Sandisk Corporation
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Item 1. Business
Separation from Western Digital Corporation
Prior to February 21, 2025, we were wholly owned by Western Digital Corporation (“WDC”). As of February 21, 2025, we separated from WDC (the “separation”) and became a standalone publicly traded company, trading under the stock symbol “SNDK” on the Nasdaq Global Select Market. For more information about the separation, see Part II, Item 7., Management’s Discussion and Analysis of Financial Condition and Results of Operations and Part II, Item 8., Note 1, Organization, Basis of Presentation and Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K.
General
Sandisk is a leading global semiconductor memory company with more than 30 years of innovation in NAND flash technology. We are a vertically integrated solutions provider with ownership of chip-level design and IP, front and back-end manufacturing, as well as systems engineering and design. With a differentiated innovation engine driving advancements in storage and semiconductor technologies, our broad and ever-expanding portfolio delivers powerful flash storage solutions for artificial intelligence (“AI”) workloads in datacenters, edge devices, and consumer applications. Our technologies enable everyone from students, gamers, and home offices to the largest enterprises and public clouds to produce, analyze, and store data. Our solutions include a broad range of solid-state drives (“SSDs”), embedded products, removable cards, universal serial bus drives and wafers and components. Our broad portfolio of technology and products addresses multiple end markets of “Datacenter”(formerly referred to as “Cloud”), “Edge” (formerly referred to as “Client”), and “Consumer.”
The Datacenter end market is comprised primarily of products for datacenters, cloud service providers, and private cloud customers. Through the Edge end market, we provide our original equipment manufacturer (“OEM”) and channel customers a broad array of high-performance flash solutions across personal computer, mobile, gaming, automotive, physical AI, at-home entertainment, and industrial spaces. The Consumer end market is highlighted by our broad range of retail and other end-user products, which capitalize on the strength of our product brand recognition and vast presence around the world.
We hold valuable patent portfolios containing approximately 8,000 granted patents and approximately 3,000 pending patent applications worldwide that support our products across all end markets. We have extensive customer, partner and channel relationships across a number of end-markets and geographies and have a rich heritage of innovation and operational excellence, a wide range of intellectual property assets, broad research and development (“R&D”) capabilities and large-scale, efficient manufacturing supply chains. The strong growth in the amount, value and use of data continues, creating a global need for larger, faster, and more capable storage solutions.
We are a customer-focused organization that has developed deep relationships with industry leaders with the goal of delivering innovative solutions to help users capture, store and transform data across a boundless range of applications. We help OEMs address storage opportunities and solutions to capture and transform data into a myriad of devices and edge technologies. We have also built strong consumer brands with tools to manage vast libraries of personal content and to push the limits of what’s possible for storage. At Sandisk, we strive to continuously transform ourselves to address the growth in data by providing what we believe to be the broadest range of storage technologies in the industry with a comprehensive product portfolio and global reach.
Industry
We operate in the semiconductor memory chip and data storage industries. The ability to access, store and share data from anywhere on any device is increasingly important to our customers and end users. From the intelligent edge to the cloud, data storage is a fundamental component underpinning the global technology architecture, inclusive of AI. Our strengths in innovation and cost leadership, diversified product portfolio and broad routes to market provide a foundation upon which we are solidifying our position as an essential building block of the digital economy. We believe there is a tremendous market opportunity flowing from the rapid global adoption of the technology architecture built with cloud infrastructure tied to intelligent endpoints all connected by high-performance networks. The value and urgency of data storage at every point across this architecture have never been clearer.
The increase in computing complexity and advancements in AI, along with growth in cloud computing applications, connected mobile devices and Internet-connected products, and edge devices are driving substantial growth in the volume of digital content to be stored and used. We believe our expertise and innovation in flash technology enable us to bring powerful solutions to a broader range of applications. We continuously monitor the full array of flash-based storage technologies, including reviewing these technologies with our customers, to ensure we are appropriately resourced to meet our customers’ storage needs.
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Flash Technology
Flash products provide non-volatile data storage based on flash technology. We develop and manufacture solid state storage products for a variety of applications, including enterprise or cloud storage, client storage, automotive, mobile devices and removable memory devices. Over time, we have successfully developed and commercialized successive generations of two- and three-dimensional flash technologies with increased numbers of storage bits per cell in an increasingly smaller form factor, further driving cost reductions. We devote significant R&D resources to the development of highly reliable, high-performance, cost-effective flash-based technology and are continually pursuing developments in next-generation flash-based technology capacities. We are leveraging our expertise, resources and strategic investments in non-volatile memories to explore a wide spectrum of persistent memory and storage class memory technologies. We have also initiated, defined and developed standards to meet new market needs and to promote wide acceptance of flash storage standards through interoperability and ease of use.
Our Data Solutions
Our broad portfolio of technology and products addresses multiple end markets of “Datacenter,” “Edge” and “Consumer” and are comprised of the Sandisk™ brand. Certain of our products will also be sold for a limited transitional period under the Western Digital®, WD® and other brands under license from WDC.
Datacenter represents a large and growing end market comprised primarily of products for public or private cloud environments and enterprise customers. We provide the Datacenter end market with an array of high-performance enterprise SSDs. Our high-performance enterprise class SSDs include high-performance flash-based SSDs and software solutions that are optimized for performance applications providing a range of capacity and performance levels primarily for use in enterprise servers and supporting high-volume online transactions, AI-related workloads, data analysis and other enterprise applications.
Through the Edge end market, we provide numerous data solutions that we incorporate into our client’s devices, which consist of SSDs for desktop and notebook PCs, gaming consoles and set top boxes, as well as flash-based embedded storage products for mobile phones, tablets, notebook PCs and other portable and wearable devices, automotive applications, Internet of Things, and industrial and connected home applications. Our SSDs are designed for use in devices requiring high performance, reliability and capacity with various attributes such as low cost per gigabyte, quiet acoustics, low power consumption and protection against shocks.
We serve the Consumer end market with a portfolio of SSDs and removable flash products, including cards and universal serial bus flash drives, through our retail and channel routes to market. We offer client portable SSDs with a range of capacities and performance characteristics to address a broad spectrum of the client storage market. Our removable cards are designed primarily for use in consumer devices, such as mobile phones, tablets, imaging systems, gaming devices, cameras and smart video systems. Our universal serial bus flash drives are used in the computing and consumer markets and are designed for high performance and reliability.
Competition
Our industry is highly competitive. We believe we are well positioned with our leading flash product portfolio, premium consumer brand, differentiated semiconductor innovation engine and leadership in driving cost efficiency. Nevertheless, we face strong competition from other manufacturers of flash in the Datacenter, Edge and Consumer end markets. We compete with vertically-integrated suppliers such as Kioxia, Micron Technology, Inc., Samsung Electronics Co., Ltd., SK Hynix, Inc., Yangtze Memory Technologies Co., Ltd. and numerous smaller companies that assemble flash into products.
Business Strategy
Our overall strategy is to leverage our innovation, technology and execution capabilities to be an industry-leading and broad-based global semiconductor memory company that supports the infrastructure that has enabled the unabated proliferation of data. We strive to successfully execute our strategy through the following foundational elements in order to create long-term value for our customers, partners, investors and employees:
•Technology Innovation and Manufacturing Leadership: We leverage our innovative R&D and intellectual property at the chip and system level coupled with advanced manufacturing scale and expertise to drive technology leadership, accelerate innovation, and deliver cost-efficient memory solutions. These capabilities enable us to meet growing customer requirements for performance and capacity delivered by our mission-critical technology enabling AI deployment and diversification across Datacenter, Edge and Consumer markets.
•Broad Product Portfolio: We leverage our capabilities in firmware, software and systems to deliver compelling and differentiated integrated storage solutions to our customers that offer the best combinations of performance, cost, power consumption, form factor, quality and reliability, while creating new use cases for our solutions in emerging markets.
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•Operational Excellence: We are focused on delivering the best value for our customers in Datacenter, Edge and Consumer end markets through a relentless focus on appropriately scaling our operations to efficiently support business growth; achieving best in class capital efficiency, quality and cycle-time; maintaining industry leading manufacturing capabilities; and having a competitive advantage in supply-chain management,
•Durable and Predictable Business Model: We are transforming our financial model through long-term customer engagement frameworks and New Business Model (“NBMs”) agreements that provide greater visibility, improve production planning and inventory management, support sustained innovation investments, and enhance the predictability of revenue, profitability and cash flow generation, while reducing exposure to industry cyclicality.
Our strategy provides the following benefits, which distinguish us in the dynamic and competitive data storage industry:
•a broad product portfolio that establishes us as a leading developer and manufacturer of integrated flash NAND products and solutions, making us a key strategic supply partner to our customers;
•efficient and flexible manufacturing capabilities, allowing us to leverage our flash R&D and capital expenditures to deliver innovative and cost-effective storage solutions to multiple end markets;
•deep relationships with industry leaders across the data ecosystems that give us the broadest routes to market; and
•industry leading consumer brand awareness and global retail distribution presence.
Research and Development
We devote substantial resources to the R&D of new products and the improvement of existing products. We focus our engineering efforts on optimizing our product design and manufacturing processes to bring our products to market in a cost-effective and timely manner. For a discussion of associated risks, see Part I, Item 1A., Risk Factors of this Annual Report on Form 10-K.
Patents, Licenses and Proprietary Information
We rely on a combination of patents, trademarks, copyright and trade secret laws, confidentiality procedures and licensing arrangements to protect our intellectual property rights.
We have approximately 8,000 granted patents and approximately 3,000 pending patent applications worldwide. We continually seek additional United States (“U.S.”) and international patents on our technology. We believe that, although our active patents and patent applications have considerable value, the successful manufacturing and marketing of our products also depend upon the technical and managerial competence of our staff. Accordingly, the patents held and applied for cannot alone ensure our future success.
In addition to patent protection of certain intellectual property rights, we consider elements of our product designs and processes to be proprietary and confidential. We believe that our non-patented IP, particularly some of our process technology, is an important factor in our success. We rely upon non-disclosure agreements, contractual provisions and a system of internal safeguards to protect our proprietary information. Despite these safeguards, there is a risk that competitors may obtain and use such information. The laws of foreign jurisdictions in which we conduct business may provide less protection for confidential information than the laws of the U.S.
We rely on certain technology that we license from other parties to manufacture and sell our products. We believe that we have adequate cross-licenses and other agreements in place in addition to our own intellectual property portfolio to compete successfully in the storage industry. For a discussion of associated risks, see Part I, Item 1A., Risk Factors of this Annual Report on Form 10-K.
Manufacturing
We believe that we have significant know-how, unique product manufacturing processes, test and tooling, execution skills, human resources and training to continue to be successful and to adjust our manufacturing operations as necessary. We strive to maintain manufacturing flexibility, high manufacturing yields, reliable products and high-quality components. The critical elements of our production are high volume and utilization, low-cost assembly and testing, strict adherence to quality metrics and maintaining close relationships with our strategic component suppliers to access best-in-class technology and manufacturing capacity. We continually monitor our manufacturing capabilities to respond to the changing requirements of our customers and maintain our competitiveness and position as a data technology leader.
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Flash manufacturing requires complex processes involving the production and assembly of precision components with narrow tolerances and rigorous testing. The manufacturing processes involve a number of steps that are dependent on each other and occur in “clean room” environments. These processes require skill in process engineering and efficient space utilization in order to keep the operating costs of these specialized manufacturing environments under control. We continually evaluate our manufacturing processes in an effort to increase productivity, sustain and improve quality and decrease manufacturing costs. We continually evaluate which steps in the manufacturing process would benefit from automation and how automated manufacturing processes can improve productivity and reduce manufacturing costs. We also leverage contract manufacturers when strategically advantageous.
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Financial statements
data from SEC XBRL filings. Values are as-reported; restatements supersede originals. Values reported in .
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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis contains forward-looking statements within the meaning of the federal securities laws and should be read in conjunction with the disclosures we make concerning risks and other factors that may affect our business and operating results. You should read this information in conjunction with the Consolidated Financial Statements and the notes thereto included in Part II, Item 8., of this Annual Report on Form 10-K. See also “Forward-Looking Statements” immediately prior to Part I, Item 1., of this Annual Report on Form 10-K.
For management’s discussion of our consolidated results for the year ended June 27, 2025 in comparison with the combined results for the year ended June 28, 2024, and other financial information related to fiscal year 2025, refer to Part II, Item 7., “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included in our 2025 Annual Report on Form 10-K, filed with the U.S. Securities and Exchange Commission (“SEC”) on August 21, 2025.
Unless otherwise indicated or the context requires, references herein to specific years and quarters are to our fiscal years and fiscal quarters. As used herein, the terms “we,” “us,” “our,” and the “Company” refer to Sandisk Corporation and its subsidiaries.
Overview
Our Business
Sandisk is a leading global semiconductor memory company with more than 30 years of innovation in NAND flash technology. We are a vertically integrated solutions provider with ownership of chip-level design and IP, front and back-end manufacturing, as well as systems engineering and design. With a differentiated innovation engine driving advancements in storage and semiconductor technologies, our broad and ever-expanding portfolio delivers powerful flash storage solutions for artificial intelligence (“AI”) workloads in datacenters, edge devices, and consumer applications. Our technologies enable everyone from students, gamers, and home offices to the largest enterprises and public clouds to produce, analyze, and store data. Our solutions include a broad range of solid-state drives (“SSDs”), embedded products, removable cards, universal serial bus drives and wafers and components. Our broad portfolio of technology and products addresses multiple end markets of “Datacenter” (formerly referred to as “Cloud”), “Edge” (formerly referred to as “Client”), and “Consumer.”
The Datacenter end market is comprised primarily of products for datacenters, cloud service providers, and private cloud customers. Through the Edge end market, we provide our original equipment manufacturer (“OEM”) and channel customers a broad array of high-performance flash solutions across personal computer, mobile, gaming, automotive, physical AI, at-home entertainment, and industrial spaces. The Consumer end market is highlighted by our broad range of retail and other end-user products, which capitalize on the strength of our product brand recognition and vast presence around the world.
The Company’s fiscal year ends on the Friday nearest to June 30 and typically consists of 52 weeks. Approximately every five to six years, we report a 53-week fiscal year to align the fiscal year with the foregoing policy. Fiscal years 2025 and 2024, which ended on June 27, 2025 and June 28, 2024, respectively, were each comprised of 52 weeks, with each fiscal quarter consisting of 13 weeks. Fiscal year 2026 was comprised of 53 weeks and ended on July 3, 2026, with the first fiscal quarter consisting of 14 weeks. Unless otherwise indicated or the context requires, references herein to specific years and quarters are to fiscal years and fiscal quarters, and references to financial information are on a consolidated basis.
The Separation
On October 30, 2023, Western Digital Corporation (“WDC”) announced that its board of directors (the “WDC Board of Directors”) authorized WDC management to pursue a plan to separate the Company into an independent public company (the “separation” or “the spin-off”). The separation received final approval by the WDC Board of Directors and was completed on February 21, 2025. Prior to February 21, 2025, we were wholly owned by WDC.
On February 21, 2025, WDC executed the spin-off of the Company through WDC’s pro rata distribution of 116,035,464, or 80.1%, of the Company’s outstanding shares of common stock to holders of WDC’s common stock. Each WDC stockholder received one-third (1/3) of one share of the Company’s common stock for each share of WDC’s common stock held by such WDC stockholder as of February 12, 2025, the record date of the distribution. Upon completion of the separation, WDC owned 28,827,787, or 19.9%, of the outstanding shares of the Company’s common stock. Following the distribution, the Company became an independent publicly listed company, and on February 24, 2025, the Company began trading as an independent publicly traded company under the stock symbol “SNDK” on Nasdaq.
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On June 9, 2025, WDC disposed of 21,314,768, or 14.6%, of our common stock through an exchange of our common stock for WDC debt held by WDC creditors, which shares were sold by affiliates of the WDC creditors in a registered public offering by the Company. On February 18, 2026, WDC disposed of an additional 5,821,135 outstanding shares of the Company through an exchange of Sandisk’s common stock for WDC debt held by WDC creditors, which shares were sold by affiliates of the WDC creditors in a registered public offering by us. All expenses for these offerings were paid for by us. Following this transaction, WDC continued to retain 1,691,884 of the outstanding shares of the Company’s common stock and, as of March 19, 2026, the sale of such shares was no longer subject to restriction, and we were no longer required to pay any expenses associated with WDC’s eventual exchange or distribution of our shares. Subsequent to this date, WDC has disposed of additional outstanding shares of our common stock in exchange for shares of its outstanding common stock and has announced that it expects to monetize all remaining shares of Sandisk common stock held by it by the end of 2026 in one or more subsequent exchanges for its outstanding common stock.
Goodwill Impairment
As discussed in Part II, Item 8., Note 5, Supplemental Financial Statement Data of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K, subsequent to the separation, we conducted a quantitative analysis of potential goodwill and long-lived assets impairments, in accordance with Accounting Standards Codification (“ASC”) No. 350, Intangibles - Goodwill and Other. This analysis indicated that the estimated carrying value of our reporting unit exceeded its fair value. Consequently, we recorded a goodwill impairment charge of $1.8 billion during the fiscal year ended June 27, 2025.
For the year ended July 3, 2026, there were no goodwill impairment charges recorded.
Financing Activities
Prior to the separation, we received financing from certain of WDC’s subsidiaries in the form of borrowings under revolving credit agreements and promissory notes to fund activities primarily related to Flash Ventures. Additional information regarding our outstanding notes due to (from) Western Digital Corporation is included in Part II, Item 8., Note 10, Related Parties and Related Commitments and Contingencies of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K.
As discussed in Part II, Item 8., Note 8, Debt of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K, on February 21, 2025, we entered into a loan agreement (the “Loan Agreement”) comprised of a seven-year Term Loan B facility in an aggregate principal amount of $2.0 billion (the “Term Loan Facility”) and a five-year revolving credit facility (the “Revolving Credit Facility”) in an aggregate principal amount of $1.5 billion, including up to $150 million for letters of credit.
On February 21, 2025, we borrowed $2.0 billion under the Term Loan Facility. We used a portion of the proceeds of the borrowing to make a net distribution payment of $1.5 billion to WDC, with the remainder used for general corporate purposes of the Company. The proceeds of the Revolving Credit Facility may be used by us for working capital and general corporate purposes.
On March 4, 2026, the Company settled in full the remaining outstanding principal amounts of the Term Loan Facility, plus accrued interest, using cash on hand. In connection with the early settlement of the Term Loan Facility, the Company recognized a loss on debt extinguishment of $46 million resulting from the write-off of the remaining unamortized issuance costs.
As of July 3, 2026, we have drawn no amounts under the Revolving Credit Facility.
Operational Update
In 2026, we continued to observe that the rapid growth of AI infrastructure is driving demand for high-performance storage products, and AI adoption is driving the need for NAND storage to support these workloads, leading to increased revenues when compared to prior periods. The current demand environment has led to pricing shifts that have positively impacted our business, and we expect these favorable pricing trends to have a positive impact on our revenue and cash flows from operations. We expect AI-driven demand to persist through calendar year 2027 and beyond. Accordingly, we expect to invest in, and allocate resources to, high-value opportunities for both the short-term and long-term benefit of our customers and us.
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There are pending and ongoing 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 for our products. Currently, the majority of our products sold in the U.S. are exempt from tariffs, but additional tariff increases, or the loss of applicable exemptions, would increase the cost of goods sold for our products sold in the U.S., which could negatively impact our margins and financial performance. Increases in the price of our products in response to increased costs may adversely impact demand for those products in the U.S., which could also negatively impact our performance and financial results. Future trade policies and regulations in the U.S. and other countries, the terms of any trade arrangements that may be negotiated between the U.S. and other countries, the scope, amount, or duration of tariffs that may be imposed by any country, and the impact of these factors on our business are uncertain and may contribute to increased costs and reduced demand for our products, each of which could harm our financial performance.
Commencing in fiscal 2026, we entered into long-term agreements, which we also refer to as New Business Models, or “NBMs,” with several Datacenter and Edge customers. These agreements generally commit us to deliver, and our customers to purchase, a stated volume of products, mostly over multi-year periods. The agreements include pricing mechanisms consisting of fixed and variable components and are supported by financial guarantees that are intended to provide additional protection in the event a customer does not satisfy their contractual purchase obligations. As NBMs are expected to become our predominant way of doing business, we believe that this business model will contribute to greater predictability of revenue, support production planning, and enhance supply assurance for our customers. While these agreements do not eliminate the risks associated with customer demand, market conditions, or operational execution, we believe they reduce certain elements of industry cyclicality and support our long-term strategic and financial objectives.
We will continue to actively monitor developments impacting our business and may take additional responsive actions that we determine to be in the best interest of our business and stakeholders.
Basis of Presentation
On February 21, 2025, the Company became a standalone publicly traded company, and its financial statements are now presented on a consolidated basis. Prior to the separation, the Company’s historical consolidated financial information was derived from WDC’s consolidated financial statements and accounting records and prepared as if the Company existed on a standalone basis. The financial statements for all periods presented, including the historical results of the Company prior to February 21, 2025, are now referred to as “Consolidated Financial Statements” and have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and the policies and practices that are generally accepted in the industry in which it operates, consistent with prior statements.
The following discussion reflects our financial condition and results of operations as set forth in the Consolidated Financial Statements included in this Annual Report on Form 10-K.
The Consolidated Statements of Operations include all revenues and costs directly attributable to us, including costs for facilities, functions, and services used by us. Prior to the separation, our business had historically functioned together with the other businesses controlled by WDC. Accordingly, we relied on WDC’s corporate overhead and other support functions. Therefore, certain corporate overhead and shared costs were allocated to us including (i) certain general and administrative expenses related to WDC’s support functions that are provided on a centralized basis within WDC (e.g., expenses for corporate facilities, executive oversight, treasury, finance, legal, human resources, compliance, information technology, employee benefit plans, stock compensation plans and other corporate functions), and (ii) certain operations support costs incurred by WDC, including product sourcing, maintenance and support services, and other supply chain functions. These expenses were specifically identified, when possible, or allocated based on revenues, headcount, usage or other allocation methods that are considered to be a reasonable reflection of the utilization of services provided or benefit received. While management considers that such allocations were made on a reasonable basis consistent with benefits received, the Consolidated Financial Statements included in this Annual Report on Form 10-K may not be indicative of our future performance, do not necessarily include the actual expenses that would have been incurred by us and may not reflect our results of operations, financial position, and cash flows had we been a separate, standalone company during the periods presented. For additional information, see Part II, Item 8., Note 1, Organization, Basis of Presentation and Summary of Significant Accounting Policies of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K.
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Results of Operations
Overview
The following table sets forth, for the periods presented, selected summary information from our Consolidated Statements of Operations by U.S. dollars and percentage of net revenue(1):
| Year Ended | |||||||||||||||||||||||||||||||||||||||||
| 2026 | 2025 | 2024 | |||||||||||||||||||||||||||||||||||||||
| (in millions, except percentages) | |||||||||||||||||||||||||||||||||||||||||
| Revenue, net | $ | 20,248 | 100.0 | % | $ | 7,355 | 100.0 | % | $ | 6,663 | 100.0 | % | |||||||||||||||||||||||||||||
| Cost of revenue | 5,776 | 28.5 | 5,143 | 69.9 | 5,591 | 83.9 | |||||||||||||||||||||||||||||||||||
| Gross profit | 14,472 | 71.5 | 2,212 | 30.1 | 1,072 | 16.1 | |||||||||||||||||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||||||||||||||||||||
| Research and development | 1,328 | 6.6 | 1,132 | 15.4 | 1,061 | 15.9 | |||||||||||||||||||||||||||||||||||
| Selling, general and administrative | 676 | 3.3 | 573 | 7.8 | 455 | 6.8 | |||||||||||||||||||||||||||||||||||
| Goodwill impairment | — | — | 1,830 | 24.9 | — | — | |||||||||||||||||||||||||||||||||||
| Loss on debt extinguishment | 46 | 0.2 | — | — | — | — | |||||||||||||||||||||||||||||||||||
| Business separation costs | 25 | 0.1 | 67 | 0.9 | 64 | 1.0 | |||||||||||||||||||||||||||||||||||
| Employee termination and other | (2) | — | 21 | 0.3 | (40) | (0.6) | |||||||||||||||||||||||||||||||||||
| (Gain) loss on business divestiture | 10 | — | (34) | (0.5) | — | — | |||||||||||||||||||||||||||||||||||
| Total operating expenses | 2,083 | 10.2 | 3,589 | 48.8 | 1,540 | 23.1 | |||||||||||||||||||||||||||||||||||
| Operating income (loss) | 12,389 | 61.3 | (1,377) | (18.7) | (468) | (7.0) | |||||||||||||||||||||||||||||||||||
| Interest and other income (expense), net: | |||||||||||||||||||||||||||||||||||||||||
| Gain (loss) on equity securities, net | 808 | 4.0 | (2) | — | 1 | — | |||||||||||||||||||||||||||||||||||
| Interest income | 70 | 0.3 | 22 | 0.3 | 12 | 0.2 | |||||||||||||||||||||||||||||||||||
| Interest expense | (73) | (0.4) | (63) | (0.9) | (40) | (0.6) | |||||||||||||||||||||||||||||||||||
| Other income (expense), net | (177) | (0.9) | (59) | (0.8) | (8) | (0.1) | |||||||||||||||||||||||||||||||||||
| Total interest and other income (expense), net | 628 | 3.0 | (102) | (1.4) | (35) | (0.5) | |||||||||||||||||||||||||||||||||||
| Income (loss) before taxes | 13,017 | 64.3 | (1,479) | (20.1) | (503) | (7.5) | |||||||||||||||||||||||||||||||||||
| Income tax expense | 1,584 | 7.8 | 162 | 2.2 | 169 | 2.5 | |||||||||||||||||||||||||||||||||||
| Net income (loss) | $ | 11,433 | 56.5 | % | $ | (1,641) | (22.3) | % | $ | (672) | (10.0) | % | |||||||||||||||||||||||||||||
(1) Percentage may not total due to rounding.
The following table sets forth, for the periods presented, summary information regarding our disaggregated revenue:
| 2026 | 2025 | 2024 | |||||||||||||||
| (in millions) | |||||||||||||||||
| Revenue by end market: | |||||||||||||||||
| Datacenter | $ | 5,153 | $ | 960 | $ | 325 | |||||||||||
| Edge | 12,160 | 4,127 | 4,069 | ||||||||||||||
| Consumer | 2,935 | 2,268 | 2,269 | ||||||||||||||
| Total revenue | $ | 20,248 | $ | 7,355 | $ | 6,663 | |||||||||||
| Revenue by geography: | |||||||||||||||||
| Asia | $ | 14,241 | $ | 4,457 | $ | 4,510 | |||||||||||
| Americas | 4,275 | 1,618 | 1,095 | ||||||||||||||
| Europe, Middle East and Africa | 1,732 | 1,280 | 1,058 | ||||||||||||||
| Total revenue | $ | 20,248 | $ | 7,355 | $ | 6,663 | |||||||||||
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Our broad portfolio of technology and products addresses multiple end markets. Datacenter represents a large and growing end market comprised primarily of products for public or private cloud environments and enterprise customers. Through the Edge end market, we provide our OEM and channel customers a broad array of high-performance flash solutions across personal computer, mobile, gaming, automotive, physical AI, at-home entertainment, and industrial spaces. The Consumer end market is highlighted by our broad range of retail and other end-user products, which capitalize on the strength of our product brand recognition and vast presence around the world.
Net Revenue
Net revenue increased 175%, or $12,893 million, in 2026 compared to 2025, due to a 437% increase in Datacenter revenue, a 195% increase in Edge revenue, and a 29% increase in Consumer revenue. Total products sold increased by mid-teens percent on an exabyte basis.
Datacenter revenue increased 437%, or $4,193 million, in 2026 compared to 2025, primarily due to higher sales and higher pricing. Total products sold increased by almost 120% on an exabyte basis. Revenue per gigabyte increased by almost 150%.
Edge revenue increased 195%, or $8,033 million, in 2026 compared to 2025, primarily due to higher sales and higher pricing. Total products sold increased by high single-digits percent on an exabyte basis. Revenue per gigabyte increased by almost 180%.
Consumer revenue increased 29%, or $667 million in 2026 compared to 2025, primarily due to higher pricing partially offset by lower sales. Total products sold decreased by mid-teens percent on an exabyte basis. Revenue per gigabyte increased by low-fifties percent.
The changes in net revenue by geography in 2026 compared to 2025 primarily reflected higher revenue in the Asia and Americas regions from Edge and Datacenter customers, respectively.
Consistent with standard industry practice, we offer sales incentives and marketing programs that provide customers with price protection and other incentives or reimbursements that are recorded as reductions of gross revenue. For 2026, 2025 and 2024, these programs represented 11%, 19%, and 19%, respectively, of gross revenues. The amounts attributed to our sales incentive and marketing programs generally vary according to several factors, including industry conditions, list pricing strategies, seasonal demand, competitor actions, channel mix, and overall availability of products. Changes in future customer demand and market conditions may require us to adjust our incentive programs as a percentage of gross revenue.
Gross Profit and Gross Margin
Gross profit increased $12,260 million in 2026 compared to 2025, primarily due to higher sales and higher pricing in 2026 compared to 2025 as described above.
Gross profit margin increased 4,100 basis points in 2026 compared to 2025 primarily due to higher sales and higher pricing.
Operating Expenses
Research and development
Research and development (“R&D”) expenses increased $196 million in 2026 compared to 2025, primarily due to a $136 million increase in compensation and benefits due to variable compensation associated with company performance and increased headcount, a $28 million increase in spending for R&D projects as we continue to invest in innovation, and a $24 million increase in stock based compensation.
Selling, general and administrative
Selling, general and administrative expenses increased $103 million in 2026 compared to 2025, primarily due to a $68 million increase in compensation and benefits due to variable compensation associated with company performance and increased headcount, partially offset by a $51 million decrease in materials due to a change in business practice for the launch of new products whereby the Company is distributing fewer free samples and has started entering into contracts to sell certain qualification units to customers. The costs of qualification units are recorded in inventory until sold to customers and recognized as cost of revenue. The change contributed to a decrease in materials and production costs classified as selling expenses when compared to the prior year period, partially offset by a $32 million increase in sales and marketing expenses, and a $15 million increase in outside services.
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Goodwill impairment
Goodwill impairment decreased $1.8 billion in 2026 compared to 2025 due to an impairment charge resulting from the difference between the carrying value of our reporting unit and its fair value that was recognized in the previous fiscal year. No such impairment charge was incurred during the current fiscal year.
Loss on debt extinguishment
Loss on debt extinguishment increased $46 million in 2026 compared to 2025 due to the write-off of the remaining unamortized issuance costs in connection with the early settlement of the Company’s Term Loan Facility.
Business separation costs
Business separation costs decreased $42 million in 2026 compared to 2025, primarily due to the completion of the separation from WDC.
Employee termination and other
Employee termination and other charges decreased $23 million in 2026 compared to 2025 as there were no restructuring actions taken in the current period.
Gain on business divestiture
Gain on business divestiture decreased $44 million in 2026 compared to 2025 primarily due to the pre-tax gain on the sale of 80% of the Company’s interest in SanDisk Semiconductor (Shanghai) Co. Ltd. (“SDSS”) recognized in the prior fiscal year and no comparable transaction in the current fiscal year.
Interest and Other Income (Expense), net
Interest and other income (expense), net increased $730 million in 2026 compared to 2025, primarily due to a gain on equity securities, due to the Company’s investment in Nanya Technology Corporation (“Nanya”), for which there was no activity in the comparable year. This $807 million gain was offset by a $118 million increase in other expenses which was primarily due to the settlement of certain non-operating legal matters, partially offset by a $48 million increase in interest income related to cash and investment accounts.
Income Tax Expense
H.R. 1, more widely known as the One Big Beautiful Bill Act (“OBBBA”), was signed into law on July 4, 2025. It reversed the requirement for capitalization of U.S. research and development expenditures that came into law under the Tax Cuts and Jobs Act of 2017, but the mandatory requirement of capitalization of foreign research and development expenditures remains. The tax rates for income earned by our foreign subsidiaries will also be changed under H.R. 1, which applies to our fiscal years 2027 and onward. Depending on our operating results, these changes can materially impact our effective tax rate and reduce our operating cash flows. During the fiscal year ended July 3, 2026, we recorded a $10 million tax benefit in relation to the OBBBA’s impact on the Company’s 2025 tax provision.
On August 16, 2022, the Inflation Reduction Act of 2022 was signed into law, which contained significant changes to laws related to tax, climate, energy, and health care. The tax measures include, among other things, a corporate alternative minimum tax (“CAMT”) of 15% on corporations with three-year average annual adjusted financial statement income (“AFSI”) exceeding $1.0 billion. We do not expect to be subject to the CAMT of 15% for fiscal year 2026 as our average annual AFSI did not exceed $1.0 billion for the preceding three-year period. We expect to be subject to CAMT in fiscal year 2027.
On December 20, 2021, the Organisation for Economic Co-operation and Development G20 Inclusive Framework on Base Erosion and Profit Shifting released Model Global Anti-Base Erosion rules under Pillar Two (“Pillar Two”). Pillar Two is currently effective in most of the jurisdictions in which we operate. Accordingly, these taxes are included in the Company’s Income tax expense for the year ended July 3, 2026.
The following table presents our Income tax expense and the effective tax rate:
| 2026 | 2025 | 2024 | |||||||||||||||
| (in millions) | |||||||||||||||||
| Income (loss) before taxes | $ | 13,017 | $ | (1,479) | $ | (503) | |||||||||||
| Income tax expense | 1,584 | 162 | 169 | ||||||||||||||
| Effective tax rate | 12 | % | (11) | % | (34) | % | |||||||||||
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The relative mix of earnings and losses by jurisdiction, foreign-derived deduction-eligible income, credits, and tax holidays in Malaysia that will expire at various dates during years 2028 through 2031 resulted in decreases to the effective tax rate below the U.S. statutory rate for the year ended July 3, 2026.
The primary drivers of the difference between the effective tax rate for the year ended June 27, 2025 and the U.S. federal statutory rate of 21% are the relative mix of earnings and losses by jurisdiction, the goodwill impairment, the foreign income inclusion, credits, and tax holidays in Malaysia.
For additional information regarding income tax expense, see Part II, Item 8., Note 14, Income Tax Expense of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K.
Financial condition, liquidity and capital resources
The following table summarizes our Consolidated Statements of Cash Flows:
| 2026 | 2025 | 2024 | |||||||||||||||
| (in millions) | |||||||||||||||||
| Net cash provided by (used in): | |||||||||||||||||
| Operating activities | $ | 11,671 | $ | 84 | $ | (309) | |||||||||||
| Investing activities | (1,386) | 556 | 210 | ||||||||||||||
| Financing activities | (7,001) | 518 | 136 | ||||||||||||||
| Effect of exchange rate changes on cash | (3) | (5) | (1) | ||||||||||||||
| Net increase in cash and cash equivalents | $ | 3,281 | $ | 1,153 | $ | 36 | |||||||||||
In alignment with market conditions, we maintained what we believe to be a conservative capital expenditure strategy for fiscal years 2026 and 2025. For fiscal year 2027, we anticipate increased capital investments as we transition to newer nodes to meet the demand and technology needs of our product portfolio.
We believe our cash and cash equivalents will be sufficient to meet our working capital and capital expenditure needs, as well as to fund any repurchases of our shares under the Repurchase Program (as defined under Share Repurchase Authorization below). We believe we can also access the various capital markets to further supplement our liquidity position if necessary. Our ability to sustain our working capital position is subject to a number of risks that we discuss in Part I, Item 1A., Risk Factors included in this Annual Report on Form 10-K.
A total of $2,879 million and $692 million of our cash and cash equivalents were held outside of the U.S. as of July 3, 2026 and June 27, 2025, respectively. There are no material tax consequences that were not previously accrued for the repatriation of this cash. Our cash equivalents are primarily invested in money market funds that invest in U.S. Treasury securities and U.S. Government agency securities.
Operating Activities
Net cash provided by operating activities primarily consists of net income or loss, adjusted for non-cash charges, plus or minus changes in operating assets and liabilities. Net cash used as a result of changes in operating assets and liabilities was $212 million for 2026, compared to $380 million net cash provided for 2025 and to $86 million net cash provided for 2024, reflecting an increase in the volume of our business, as discussed above.
Changes in our operating assets and liabilities are largely affected by our working capital requirements, which are dependent on the volume of our business and the effective management of our cash conversion cycle as well as timing of payments for taxes. Our cash conversion cycle measures how quickly we can convert our products into cash through sales. The cash conversion cycles were as follows (in days):
| 2026 | 2025 | 2024 | |||||||||||||
| Days sales outstanding | 48 | 51 | 48 | ||||||||||||
| Days in inventory | 178 | 135 | 158 | ||||||||||||
| Days payable outstanding | (64) | (50) | (54) | ||||||||||||
| Cash conversion cycle | 162 | 136 | 152 | ||||||||||||
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Changes in days sales outstanding, or DSO, are generally due to the timing of shipments. Changes in days in inventory, or DIO, are generally related to the timing of inventory builds. Changes in days payable outstanding, or DPO, are generally related to production volume and the timing of purchases during the period. From time to time, we modify the timing of payments to our vendors. We make modifications primarily to manage our vendor relationships and to manage our cash flows, including our cash balances. Generally, we make payment term modifications through negotiations with our vendors or by granting to, or receiving from, our vendors’ payment term accommodations.
In 2026, DSO decreased 3 days when compared to the prior year, primarily due to the timing of shipments and continued strong receivables collections. DIO increased 43 days over the prior year, primarily due to inventory builds to meet demand. DPO increased 14 days over the prior year, primarily due to routine variations in the timing of purchases and payments.
Investing Activities
Net cash used in investing activities in 2026 primarily consisted of $970 million in purchases of marketable equity securities, $275 million in net issuances from activity related to Flash Ventures and $177 million in capital expenditures, partially offset by $25 million in net proceeds from our sale of a majority interest in one of our subsidiaries. Net cash provided by investing activities in 2025 primarily consisted of $401 million in net proceeds from our sale of a majority interest in one of our subsidiaries and $358 million in net proceeds from activity related to Flash Ventures, partially offset by $204 million in capital expenditures.
Financing Activities
Net cash used in financing activities in 2026 primarily consisted of $4.5 billion in repurchases of the Company’s common stock pursuant to the Initial Repurchase Program (as defined under Share Repurchase Authorization below), $1.9 billion for repayments and eventual settlement of the Term Loan Facility, and $630 million in payments of taxes on vested stock awards. Net cash provided by financing activities in 2025 primarily consisted of $2.0 billion in proceeds from borrowings from the Term Loan Facility, $550 million in proceeds from borrowings on notes due to WDC, and $101 million in proceeds from principal repayments on notes due from WDC, partially offset by $1.9 billion transferred to WDC, $100 million in repayment on the Term Loan Facility, and $76 million in net repayments on notes due to WDC.
A discussion of our cash flows for 2024, including a comparison of such cash flows to 2023, is included in Part II, Item 7., “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included in our 2025 Annual Report on Form 10-K, filed with the U.S. Securities and Exchange Commission (“SEC”) on August 21, 2025.
Off-Balance Sheet Arrangements
Other than the Flash Ventures, SDSS and Nanya-related commitments incurred in the normal course of business and certain indemnification provisions (see “Short-and-Long-term Liquidity—Purchase Obligations and Other Commitments” below), we do not have any other material off-balance sheet financing arrangements or liabilities, guarantee contracts, retained or contingent interests in transferred assets, or any other obligations arising out of a material variable interest in an unconsolidated entity. We do not have any majority-owned subsidiaries that are not included in the Consolidated Financial Statements. Additionally, with the exception of Flash Ventures, the SDSS Venture and the Unis Venture, we do not have an interest in, or relationships with, any variable interest entities. For additional information regarding our off-balance sheet arrangements, see Part II, Item 8., Note 10, Related Parties and Related Commitments and Contingencies of the Notes to Consolidated Financial Statements included in this Annual Report on Form 10-K.
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Short-and-Long-term Liquidity
Material Cash Requirements
The following is a summary of our known material cash requirements, including those for capital expenditures, as of July 3, 2026. In addition, see the discussions further below related to unrecognized tax benefits, foreign exchange contracts, indemnifications, long term agreements and share repurchase authorization.
| Total | 1 year (2027) | 2-3 Years (2028 - 2029) | 4-5 Years (2030 - 2031) | More than 5 Years (Beyond 2031) | |||||||||||||||||||||||||
| (in millions) | |||||||||||||||||||||||||||||
Flash Ventures related commitments (1) | $ | 6,559 | $ | 2,627 | $ | ||||||||||||||||||||||||
Recent insider activity
| Date | Insider | Role | Action | Shares | Price | Value |
|---|---|---|---|---|---|---|
| 2026-09-03 | Ilkbahar Alper | EVP & Chief Technology Officer | Sell | -5,112 ×34 | $1,542.40 | -$7,884,748 |
| 2026-09-08 | Shek Bernard | Chief Legal Officer & Secty | Sell | -2,308 | $1,767.33 | -$4,078,998 |
| 2026-09-01 | Shek Bernard | Chief Legal Officer & Secty | Sell | -600 | $1,525.60 | -$915,360 |
| 2026-08-03 | Shek Bernard | Chief Legal Officer & Secty | Sell | -600 | $1,162.16 | -$697,296 |
| 2026-07-01 | Shek Bernard | Chief Legal Officer & Secty | Sell | -600 | $2,088.00 | -$1,252,800 |
Source: SEC Form 4 filings.
Next expected filings
- ~2026-10-14 10-Q expected by 2026-10-19 (in 31 days)
- ~2027-01-06 10-Q expected by 2027-01-11 (in 115 days)
- ~2027-04-07 10-Q expected by 2027-04-12 (in 206 days)
Predicted from historical filing cadence; not an SEC commitment.
Recent SEC filings
- 2026-09-11 8-K Material Agreement Entered; Financial Statements and Exhibits
- 2026-08-17 10-K Annual Report
- 2026-08-05 8-K Earnings Release; Other Events; Financial Statements and Exhibits
- 2026-05-15 8-K Other Events; Financial Statements and Exhibits
- 2026-05-01 10-Q Quarterly Report
- 2026-04-30 8-K Earnings Release; Other Events; Financial Statements and Exhibits
- 2026-03-25 8-K Material Agreement Entered; Other Events; Financial Statements and Exhibits
- 2026-01-30 10-Q Quarterly Report
- 2026-01-29 8-K Earnings Release; Financial Statements and Exhibits
- 2026-01-02 8-K Officer/Director Change
- 2025-11-07 10-Q Quarterly Report
- 2025-11-06 8-K Earnings Release; Financial Statements and Exhibits
- 2025-08-21 10-K Annual Report
- 2025-08-14 8-K Earnings Release; Financial Statements and Exhibits
- 2025-06-04 S-1/A Registration Statement (Amended)