Sandisk Corporation Morgan Stanley Technology, Media & Telecom Conference 2026 Transcript

Joseph Moore:Good. All right, welcome back. I'm Joseph Moore, Morgan Stanley Semiconductor research team. Very happy to have with us the executive team from SanDisk, CEO David Goeckeler, and EVP CFO Wissam Jabre. Thank you, guys.

David Goeckeler:Hey, Joe. Thanks for having us. We appreciate it.

Joseph Moore:Thank you. I think, Wissam, won't you want to read a safe harbor first?

Wissam Jabre:Yeah. We will be making forward-looking statements in today's discussion based on management's current assumptions and expectations, including with respect to our technology and product portfolio, our business plans and performance, market trends and opportunities, and our future financial results. These forward-looking statements are subject to risk and uncertainties. We assume no obligation to update these statements. Please refer to our annual report and Form 10-K and other filings with the SEC for more information on the risks and uncertainties that could cause actual results to differ materially from expectations. We will also be making reference to non-GAAP financials and reconciliations to our GAAP to non-GAAP financials can be found on our website.

Joseph Moore:Great. You guys saw all this coming, right?

David Goeckeler:Well, I mean, Well,

Joseph Moore:Some of it coming. I mean, really.

David Goeckeler:We saw some of it coming. We saw some of it, too.

Joseph Moore:I'll start off giving credit. You said this time last year, you know, that we would have a stronger second half. You were right in a pretty big way. I guess, you know, just maybe kind of walk us through what did people miss? You know, you saw some of this improvement coming. Obviously, AI surpassed all of our expectations. You know.

David Goeckeler:I mean, we've had conviction for a while that the market. You know, I think we've been saying for quite some time that we thought the market would be undersupplied through the end of 2026, and that was as far as we were doing modeling at the time. We were pretty clear about that last year when we launched the company. How do we come to that conviction? I mean, we do obviously a lot of bottoms-up research ourselves. We have a lot of insights into the market because we play in them all the time. We do models on demand on all the, you know, the big three markets, on smartphones, PCs, data center. We obviously do a lot of modeling of supply. We again, we have some unique insights.

David Goeckeler:We have some people on our team that happen to know a lot about how you design NAND.

Joseph Moore:Yeah.

David Goeckeler:What, you know, what different people's roadmaps may look like and what supply is gonna look like. We would just consistently look at that picture, internally, and we would just see that we thought, you know, coming out of 23, which was kind of a, you know, industry-defining event, that, you know, this market was going to get to a very different place. We have a lot of conviction that the way you have to manage the business is different. You can't just release new nodes because they're available and think they're gonna drive your costs down and the market will just absorb all that supply. We thought that playbook had completely changed. You know, that turned out to be true.

David Goeckeler:As we moved through the second half of last year, we saw the data center keep raising CapEx spend, I think, which was very well understood. Again, we have our own models of how we translate that into you know, calendar year 2026 exabyte demand.

Joseph Moore:Yeah.

David Goeckeler:It just, the, you know, we went through two forecast cycles. We went into, let's say, this time last year, late last year, we thought data center would grow mid-20s. Next forecast cycle, we thought it was gonna grow mid-40s. Then we came out our last earnings call, we talked about now we see it growing mid to high 60s. Yeah, I mean, again, we just-- we do a lot of modeling.

Joseph Moore:Yeah

David Goeckeler:... bottoms up on both sides of the equation, and take a clear-eyed look at it and see where we think the market's gonna go.

Joseph Moore:I mean, that data center storage market has been really surprising. I guess we saw huge orders in the fourth quarter for immediate delivery. How much of that do you think is because of hard drives? I guess I don't feel like it's hard drive replacement because I think it maybe accelerated some moves to solid state that might have happened later. You know, the overall storage shortage, what role does that play?

David Goeckeler:Yeah, I'm not a believer in the hard drive substitution question.

Joseph Moore:Yeah.

David Goeckeler:I mean, it's not lost on me that two years ago...

Joseph Moore:You know a little bit about the hard drive.

David Goeckeler:A little bit, but, you know, two years ago, two and a half years ago, I was answering all these questions that, you know, no hard drives are gonna be sold in five years.

Joseph Moore:Yeah.

David Goeckeler:Right? We've pivoted two years later to 1 million questions about there's not enough hard drives in the world. I think as a NAND industry, we just need to leave hard drives behind.

Joseph Moore:Yeah.

David Goeckeler:NAND is a different market. Hard drive is great. You know, I love that business, too. know a little bit about it. Great business, great technology. NAND is the same way. Great business, great technology. I think I've said this very consistently for the last six years, these are complementary technologies in the data center. In the device, they're substitutes, but in the data center they're complementary. NAND is. They're both going to grow. NAND is gonna grow faster than hard drives, and I think that has borne out to be true.

Joseph Moore:Yeah.

David Goeckeler:I think with AI, you know, NAND is now being fully integrated into the AI architecture. That's something that we thought was gonna happen years ago. We didn't think it was gonna happen years ago, but we were looking at the technology. NAND is the most scalable semiconductor technology out there. When you have an architecture that's scaling like AI is, NAND is gonna come into that architecture at some point. That is happening, and that, of course, is accelerating the data center growth rate.

Joseph Moore:On consumer, you've seen shortages as well, and that surprised me a little bit. Is that just because there's demand coming from the enterprise side? Is it you know, what's

driving that then?

David Goeckeler:Yeah, I mean, I think shortage is an interesting term. I mean, we just have a market, and the market, you know, markets have supply and demand, and they meet every day, right? That's rationalized through pricing. As that gets rationalized, if your business model is dependent on buying NAND from one supplier and turning it into something else, as your costs go up, it's gonna make your business model less attractive.

Joseph Moore:Mm-hmm.

David Goeckeler:I think it's natural you're gonna see business models that depend on readily available, inexpensive NAND are gonna be under pressure. I think this is kind of the, I think, still somewhat misunderstood part of the NAND market. The NAND buyer is just fundamentally changing. You know, this used to be a market that was, you know, it was more of a commodity market. The buyer wanted multiple suppliers for every point in their arc... you know, their deployment. That's being replaced by a buyer now that is the predominant part of the market. The largest part of the market is now a buyer that is not. Their business model is not dependent on the volume of NAND they buy. They're not reselling NAND.

Joseph Moore:Yeah

David Goeckeler:... a different form factor. Their NAND is part of a much larger architecture that is very profitable, and their consumption continues to go up, and I think that is what's catalyzing a change in the business practices in the market.

Joseph Moore:Mm-hmm.

David Goeckeler:I think that's really what's going on. We're in the middle of that, and when you're in the middle of something like that, it's sometimes confusing, and it's hard to figure out

what's exactly going to happen.

Joseph Moore:Yeah.

David Goeckeler:I think it's just incredibly exciting, and it is, you know, this technology that we've been building for 25 years, it's extraordinarily important, and the fundamental dynamics of the way the market works are changing.

Joseph Moore:Yeah.

David Goeckeler:It's gonna be fun to see how it plays out.

Joseph Moore:Yeah. Yeah. It has been fun so far, for sure. From the standpoint of capital spending in NAND, we've actually seen NAND capital equipment sales drop the last two quarters as the market's gotten really good. I think some of that's just timing, kind of random timing stuff. There's also clean room space that people are allocating to DRAM that's maybe taking away. Like, what do you think is the supply picture here? What does it take for you guys to resume kind of a higher level of spending?

David Goeckeler:Well, I mean, first of all, I think it's important to realize we are spending more money all the time to increase supply.

Joseph Moore:Yeah.

David Goeckeler:We've been very transparent. We're gonna grow supply mid to high teens. We're putting billions of dollars behind that. We're putting hundreds of millions of dollars of R&D behind building the best NAND technology in the world. We are gonna grow the market, and we grow the market every single day. We think that that is a good long-term growth rate for the market, and, you know, we're trying to sort out as this market changes, where is the

attractive demand in that market? I think that's happening every single day. You know, it would take a lot to get more conviction. You know, we're not interested in what the growth rate of the market is yet next year or the year after.

Joseph Moore:Okay.

David Goeckeler:We're interested in the growth rate of the market, a sustained basis for the next decade.

Joseph Moore:Yeah.

David Goeckeler:I don't think it should be lost on anybody that, you know, we just invested over $1 billion to make sure we have supply from 2030 to 2035. That's the kind of time horizon that we're thinking about, and we continue to invest more in the business to make sure we can continue to grow this business. I think as these business practices gets worked out over the next, you know, year or so, maybe faster than that, we'll find out what the real growth rate is of the attractive demand in the market.

Joseph Moore:I guess one of your pushes really even predating the spin has been that customers need to give you more visibility into what their demand is, more transparency to the long-term view. This tightness in the market, does that help you achieve that? I guess, you know, maybe we can go into some of the long-term agreements and things like that that are giving you that visibility now.

David Goeckeler:I mean, certainly that's what we need to get conviction behind. We're investing to grow the market.

Joseph Moore:Yeah.

David Goeckeler:We've talked about that. We're investing billions of dollars in CapEx. We're investing hundreds of millions of dollars of R&D to build incredible technology. Clearly, our time horizon for those investments are quite long. I mean, if you're gonna build a fab, it's a pretty big place, and you need to get, you know, 10, 15 years of return out of that. We're clearly looking for more visibility on demand. I mean, the way the market has traditionally worked is the world's NAND is kinda auctioned every quarter. That's kinda how it works. I think that business practice is gonna change to giving more visibility and commitment to a longer time horizon of what demand is. I think this is, you know, the data center buyer coming in is more interested in certainty of supply.

Joseph Moore:Yeah.

David Goeckeler:Right? That's extremely important. You know, I think our interests are highly aligned. We're gonna produce NAND, they need to consume NAND.

Joseph Moore:Mm-hmm.

David Goeckeler:The question is, how do we put a business model and an incentive scheme around that where we both have confidence we can get what we need? The industry hasn't done a very good job of that in the past, quite frankly.

Joseph Moore:You know, as a long-term memory analyst, you hear about long-term supply agreements, and kind of triggers memories of things that didn't work in the past and things like that. You know, you've talked about the structure of these being different. You've talked about prepayments upfront, agreements that have teeth. You know, you don't have to sue your customers to collect down the road. You know, how should we think about that? Are you seeing those commitments, or is that desire continuing to build?

David Goeckeler:I'll talk a little bit about this, and Wissam can really is very thoughtful on this as well. I mean, look, I mean, there's no shortage of people that can tell us all the stuff that didn't work in the past, right? It's like everybody's got a lot of scar tissue. There's a lot of things that didn't work.

Joseph Moore:Yeah.

David Goeckeler:We're very well informed in all of that. I think the most important thing in all of this is we have a willing partner. Again, the customer we're talking to has significant amount of demand in the future. They're planning for. You know, 2027, 2028, 2029, what their demand is gonna look like, they're willing to share that with us. That's very unusual, right? We usually don't get that much insight. The product is so important to them, they want that certainty of supply. They're thinking that far down the road, "How am I going to be able to acquire the amount of NAND I need?" When we look at the numbers, quite frankly, they're kinda eye-popping numbers. They're like, if you're gonna count on showing up every quarter, you're probably not gonna get that much.

Wissam Jabre:Mm.

David Goeckeler:Our interests are aligned. The question is, how do we align the incentives to make sure everybody can do what they need to do? Maybe you can talk some about that 'cause you're like the tip of the spear on negotiating all of these.

Wissam Jabre:Yeah. Thank you, David. I think, one of the first things we need to do is stop talking about LTAs and really talk about this as a business transformation, 'cause that's really what it is. There are a few components with that. The first one is we don't wanna be talking about the quarter, we're gonna talk about two years, three years, five years, right? The agreements are really longer term, we're both committed to it. The second element is how do

we ensure financials are good? Financials need to be good in good times and in bad times. If they're good if we're in good times, there is upside for us and there is an ability for us to capture it.

Wissam Jabre:If we're in bad times, we're protected so that the financials, our gross margins, our operating margins, our free cash flow generations are all good. We want a business that's growing, right? We're selecting these customers where we believe that or we're making a commitment or they're making a commitment to us that the exabytes are gonna be growing at a rate faster than the market. We're choosing very carefully so that we choose winning customers. The last component is what David was talking about, which is there has to be enough commitment from their side that they will go all the way to the end of the contract. Exactly how that's gonna work, we'll come back to you as we finish our negotiations.

Wissam Jabre:It's a little bit too early, but we feel very good about where the discussions are going.

Joseph Moore:You said it's not an LTA, and you sort of said take-or-pays become unenforceable beyond a certain timeframe. There has to be some kind of cash prepayment, right?

David Goeckeler:I think... Well, I wouldn't necessarily go... Like, we're not gonna go into the details.

Joseph Moore:Yeah

David Goeckeler:... of what we're negotiating, but I think Wissam said it extraordinarily well. This is not about just an agreement.

Joseph Moore:Yeah.

David Goeckeler:This is about what are the business practices or the way we do business with our customers. Look, our customers are all of our customers are extremely enviable companies, right? They have incredible businesses.

Joseph Moore:Yeah.

David Goeckeler:We're very lucky to have deep relationships with them. I think our interests are highly aligned here. As I said, they wanna consume a lot of NAND, and we're gonna produce a lot of NAND. The issue is how do we get a model around that where we both have more assurance of what that's gonna be? Our customers, you know, we don't expect them to be experts in our business. Our business is a very interesting business, you know? You build a fab, and it's very expensive.

Joseph Moore:Mm-hmm.

David Goeckeler:You turn it on, and wafers come out, and they come out every single day. They don't stop. They just keep coming out, and there's more tomorrow than there was yesterday. That's not necessarily the way they run their business, but that's the way we run our business. We gotta get those gears to mesh, and the way we do that is through having a conversation and figuring out how do we transform the business practices or the way we're doing business with each other. Again, I think we have a set of customers that are very interested in having that conversation. Will we get to the finish line? Stay tuned, right? What will it look like? Stay tuned. We'll say more about it when we get there. I think there's a willingness to get this figured out.

Joseph Moore:With those kinds of big customer deals, is there a trade-off between capturing the best near-term price and getting that long-term visibility? Do you have to give them lower prices near-term to get them multiple years into?

David Goeckeler:Again, you're getting into the details.

Joseph Moore:Yeah.

David Goeckeler:I mean.

Joseph Moore:Sorry.

David Goeckeler:Like you keep telling me.

Joseph Moore:Just tell me everything you got. Just us.

David Goeckeler:Look, I think it's just us. I think you can have confidence that we have pretty good insights into what pricing is...

Joseph Moore:Yeah

David Goeckeler:... and things like that and where it's going and, you know, we're trying to do multiple things at the same time. I mean, clearly we're trying to build a business that has very enviable economics.

Joseph Moore:Yeah.

David Goeckeler:Right? We're also trying to sustain that business, right? We, you know, we wanna get off the roller coaster of going up and down, and that's, you know, again, everybody wants to tell you all about this all the time. "Oh, it's just a matter of time before this is gonna change, and everything is gonna go in a different direction." You know, we don't happen to believe that. We believe that if you have willing partners and willing customers, and everybody has the same objectives, you can put a business model around that and business practices that significantly address those concerns. I think everybody's a winner in that.

Joseph Moore:Yeah.

David Goeckeler:There's not a loser. We'll see. Like, I think the environment is such that there's a possibility that this could get worked out, and it would be a significantly different business model than looking backwards. I think it's a big risk right now in our business for our company to basically just pro-project the past on the future. That's the simplest thing to do. Again, like, "Oh, this is the way it's always worked, so this is the way it must always work." That's not true. It can change. There are a lot of things changing in the environment. The demand is changing, the technology is changing, the buyer is changing. Lots of things are changing in this whole mix of ingredients to come up with be able to transform this business to something different.

Joseph Moore:Okay, thank you for that. Sorry if I'm asking questions.

David Goeckeler:No, no. Keep asking away, right? Keep asking away.

Joseph Moore:Maybe we shift gears to talk about the technology a little bit. How happy are you with your enterprise SSD portfolio? How does BiCS8 kind of help you going forward?

David Goeckeler:We're happy with the portfolio. I think we've got the right portfolio at the right time, and that portfolio is more than just the enterprise SSD. It's the whole. You got to get a whole bunch of things right? BiCS8 is a tremendous node, right? Wafer bonding, all the technology that's there, the performance, the power efficiency, it's just a great fundamental technology. In our business, if you don't have a great fundamental technology, you can't really make up for it when you build the controller, right? Having that great fundamental technology is very important. We have a 2Tb die, right? That makes a big difference because, you know, when you build an enterprise SSD, you only have so much real estate to pack these things into, so you got to have the right die.

David Goeckeler:On top of that, now we've had an opportunity to spend the last, you know, many years building a clean sheet controller and bringing all the expertise that we have inside SanDisk around our ability to build controllers for the consumer business, the ability to build controllers for the client business, and all those businesses we're in. We've taken all that expertise and applied it to building a brand new controller for our storage class enterprise SSD. That product is in qualification. That product and the receptiveness of that product is really what's unlocking these conversations that we talked about before.

Joseph Moore:Okay.

David Goeckeler:All right? If you're gonna spend two years or a year going through a qualification process, that's when you're gonna start getting more insight into what your demand is years in the future, and that's what kind of unlocks this conversation. We feel very good about where we're at.

Joseph Moore:Yeah. Okay. NVIDIA talked a little bit about a new Key-Value Cache technology, that if you just take the number of bits they talk about and the units that we know they ship, it's like 8% of the world's NAND.

David Goeckeler:Yeah.

Joseph Moore:It seems like that's getting phased in maybe over time, not something that's imminent. You know, do you have visibility into what that opportunity may look like? It seems consistent with people giving you very high 2028 forecasts.

David Goeckeler:Yeah, I mean, This is why I love this business. It's like people are always thinking of new things to do with our product-

Joseph Moore:Yeah.

David Goeckeler:which is fantastic. It's fantastic technology. Look, we've looked at this architecture. We've talked a bit about this. I mean, I think the bigger picture is we've had confidence for some time that, you know, NAND is the most scalable semiconductor technology, the AI architecture is about scaling. Models are getting bigger, context lengths are getting bigger, caches are getting bigger. You're naturally gonna start pulling in that very scalable NAND technology into that architecture. I think, you know, that's now very clear to everyone, that's driving a lot of the business. If you look at the announcement you're talking about, we just did some...

David Goeckeler:You know, it's early. In our early analysis of that, if you just look at, you know, some penetration rates per device, and then you look at how fast you put some assumptions around how fast they're gonna be sold and ramp, you do get to a number like 75-100 X bytes of incremental demand, which is great.

Joseph Moore:A lot of demand.

David Goeckeler:Right? That's a 27 number.

Joseph Moore:Yeah.

David Goeckeler:You go up from there. Yeah, there's lots of reasons to be optimistic about demand. Again, it's about, back to the previous conversation, signing up for that demand.

Joseph Moore:Yeah.

David Goeckeler:Not just doing a paper exercise and saying this demand is there. I think that process is happening, right? That's where I say we have a willing partner in this conversation on how do we get our interests aligned around producing and consuming NAND.

Joseph Moore:Okay. You also, you talked about High-Bandwidth Flash, around the time of the spin, and none of us really knew exactly what you were talking about. It seems like there's a fair amount of momentum building around that.

David Goeckeler:You were nice about that.

Joseph Moore:The deficit is me, not you.

David Goeckeler:No.

Joseph Moore:The, you know, I think, that opportunity starting to take shape a little bit.

David Goeckeler:Yeah.

Joseph Moore:with the agreement you have. Can you just give us an overview of where we are?

David Goeckeler:Yeah, you know, I'll say, Joe, you know, we were just chatting before we started, and, you know, it's been an exciting year. We're like, you know, we're like almost exactly one year from when we launched the company, and a lot has happened in that one year. If I look back on where we were one year ago and where we are today, I would say this is one of the things I'm personally happiest about. That we had been working on this idea that NAND needs to play a larger role in the AI architecture, especially inference, where NAND brings an enormous amount of density. When you talk about something is 10x more than something else-

Joseph Moore:Mm-hmm.

David Goeckeler:That is a very good sign that you should spend time trying to figure out how to make that product fit into that architecture. We started working on that many years ago, and I think it was some insight by some very clever people in our organization, which is, if you're a

NAND designer, you've been told your whole life, "Figure out how to get me more bits. That's all I care about. I want more bits at the lowest cost possible." Now you need more bandwidth. For inference, you need more bandwidth. If you go back to that NAND designer and you say, "Hey, okay, we're not declaring victory on density. We have a long roadmap on density, right? That's, we, you know, the technology is very productive.

David Goeckeler:Why don't you start thinking about how to increase the bandwidth?" It turns out very clever people come up with ideas how to do that, and enough ideas where this technology can move into the inference architecture. That's what High-Bandwidth Flash is all about, right? Can you build a NAND product? Can you use NAND in that inference architecture? It's not training. We're not replacing HBM. We know that. Like, that would be crazy. But a read optimized, very deterministic, I know what I'm reading, I'm reading the same model over and over again, loading it into a processor. We believe that that's a memory constraint problem, not a CPU or a GPU constraint problem. We started working on that, and then we were going to launch the company, we had a long discussion about should we talk about this?

David Goeckeler:It's very early. We decided, hey, let's talk about it, right? Because we're asking people to invest in the company, and we think, you know, we like this idea, and we talked about it, and everybody looked at us like, "What are you guys talking about?" Maybe was met with a little bit of skepticism. I, you know, one of the things I'm happiest about in this year that's transpired and everything that's transpired is people are not looking at us that way anymore.

Joseph Moore:Yeah.

David Goeckeler:Right? Others have come along. Other people in the industry are now saying, "Hey, storage needs to be redesigned for AI." They're not talking necessarily about

High-Bandwidth Flash, but it's the same kind of concept.

Joseph Moore:Yeah.

David Goeckeler:How do we bring this very scalable semiconductor technology to bear to help this architecture, which is phenomenal, scale better? You know, we're working on it. We're talking to potential customers, both on devices and in cloud infrastructure, of how they could use this. It's not a plug-compatible component for the current architecture. You got to change the system a little bit to accommodate it.

Joseph Moore:Mm-hmm.

David Goeckeler:If you're going to do that, you got to know what use case you're trying to optimize around. There's a lot of work that has to go on, and we're having those conversations, and we're, you know, we're optimistic that's gonna lead to a good outcome. We're not ready to declare victory.

Joseph Moore:Yeah.

David Goeckeler:At the same time, we're doing the work the end of this year, we'll have a die, a NAND die, right? It's a derivative of BiCS8. It's not like we have to build a whole new node. We're also working on the controller. You know, maybe a year from now, we'll have what we would call a device that we could put in customers' hands that they could start using. You know, along the way, one of our peers decided they wanted to work with us on the standardization of this. I think that was a big step forward. It's hard to create a market all by yourself. One of our peers stepped forward, SK, and they wanted to standardize it together.

David Goeckeler:I think it was just last week that we announced that we're going to do that at OCP. We're not working on the NAND die. We're not working on the device together. We're just

working on the specification of the system, so people would know how to use this.

Joseph Moore:It's pretty important.

David Goeckeler:Yeah. I feel very good about how far we've come in a year, and we still have more work to do, and we're going to stay very focused on that. We think that, you know, I think that original insight that this very scalable semiconductor technology has got something to add to the AI architecture and will be central to that architecture, I think has proven to be a very good insight, and I think generally accepted now. There's different ways of doing that, primarily enterprise SSDs today. I think we're going to continue to see innovation in that space, and I think this is what's super exciting about the world right now.

Joseph Moore:Yeah.

David Goeckeler:I think we have this awesome technology. We have this you know, we've been working on this technology for 25 years. We have, like, 25 years of accumulated R&D. We have 25 years of accumulated CapEx investment on fabs that cost tens of billions of dollars. Here we have this just incredible innovation in addition to all the other great markets we're in, which is, like, every possible device you could imagine, smartphones, PCs, tablets, just goes on and on and on. Now we have this entire new area of AI to innovate in and figure out how we can bring all of this intellectual property and all of this accumulated investment that we've done over 25 years to bear on one of the most exciting technology developments in a very long time.

Joseph Moore:Yeah.

David Goeckeler:If ever.

Joseph Moore:Yeah. That's very cool. Thank you. You don't worry about demand disruption in consumer markets. We've talked about this. I guess why not? If you see prices in a consumer

solid-state drive double or triple, isn't the natural thing to cut the content in half?

David Goeckeler:I would rather focus on, I think Kioxia and I would both rather focus on the incredible demand creation that's going on.

Joseph Moore:Yeah.

David Goeckeler:Right? We're looking for the, what we consider the attractive demand for our products, which is something that recognizes that value of all this accumulated intellectual property, the value of all this accumulated CapEx that we. You know, most technology businesses are either very IP intensive or they're very CapEx intensive.

Joseph Moore:Yeah.

David Goeckeler:Like, kind of one or the other. We're like both.

Joseph Moore:Yeah.

David Goeckeler:This technology is extremely valuable, and I think this is extremely exciting time because that value, you know, I think it's fair to say for a long time, that value wasn't really recognized.

Joseph Moore:Yeah.

David Goeckeler:I think that's, you know, you just have to look back a year at our value of our stock.

Joseph Moore:Yeah.

David Goeckeler:Like, people did not recognize that value.

Joseph Moore:Well, the income for the last five years hasn't been what you should have for assets like that.

David Goeckeler:The good news of that is we have all this accumulated R&D.

Joseph Moore:Yeah.

David Goeckeler:We have all this accumulated CapEx. It's like this gigantic coiled spring that's all uncoiling all at once. It's uncoiling in this creation of incredibly attractive demand. Other demand that's not as attractive.

Joseph Moore:Yeah.

David Goeckeler:All of our customers are fantastic, but there's supply, there's demand, they're going to be rationalized through what is the price, and I think we're discovering that the world is valuing this technology a lot higher than it has in the past.

Joseph Moore:Great. We only have four minutes left. Let me see if I have questions from the audience. Had one in the front row. Speaker 4: What would you need to see to supply to, let's say, a mid-twenties bit growth rate, and how does that conversation with your JV partner go?

David Goeckeler:Do you wanna take that one?

Wissam Jabre:I mean, remember, we invest on a 10-year basis, right? That's our CapEx, we need to have conviction that for the next 10 years we're gonna see that type of growth. Therefore, we're not there yet. You know, we're very far, and we're sticking to our plans, which is to invest to the mid to high teens rate, and that's what we'll continue to do. We work very closely with Kioxia to define the investment plans, and we do that together for the JV portion of

their spending and it has worked very well for 25 years. Speaker 4: I guess just to follow up on that, is there a hypothetical world where your LTAs necessitate CapEx given the prepayments?

David Goeckeler:I think this is one of the things that the more people I talk to, I think, is a bit misunderstood about what we're doing. We're not trying to create a world where we can spend more CapEx. What we're trying to do is create a world where people commit to buying what we know we're already gonna produce. That's really what we're trying to do. We know we're gonna produce in the future. In fact, we're gonna produce more in the future than we do now, and we're committing billions of dollars to make that happen. What we're looking to do is work with our customers and our partners to align ourselves around how that supply is gonna be consumed.

David Goeckeler:Like I said, we have I think it's super interesting because I think the main buyer, not, you know Everybody in the market is extremely important. We have incredible, enviable customers. They are like some of the most fantastic technology companies ever across all domains, whether it's smartphones, PCs, gaming, data centers, all of it. We're just trying to get this business model better aligned of our investment horizons and their consumption horizons. That's what we're trying to do. As I think we as we get that better aligned, we'll have a basis to answer this question. Right now, there's no basis to answer this question. Like my view is we're already investing mid to high teens bit growth. We're investing more to grow this industry. It's now about getting the consumption of that aligned to that same level of investment.

Joseph Moore:Any more questions? Maybe just to wrap up. I mean, the conventional wisdom for the last few years has been that this is a space that needs to consolidate. All of this

goodness has happened without anything consolidating.

David Goeckeler:Isn't it amazing?

Joseph Moore:It doesn't really seem to me that we do need that, but just what's your perspective?

David Goeckeler:I think any time you're in a high fixed cost industry, like scale matters, but we could scale through the JV, right?

Joseph Moore:Yeah.

David Goeckeler:There's always benefits of if you can do that. I just don't think it's a precondition for the economics being incredible in this industry. I mean, the way I look at it is there's like this entire spectrum of technology that the world needs. NAND is a key part of all of that, and there's only just a few companies in the world that can do that. If you wanna create a NAND company, best of luck.

Joseph Moore:Yeah.

David Goeckeler:If you find yourself an R&D team as a start with, that's really hard.

Joseph Moore:Yeah.

David Goeckeler:We'll see you in 10 years. The world doesn't need that, right? It's just like this is a spectac-- I mean, this is why I chose to come to this industry a year ago, and I think a lot of people told me I was crazy. I found out that a lot of people put in writing they thought I was crazy because I think this is just a spectacular industry. I think it's a spectacular technology. I think all the elements are there. We just need to change the business model a little bit, and everybody's a winner.

Joseph Moore:I didn't think you were crazy, but I probably underestimated WD a little bit.

David Goeckeler:You were probably one of the few people that didn't think I was crazy.

Joseph Moore:Look, guys, we're out of time. Thank you very much.

Wissam Jabre:Thank you. I appreciate it.

David Goeckeler:Thank you, Joe.

Joseph Moore:Thank you.

David Goeckeler:Appreciate it.

Joseph Moore:Joe, thank you guys.