SanDisk and Kioxia plan to build new NAND capacity.
They have signed long-term contracts to lock in demand.
Analysts expect memory shortages to persist through 2028.
What happened
SanDisk and Kioxia plan to invest over $31 billion over six years in Japan to expand NAND flash production, including about $11.3 billion for a new facility at Kioxia's Kitakami plant.
Why it matters
Unlike past memory cycles, SanDisk has signed contracts with eight data center and edge customers averaging over four years, with total minimum expected revenue of $93.9 billion at floor pricing, reducing the risk of oversupply.
What to watch
Management expects bits to remain in allocation beyond 2027, and analysts see a structural memory shortage unlikely to ease before 2028, which could support pricing.
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SanDisk's $31 billion NAND bet comes after years of cyclical memory crashes. The company is trying to avoid the trap of building capacity that arrives during a glut by securing demand first. Management's comments about visibility stretching from three months to over four years highlight the change. The financials support the move: fiscal Q4 revenue jumped 371.59% year over year, and datacenter revenue grew 437% for the full year. The stock already reflects optimism, up 525.57% year to date. The key unknown is whether AI demand can absorb the new supply, but contracts with floor pricing and customer guarantees may shield SanDisk from a spot-market downturn. Analysts also note a structural shortage that could last until 2028, which would help. Still, Reddit sentiment shows some investors worry that the memory supercycle will eventually turn cyclical.
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