 — consolidated statements of operations, balance sheets and cash flows, and the results-of-operations and liquidity discussion in Item 7. Revenue net $20,248 million against $7,355 million and $6,663 million in the two prior years, up 175%; cost of revenue $5,776 million (28.5% of revenue); gross profit $14,472 million (71.5%, up 4,100 basis points); research and development $1,328 million (6.6%); selling, general and administrative $676 million (3.3%); loss on debt extinguishment $46 million; business separation costs $25 million; total operating expenses $2,083 million; operating income $12,389 million (61.3%); gain on equity securities $808 million; interest income $70 million; interest expense $73 million; other expense $177 million; income before taxes $13,017 million; income tax expense $1,584 million at a 12% effective rate (against negative 11% and negative 34%); net income $11,433 million (56.5%) against losses of $1,641 million and $672 million. Basic EPS $77.78 and diluted $73.76, on 147 million basic and 155 million diluted weighted average shares. Revenue by end market: Datacenter $5,153 million, $960 million and $325 million; Edge $12,160 million, $4,127 million and $4,069 million; Consumer $2,935 million, $2,268 million and $2,269 million. Revenue by geography: Asia $14,241 million, Americas $4,275 million, EMEA $1,732 million. Datacenter revenue rose 437% with products sold up almost 120% on an exabyte basis and revenue per gigabyte up almost 150%; Edge rose 195% with exabytes up a high single-digit percentage and revenue per gigabyte up almost 180%; Consumer rose 29% with exabytes DOWN a mid-teens percentage and revenue per gigabyte up a low-fifties percentage; total products sold increased by a mid-teens percentage on an exabyte basis. Sales incentive and marketing programmes represented 11%, 19% and 19% of gross revenues in 2026, 2025 and 2024. Balance sheet at 3 July 2026: cash and cash equivalents $4,762 million, accounts receivable $4,708 million, inventories $2,698 million, total current assets $12,780 million, marketable equity securities $1,777 million, property plant and equipment net $674 million, notes receivable and investments in Flash Ventures $678 million, goodwill $4,994 million, total assets $22,507 million; refund liabilities $1,500 million (from $126 million), contract liabilities $849 million current and $393 million non-current, income tax payable $1,286 million, total current liabilities $5,581 million, long-term debt nil (from $1,829 million), total liabilities $6,771 million, treasury stock $4,537 million, retained earnings $9,649 million (from an accumulated deficit of $1,784 million), total shareholders' equity $15,736 million, 149 million shares issued and 146 million outstanding. Cash flows: operating activities provided $11,671 million against $84 million and a use of $309 million; investing used $1,386 million including $970 million of purchases of marketable equity securities, $275 million of net issuances related to Flash Ventures and $177 million of capital expenditures; financing used $7,001 million including $4.5 billion of share repurchases, $1.9 billion of Term Loan repayments and settlement and $630 million of taxes on vested stock awards. Cash conversion cycle 162 days (DSO 48, DIO 178, DPO 64). $2,879 million of cash was held outside the US. Contract liabilities were $1,242 million and refund liabilities $1,500 million under long-term agreements. Unrecognised tax benefits were approximately $323 million. Tax holidays in Malaysia expire at various dates during 2028 through 2031. Total material cash requirements were $11,760 million, of which Flash Ventures-related commitments were $6,559 million and purchase obligations and other commitments $4,902 million. — FY2026 · publ. 2026-08-17 · source ↗
3. ReportedSandisk pays for variable costs on a rolling three-month forecast that is binding and cannot be cancelled, and it pays half of Flash Ventures' fixed costs regardless of how much output it takes. When demand collapsed, that clause had a price: $249 million of underutilisation charges in 2024, $75 million in 2025, $11 million in 2026.
   Sandisk Corporation, Form 10-K FY2026 — Note 10, Related Parties and Related Commitments and Contingencies, and the related Item 1 and Item 7 disclosure on Flash Ventures. Sandisk procures all of its flash-based memory wafers from Flash Partners Ltd., Flash Alliance Ltd. and Flash Forward Ltd.; it holds a 49.9% ownership interest and Kioxia 50.1% in each. Wafers are manufactured by Kioxia at its wafer fabrication facilities in Japan using equipment individually owned or leased by each Flash Ventures entity; each entity purchases wafers from Kioxia at cost and resells them to Sandisk and Kioxia at cost plus a markup, with each partner generally entitled to 50% of output. The facilities are Y3 (Flash Partners, 2004), Y4 (Flash Alliance, 2006), Y5 (Flash Forward, 2010), New Y2 (production from 2016), Y6 (2018), K1 at Kitakami (2019), Y7 (2022) and K2 at Kitakami, whose output began in the year ended 3 July 2026. Sandisk is obligated to pay for variable costs based on a rolling three-month forecast, and purchase orders placed with Flash Ventures for up to three months are binding and cannot be cancelled; it is obligated to pay for half of Flash Ventures' fixed costs regardless of the output it chooses to purchase, and is committed to fund 49.9% to 50.0% of each entity's capital investments where operating cash flow is insufficient. Flash Ventures has historically operated at approximately 100% of manufacturing capacity; during 2026, 2025 and 2024 Sandisk temporarily reduced its utilisation and incurred costs of $11 million, $75 million and $249 million respectively, recorded as charges to cost of revenue. It participates in common R&D activities with Kioxia and is contractually committed to a minimum funding level, with R&D commitments due for 2027 of $138 million. Sandisk accounts for its ownership under the equity method; the entities are VIEs and Sandisk determined it is not the primary beneficiary of any of them, concluding on its 49.9% ownership, the voting structure and the manner in which day-to-day operations are conducted that it lacked the power to direct most of the activities that most significantly impact economic performance. Its 49.9% interest in the earnings of the entities is recognised one quarter in arrears in Other income (expense), net. Summarised financial information for the ventures: net sales of $2,775 million, $2,315 million and $2,252 million and net losses of $85 million, $63 million and $9 million for 2026, 2025 and 2024, with a gross loss of $93 million in 2026; total assets $7,320 million and total net equity of investees $1,025 million. Notes receivable and investments in Flash Ventures totalled $679 million. Sandisk made net payments to Flash Ventures of $3.6 billion, $3.4 billion and $3.4 billion in 2026, 2025 and 2024 and received distributions of $107 million and $176 million in 2026 and 2025. Maximum estimable loss exposure is $2,897 million: notes receivable $577 million, equity investments $102 million, operating lease guarantees $923 million and inventory and prepayments $1,295 million. Flash Ventures sells to and leases back a portion of its tools from a consortium of financial institutions; Sandisk guarantees half of all outstanding obligations under each lease agreement, totalling JPY149.0 billion or $923 million, in annual guarantee instalments of $378 million in 2027, $245 million in 2028, $126 million in 2029, $96 million in 2030 and $78 million in 2031. Prepayments toward Sandisk's share of future building depreciation of $840 million remain to be credited against future wafer purchases, with a further $402 million committed through fiscal 2035. On 29 January 2026 the FAL and FPL Second Commitment and Extension Agreements extended Flash Alliance and Flash Partners from 31 December 2029 to 31 December 2034, so that all three ventures co-terminate on that date; an Agreement to Enhance Collaboration commits Sandisk Technologies to pay Kioxia $1.2 billion over 2026 through 2029 in consideration of Kioxia's manufacturing services and the continued availability of supply, amortised straight-line into cost of revenue. On expiry each entity commences a wind-up and is dissolved, with net proceeds distributed in kind or cash pro rata. Flash Ventures-related commitments total $6,559 million: $2,627 million in 2027, $2,577 million in 2028-2029, $1,318 million in 2030-2031 and $37 million beyond. — FY2026 · publ. 2026-08-17 · source ↗
4. ReportedWhen demand collapsed, that clause had a price: $249 million of underutilisation charges in 2024, $75 million in 2025, $11 million in 2026. Its maximum estimable loss exposure to the arrangement — notes receivable, equity, lease guarantees, inventory and prepayments — is $2,897 million.
   Sandisk Corporation, Form 10-K FY2026 — Note 10, Related Parties and Related Commitments and Contingencies, and the related Item 1 and Item 7 disclosure on Flash Ventures. Sandisk procures all of its flash-based memory wafers from Flash Partners Ltd., Flash Alliance Ltd. and Flash Forward Ltd.; it holds a 49.9% ownership interest and Kioxia 50.1% in each. Wafers are manufactured by Kioxia at its wafer fabrication facilities in Japan using equipment individually owned or leased by each Flash Ventures entity; each entity purchases wafers from Kioxia at cost and resells them to Sandisk and Kioxia at cost plus a markup, with each partner generally entitled to 50% of output. The facilities are Y3 (Flash Partners, 2004), Y4 (Flash Alliance, 2006), Y5 (Flash Forward, 2010), New Y2 (production from 2016), Y6 (2018), K1 at Kitakami (2019), Y7 (2022) and K2 at Kitakami, whose output began in the year ended 3 July 2026. Sandisk is obligated to pay for variable costs based on a rolling three-month forecast, and purchase orders placed with Flash Ventures for up to three months are binding and cannot be cancelled; it is obligated to pay for half of Flash Ventures' fixed costs regardless of the output it chooses to purchase, and is committed to fund 49.9% to 50.0% of each entity's capital investments where operating cash flow is insufficient. Flash Ventures has historically operated at approximately 100% of manufacturing capacity; during 2026, 2025 and 2024 Sandisk temporarily reduced its utilisation and incurred costs of $11 million, $75 million and $249 million respectively, recorded as charges to cost of revenue. It participates in common R&D activities with Kioxia and is contractually committed to a minimum funding level, with R&D commitments due for 2027 of $138 million. Sandisk accounts for its ownership under the equity method; the entities are VIEs and Sandisk determined it is not the primary beneficiary of any of them, concluding on its 49.9% ownership, the voting structure and the manner in which day-to-day operations are conducted that it lacked the power to direct most of the activities that most significantly impact economic performance. Its 49.9% interest in the earnings of the entities is recognised one quarter in arrears in Other income (expense), net. Summarised financial information for the ventures: net sales of $2,775 million, $2,315 million and $2,252 million and net losses of $85 million, $63 million and $9 million for 2026, 2025 and 2024, with a gross loss of $93 million in 2026; total assets $7,320 million and total net equity of investees $1,025 million. Notes receivable and investments in Flash Ventures totalled $679 million. Sandisk made net payments to Flash Ventures of $3.6 billion, $3.4 billion and $3.4 billion in 2026, 2025 and 2024 and received distributions of $107 million and $176 million in 2026 and 2025. Maximum estimable loss exposure is $2,897 million: notes receivable $577 million, equity investments $102 million, operating lease guarantees $923 million and inventory and prepayments $1,295 million. Flash Ventures sells to and leases back a portion of its tools from a consortium of financial institutions; Sandisk guarantees half of all outstanding obligations under each lease agreement, totalling JPY149.0 billion or $923 million, in annual guarantee instalments of $378 million in 2027, $245 million in 2028, $126 million in 2029, $96 million in 2030 and $78 million in 2031. Prepayments toward Sandisk's share of future building depreciation of $840 million remain to be credited against future wafer purchases, with a further $402 million committed through fiscal 2035. On 29 January 2026 the FAL and FPL Second Commitment and Extension Agreements extended Flash Alliance and Flash Partners from 31 December 2029 to 31 December 2034, so that all three ventures co-terminate on that date; an Agreement to Enhance Collaboration commits Sandisk Technologies to pay Kioxia $1.2 billion over 2026 through 2029 in consideration of Kioxia's manufacturing services and the continued availability of supply, amortised straight-line into cost of revenue. On expiry each entity commences a wind-up and is dissolved, with net proceeds distributed in kind or cash pro rata. Flash Ventures-related commitments total $6,559 million: $2,627 million in 2027, $2,577 million in 2028-2029, $1,318 million in 2030-2031 and $37 million beyond. — FY2026 · publ. 2026-08-17 · source ↗
5. ReportedIts maximum estimable loss exposure to the arrangement — notes receivable, equity, lease guarantees, inventory and prepayments — is $2,897 million. Kioxia owns the buildings.
   Sandisk Corporation, Form 10-K FY2026 — Note 10, Related Parties and Related Commitments and Contingencies, and the related Item 1 and Item 7 disclosure on Flash Ventures. Sandisk procures all of its flash-based memory wafers from Flash Partners Ltd., Flash Alliance Ltd. and Flash Forward Ltd.; it holds a 49.9% ownership interest and Kioxia 50.1% in each. Wafers are manufactured by Kioxia at its wafer fabrication facilities in Japan using equipment individually owned or leased by each Flash Ventures entity; each entity purchases wafers from Kioxia at cost and resells them to Sandisk and Kioxia at cost plus a markup, with each partner generally entitled to 50% of output. The facilities are Y3 (Flash Partners, 2004), Y4 (Flash Alliance, 2006), Y5 (Flash Forward, 2010), New Y2 (production from 2016), Y6 (2018), K1 at Kitakami (2019), Y7 (2022) and K2 at Kitakami, whose output began in the year ended 3 July 2026. Sandisk is obligated to pay for variable costs based on a rolling three-month forecast, and purchase orders placed with Flash Ventures for up to three months are binding and cannot be cancelled; it is obligated to pay for half of Flash Ventures' fixed costs regardless of the output it chooses to purchase, and is committed to fund 49.9% to 50.0% of each entity's capital investments where operating cash flow is insufficient. Flash Ventures has historically operated at approximately 100% of manufacturing capacity; during 2026, 2025 and 2024 Sandisk temporarily reduced its utilisation and incurred costs of $11 million, $75 million and $249 million respectively, recorded as charges to cost of revenue. It participates in common R&D activities with Kioxia and is contractually committed to a minimum funding level, with R&D commitments due for 2027 of $138 million. Sandisk accounts for its ownership under the equity method; the entities are VIEs and Sandisk determined it is not the primary beneficiary of any of them, concluding on its 49.9% ownership, the voting structure and the manner in which day-to-day operations are conducted that it lacked the power to direct most of the activities that most significantly impact economic performance. Its 49.9% interest in the earnings of the entities is recognised one quarter in arrears in Other income (expense), net. Summarised financial information for the ventures: net sales of $2,775 million, $2,315 million and $2,252 million and net losses of $85 million, $63 million and $9 million for 2026, 2025 and 2024, with a gross loss of $93 million in 2026; total assets $7,320 million and total net equity of investees $1,025 million. Notes receivable and investments in Flash Ventures totalled $679 million. Sandisk made net payments to Flash Ventures of $3.6 billion, $3.4 billion and $3.4 billion in 2026, 2025 and 2024 and received distributions of $107 million and $176 million in 2026 and 2025. Maximum estimable loss exposure is $2,897 million: notes receivable $577 million, equity investments $102 million, operating lease guarantees $923 million and inventory and prepayments $1,295 million. Flash Ventures sells to and leases back a portion of its tools from a consortium of financial institutions; Sandisk guarantees half of all outstanding obligations under each lease agreement, totalling JPY149.0 billion or $923 million, in annual guarantee instalments of $378 million in 2027, $245 million in 2028, $126 million in 2029, $96 million in 2030 and $78 million in 2031. Prepayments toward Sandisk's share of future building depreciation of $840 million remain to be credited against future wafer purchases, with a further $402 million committed through fiscal 2035. On 29 January 2026 the FAL and FPL Second Commitment and Extension Agreements extended Flash Alliance and Flash Partners from 31 December 2029 to 31 December 2034, so that all three ventures co-terminate on that date; an Agreement to Enhance Collaboration commits Sandisk Technologies to pay Kioxia $1.2 billion over 2026 through 2029 in consideration of Kioxia's manufacturing services and the continued availability of supply, amortised straight-line into cost of revenue. On expiry each entity commences a wind-up and is dissolved, with net proceeds distributed in kind or cash pro rata. Flash Ventures-related commitments total $6,559 million: $2,627 million in 2027, $2,577 million in 2028-2029, $1,318 million in 2030-2031 and $37 million beyond. — FY2026 · publ. 2026-08-17 · source ↗
6. ReportedSandisk owns equipment inside them and a 49.9% interest accounted for by the equity method, having concluded it is not the primary beneficiary of any of the three entities. Its share of their earnings is recognised a quarter in arrears, in Other income — and in fiscal 2026 that share was a loss, because Flash Ventures is run at cost.
   Sandisk Corporation, Form 10-K FY2026 — Note 10, Related Parties and Related Commitments and Contingencies, and the related Item 1 and Item 7 disclosure on Flash Ventures. Sandisk procures all of its flash-based memory wafers from Flash Partners Ltd., Flash Alliance Ltd. and Flash Forward Ltd.; it holds a 49.9% ownership interest and Kioxia 50.1% in each. Wafers are manufactured by Kioxia at its wafer fabrication facilities in Japan using equipment individually owned or leased by each Flash Ventures entity; each entity purchases wafers from Kioxia at cost and resells them to Sandisk and Kioxia at cost plus a markup, with each partner generally entitled to 50% of output. The facilities are Y3 (Flash Partners, 2004), Y4 (Flash Alliance, 2006), Y5 (Flash Forward, 2010), New Y2 (production from 2016), Y6 (2018), K1 at Kitakami (2019), Y7 (2022) and K2 at Kitakami, whose output began in the year ended 3 July 2026. Sandisk is obligated to pay for variable costs based on a rolling three-month forecast, and purchase orders placed with Flash Ventures for up to three months are binding and cannot be cancelled; it is obligated to pay for half of Flash Ventures' fixed costs regardless of the output it chooses to purchase, and is committed to fund 49.9% to 50.0% of each entity's capital investments where operating cash flow is insufficient. Flash Ventures has historically operated at approximately 100% of manufacturing capacity; during 2026, 2025 and 2024 Sandisk temporarily reduced its utilisation and incurred costs of $11 million, $75 million and $249 million respectively, recorded as charges to cost of revenue. It participates in common R&D activities with Kioxia and is contractually committed to a minimum funding level, with R&D commitments due for 2027 of $138 million. Sandisk accounts for its ownership under the equity method; the entities are VIEs and Sandisk determined it is not the primary beneficiary of any of them, concluding on its 49.9% ownership, the voting structure and the manner in which day-to-day operations are conducted that it lacked the power to direct most of the activities that most significantly impact economic performance. Its 49.9% interest in the earnings of the entities is recognised one quarter in arrears in Other income (expense), net. Summarised financial information for the ventures: net sales of $2,775 million, $2,315 million and $2,252 million and net losses of $85 million, $63 million and $9 million for 2026, 2025 and 2024, with a gross loss of $93 million in 2026; total assets $7,320 million and total net equity of investees $1,025 million. Notes receivable and investments in Flash Ventures totalled $679 million. Sandisk made net payments to Flash Ventures of $3.6 billion, $3.4 billion and $3.4 billion in 2026, 2025 and 2024 and received distributions of $107 million and $176 million in 2026 and 2025. Maximum estimable loss exposure is $2,897 million: notes receivable $577 million, equity investments $102 million, operating lease guarantees $923 million and inventory and prepayments $1,295 million. Flash Ventures sells to and leases back a portion of its tools from a consortium of financial institutions; Sandisk guarantees half of all outstanding obligations under each lease agreement, totalling JPY149.0 billion or $923 million, in annual guarantee instalments of $378 million in 2027, $245 million in 2028, $126 million in 2029, $96 million in 2030 and $78 million in 2031. Prepayments toward Sandisk's share of future building depreciation of $840 million remain to be credited against future wafer purchases, with a further $402 million committed through fiscal 2035. On 29 January 2026 the FAL and FPL Second Commitment and Extension Agreements extended Flash Alliance and Flash Partners from 31 December 2029 to 31 December 2034, so that all three ventures co-terminate on that date; an Agreement to Enhance Collaboration commits Sandisk Technologies to pay Kioxia $1.2 billion over 2026 through 2029 in consideration of Kioxia's manufacturing services and the continued availability of supply, amortised straight-line into cost of revenue. On expiry each entity commences a wind-up and is dissolved, with net proceeds distributed in kind or cash pro rata. Flash Ventures-related commitments total $6,559 million: $2,627 million in 2027, $2,577 million in 2028-2029, $1,318 million in 2030-2031 and $37 million beyond. — FY2026 · publ. 2026-08-17 · source ↗
7. ReportedIts share of their earnings is recognised a quarter in arrears, in Other income — and in fiscal 2026 that share was a loss, because Flash Ventures is run at cost. The ventures now co-terminate on 31 December 2034, extended in January 2026 in exchange for $1.2 billion of payments to Kioxia through 2029.
   Sandisk Corporation, Form 10-K FY2026 — Note 10, Related Parties and Related Commitments and Contingencies, and the related Item 1 and Item 7 disclosure on Flash Ventures. Sandisk procures all of its flash-based memory wafers from Flash Partners Ltd., Flash Alliance Ltd. and Flash Forward Ltd.; it holds a 49.9% ownership interest and Kioxia 50.1% in each. Wafers are manufactured by Kioxia at its wafer fabrication facilities in Japan using equipment individually owned or leased by each Flash Ventures entity; each entity purchases wafers from Kioxia at cost and resells them to Sandisk and Kioxia at cost plus a markup, with each partner generally entitled to 50% of output. The facilities are Y3 (Flash Partners, 2004), Y4 (Flash Alliance, 2006), Y5 (Flash Forward, 2010), New Y2 (production from 2016), Y6 (2018), K1 at Kitakami (2019), Y7 (2022) and K2 at Kitakami, whose output began in the year ended 3 July 2026. Sandisk is obligated to pay for variable costs based on a rolling three-month forecast, and purchase orders placed with Flash Ventures for up to three months are binding and cannot be cancelled; it is obligated to pay for half of Flash Ventures' fixed costs regardless of the output it chooses to purchase, and is committed to fund 49.9% to 50.0% of each entity's capital investments where operating cash flow is insufficient. Flash Ventures has historically operated at approximately 100% of manufacturing capacity; during 2026, 2025 and 2024 Sandisk temporarily reduced its utilisation and incurred costs of $11 million, $75 million and $249 million respectively, recorded as charges to cost of revenue. It participates in common R&D activities with Kioxia and is contractually committed to a minimum funding level, with R&D commitments due for 2027 of $138 million. Sandisk accounts for its ownership under the equity method; the entities are VIEs and Sandisk determined it is not the primary beneficiary of any of them, concluding on its 49.9% ownership, the voting structure and the manner in which day-to-day operations are conducted that it lacked the power to direct most of the activities that most significantly impact economic performance. Its 49.9% interest in the earnings of the entities is recognised one quarter in arrears in Other income (expense), net. Summarised financial information for the ventures: net sales of $2,775 million, $2,315 million and $2,252 million and net losses of $85 million, $63 million and $9 million for 2026, 2025 and 2024, with a gross loss of $93 million in 2026; total assets $7,320 million and total net equity of investees $1,025 million. Notes receivable and investments in Flash Ventures totalled $679 million. Sandisk made net payments to Flash Ventures of $3.6 billion, $3.4 billion and $3.4 billion in 2026, 2025 and 2024 and received distributions of $107 million and $176 million in 2026 and 2025. Maximum estimable loss exposure is $2,897 million: notes receivable $577 million, equity investments $102 million, operating lease guarantees $923 million and inventory and prepayments $1,295 million. Flash Ventures sells to and leases back a portion of its tools from a consortium of financial institutions; Sandisk guarantees half of all outstanding obligations under each lease agreement, totalling JPY149.0 billion or $923 million, in annual guarantee instalments of $378 million in 2027, $245 million in 2028, $126 million in 2029, $96 million in 2030 and $78 million in 2031. Prepayments toward Sandisk's share of future building depreciation of $840 million remain to be credited against future wafer purchases, with a further $402 million committed through fiscal 2035. On 29 January 2026 the FAL and FPL Second Commitment and Extension Agreements extended Flash Alliance and Flash Partners from 31 December 2029 to 31 December 2034, so that all three ventures co-terminate on that date; an Agreement to Enhance Collaboration commits Sandisk Technologies to pay Kioxia $1.2 billion over 2026 through 2029 in consideration of Kioxia's manufacturing services and the continued availability of supply, amortised straight-line into cost of revenue. On expiry each entity commences a wind-up and is dissolved, with net proceeds distributed in kind or cash pro rata. Flash Ventures-related commitments total $6,559 million: $2,627 million in 2027, $2,577 million in 2028-2029, $1,318 million in 2030-2031 and $37 million beyond. — FY2026 · publ. 2026-08-17 · source ↗
8. ReportedThe ventures now co-terminate on 31 December 2034, extended in January 2026 in exchange for $1.2 billion of payments to Kioxia through 2029. Eight years is a long runway and it is not forever, and the filing concedes there is a risk the two cannot agree a further extension.
   Sandisk Corporation, Form 10-K FY2026 — Note 10, Related Parties and Related Commitments and Contingencies, and the related Item 1 and Item 7 disclosure on Flash Ventures. Sandisk procures all of its flash-based memory wafers from Flash Partners Ltd., Flash Alliance Ltd. and Flash Forward Ltd.; it holds a 49.9% ownership interest and Kioxia 50.1% in each. Wafers are manufactured by Kioxia at its wafer fabrication facilities in Japan using equipment individually owned or leased by each Flash Ventures entity; each entity purchases wafers from Kioxia at cost and resells them to Sandisk and Kioxia at cost plus a markup, with each partner generally entitled to 50% of output. The facilities are Y3 (Flash Partners, 2004), Y4 (Flash Alliance, 2006), Y5 (Flash Forward, 2010), New Y2 (production from 2016), Y6 (2018), K1 at Kitakami (2019), Y7 (2022) and K2 at Kitakami, whose output began in the year ended 3 July 2026. Sandisk is obligated to pay for variable costs based on a rolling three-month forecast, and purchase orders placed with Flash Ventures for up to three months are binding and cannot be cancelled; it is obligated to pay for half of Flash Ventures' fixed costs regardless of the output it chooses to purchase, and is committed to fund 49.9% to 50.0% of each entity's capital investments where operating cash flow is insufficient. Flash Ventures has historically operated at approximately 100% of manufacturing capacity; during 2026, 2025 and 2024 Sandisk temporarily reduced its utilisation and incurred costs of $11 million, $75 million and $249 million respectively, recorded as charges to cost of revenue. It participates in common R&D activities with Kioxia and is contractually committed to a minimum funding level, with R&D commitments due for 2027 of $138 million. Sandisk accounts for its ownership under the equity method; the entities are VIEs and Sandisk determined it is not the primary beneficiary of any of them, concluding on its 49.9% ownership, the voting structure and the manner in which day-to-day operations are conducted that it lacked the power to direct most of the activities that most significantly impact economic performance. Its 49.9% interest in the earnings of the entities is recognised one quarter in arrears in Other income (expense), net. Summarised financial information for the ventures: net sales of $2,775 million, $2,315 million and $2,252 million and net losses of $85 million, $63 million and $9 million for 2026, 2025 and 2024, with a gross loss of $93 million in 2026; total assets $7,320 million and total net equity of investees $1,025 million. Notes receivable and investments in Flash Ventures totalled $679 million. Sandisk made net payments to Flash Ventures of $3.6 billion, $3.4 billion and $3.4 billion in 2026, 2025 and 2024 and received distributions of $107 million and $176 million in 2026 and 2025. Maximum estimable loss exposure is $2,897 million: notes receivable $577 million, equity investments $102 million, operating lease guarantees $923 million and inventory and prepayments $1,295 million. Flash Ventures sells to and leases back a portion of its tools from a consortium of financial institutions; Sandisk guarantees half of all outstanding obligations under each lease agreement, totalling JPY149.0 billion or $923 million, in annual guarantee instalments of $378 million in 2027, $245 million in 2028, $126 million in 2029, $96 million in 2030 and $78 million in 2031. Prepayments toward Sandisk's share of future building depreciation of $840 million remain to be credited against future wafer purchases, with a further $402 million committed through fiscal 2035. On 29 January 2026 the FAL and FPL Second Commitment and Extension Agreements extended Flash Alliance and Flash Partners from 31 December 2029 to 31 December 2034, so that all three ventures co-terminate on that date; an Agreement to Enhance Collaboration commits Sandisk Technologies to pay Kioxia $1.2 billion over 2026 through 2029 in consideration of Kioxia's manufacturing services and the continued availability of supply, amortised straight-line into cost of revenue. On expiry each entity commences a wind-up and is dissolved, with net proceeds distributed in kind or cash pro rata. Flash Ventures-related commitments total $6,559 million: $2,627 million in 2027, $2,577 million in 2028-2029, $1,318 million in 2030-2031 and $37 million beyond. — FY2026 · publ. 2026-08-17 · source ↗
9. ReportedEight years is a long runway and it is not forever, and the filing concedes there is a risk the two cannot agree a further extension. Watch the extension, not the earnings.
   Sandisk Corporation, Form 10-K FY2026 — consolidated statements of operations, balance sheets and cash flows, and the results-of-operations and liquidity discussion in Item 7. Revenue net $20,248 million against $7,355 million and $6,663 million in the two prior years, up 175%; cost of revenue $5,776 million (28.5% of revenue); gross profit $14,472 million (71.5%, up 4,100 basis points); research and development $1,328 million (6.6%); selling, general and administrative $676 million (3.3%); loss on debt extinguishment $46 million; business separation costs $25 million; total operating expenses $2,083 million; operating income $12,389 million (61.3%); gain on equity securities $808 million; interest income $70 million; interest expense $73 million; other expense $177 million; income before taxes $13,017 million; income tax expense $1,584 million at a 12% effective rate (against negative 11% and negative 34%); net income $11,433 million (56.5%) against losses of $1,641 million and $672 million. Basic EPS $77.78 and diluted $73.76, on 147 million basic and 155 million diluted weighted average shares. Revenue by end market: Datacenter $5,153 million, $960 million and $325 million; Edge $12,160 million, $4,127 million and $4,069 million; Consumer $2,935 million, $2,268 million and $2,269 million. Revenue by geography: Asia $14,241 million, Americas $4,275 million, EMEA $1,732 million. Datacenter revenue rose 437% with products sold up almost 120% on an exabyte basis and revenue per gigabyte up almost 150%; Edge rose 195% with exabytes up a high single-digit percentage and revenue per gigabyte up almost 180%; Consumer rose 29% with exabytes DOWN a mid-teens percentage and revenue per gigabyte up a low-fifties percentage; total products sold increased by a mid-teens percentage on an exabyte basis. Sales incentive and marketing programmes represented 11%, 19% and 19% of gross revenues in 2026, 2025 and 2024. Balance sheet at 3 July 2026: cash and cash equivalents $4,762 million, accounts receivable $4,708 million, inventories $2,698 million, total current assets $12,780 million, marketable equity securities $1,777 million, property plant and equipment net $674 million, notes receivable and investments in Flash Ventures $678 million, goodwill $4,994 million, total assets $22,507 million; refund liabilities $1,500 million (from $126 million), contract liabilities $849 million current and $393 million non-current, income tax payable $1,286 million, total current liabilities $5,581 million, long-term debt nil (from $1,829 million), total liabilities $6,771 million, treasury stock $4,537 million, retained earnings $9,649 million (from an accumulated deficit of $1,784 million), total shareholders' equity $15,736 million, 149 million shares issued and 146 million outstanding. Cash flows: operating activities provided $11,671 million against $84 million and a use of $309 million; investing used $1,386 million including $970 million of purchases of marketable equity securities, $275 million of net issuances related to Flash Ventures and $177 million of capital expenditures; financing used $7,001 million including $4.5 billion of share repurchases, $1.9 billion of Term Loan repayments and settlement and $630 million of taxes on vested stock awards. Cash conversion cycle 162 days (DSO 48, DIO 178, DPO 64). $2,879 million of cash was held outside the US. Contract liabilities were $1,242 million and refund liabilities $1,500 million under long-term agreements. Unrecognised tax benefits were approximately $323 million. Tax holidays in Malaysia expire at various dates during 2028 through 2031. Total material cash requirements were $11,760 million, of which Flash Ventures-related commitments were $6,559 million and purchase obligations and other commitments $4,902 million. — FY2026 · publ. 2026-08-17 · source ↗

• Sandisk Corporation Form 10-K, FY2026 (SEC EDGAR)