Sandisk Anticipates Significant Profit Growth and Strengthens Supply Agreement Amid Rising AI Storage Demand

By Stephen Nellis SAN FRANCISCO, Jan 29 (Reuters) - Sandisk announced on Thursday that it expects profits and revenues to exceed Wall Street predictions, bolstered by a substantial demand for data storage driven by artificial intelligence. The company projected fiscal third-quarter revenues to reach a midpoint of $4.6 billion with adjusted earnings of $14 per share, both surpassing the expected figures of $2.77 billion and $4.37, according to LSEG-compiled data. Based in Silicon Valley, Sandisk specializes in flash storage memory, which is essential for solid-state drives that manage large quantities of data in AI data centers. While the ongoing global shortage of memory chips has predominantly affected DRAM— the quicker memory type located closer to a computer's processor— there is also a growing need for flash storage due to AI. Sandisk CEO David Goeckeler noted that major AI companies are establishing data centers for 'inference,' the stage where AI models respond to user queries, which necessitates the input of stored data into computing chips. Sandisk’s projections indicate that these firms are prepared to invest in the current constrained flash storage market to maintain their operational goals. 'Customers are prioritizing supply over price,' Goeckeler stated. In its recently concluded fiscal second quarter, Sandisk reported sales and adjusted profits of $3.3 billion and $6.20 per share, respectively, both of which exceeded estimates of $2.64 billion and $3.33 per share, based on LSEG data. The company secures its flash chip supply through a collaborative venture with Kioxia Corp in Japan. 'We have tremendous capacity in Japan that we've been continuously investing in, and we plan to keep investing. We've now signed an extended partnership for another nine years,' Goeckeler added. The companies confirmed that their supply agreement has been extended until the end of 2034, up from the previous end date of 2029. (Reporting by Stephen Nellis in San Francisco; Editing by Sherry Jacob-Phillips)