TMTB: LITE and SNDK CEOs at Mizuho Conference Key Quotes
SNDK
Speakers: David Goeckeler (CEO), Luis Felipe Vizsozo (CFO) | Host: VJ (Mizuho)
1. New Business Models / LTAs — Structure, Pricing Mechanics & Margins
CFO: “In general, there are fixed price components within these new business models, which I believe are important. There are parts of the agreement... with, let’s call it a floor and a ceiling of pricing... The reason we did that is because none of us wanted to be unhappy, right? If prices go up, we would be unhappy because we would not be capturing the upside. If prices go down, our customers would be uncompetitive... their peers would be paying lower prices... Importantly, as we said in our earnings call, even in the low prices, we like the margins. This is how we structure them. Margins will be consistent with the margins that we guided in for the fourth quarter, for our fiscal fourth quarter.”
CEO: “We’re not trading duration for price, right?... That’s not the value proposition. The value proposition is continuity of supply... Price is price. Price is whatever’s fair for both of us... You can assume we have somewhat unique insights into price being in the market... As our customers go through that equation... they’re coming to the conclusion that having longer term relationships with suppliers of NAND is a very good idea... It’s changing the trajectory of our business, I think in a very positive way... It’s a very powerful relationship between us and our customers, and it’s very much of a win-win conversation.”
2. LTA / NVM Pipeline — Five Deals Signed, More Coming
CFO: “When we closed the quarter, we said we had signed five deals... we’re very happy about that... It’s a win-win relationship with our customers... They’re coming back, and we’re in constant negotiations with them. As I also mentioned last quarter, there are several conversations going on, and they’re progressing well... We’re talking to customers across all segments, right? From data centers to edge customers. Obviously, our consumer business is more transactional... it doesn’t really apply there. But we’re talking to all other customers, and as long as we’re willing to operate in this new business model, we’re open for business.”
3. AI / Data Center Demand — Inference Is the NAND Unlock
CEO: “We see a market with sustained mid to high teens growth... Clearly, there’s a lot of AI demand that’s helping that equation. Data center has now become or is quickly becoming the largest market in NAND. We’ve had many revisions of data center CapEx going up... it’s 14 revisions now... all going up. A lot of that is as AI moves into inference... [Our customers] are working on what is the architecture for inference? That’s when NAND becomes a big part of that equation... We’ve seen it with... KV cache or RAG. NAND has always been the most scalable semiconductor technology. As you start to scale any architecture, I think it’s naturally going to come towards NAND... if you need storage... Figuring out what’s the right concentration of processing power, what’s the right concentration of DRAM, HBM, what’s the right concentration of NAND. It’s very use case dependent... I think the big-picture answer to that question is you need a lot more NAND. Because NAND is the most scalable semiconductor technology. And if you’re going to scale something economically, you’re going to want to use as much of the most scalable technology that you possibly can... NAND has been something where it’s been almost always focused on density... Now it’s focused more on high performance... It’s a much more multidimensional equation... There’s been a lot said about AI, but [it’s an] extremely fundamental technology shift that we’re clearly in the very early innings [of]... A lot has changed in the last year, but I really do think we’re just getting started.”
4. Enterprise SSD Ramp — 7x YoY, ~25% of Revenue, Second Leg Just Starting
Host framing: enterprise SSD is “almost 25% of the revenues now... might be mid-single digit last year. It’s grown 7x year-over-year.”
CEO: “It’s been no secret, we’ve been investing heavily in enterprise SSD. It’s a part of the market where we’ve been under-penetrated, and it’s about building the right portfolio to increase our mix in that part of the market... There’s really two major categories of products there. There’s a performance-based TLC NAND product... used a lot for KV cache and a number of things. That’s been the driver of the portfolio over the last year. The second part of the portfolio is the storage-based [capacity] product... This is the first quarter we’ll recognize revenue on that product. You’re right, we’re just getting started on that leg of... the portfolio... Now we’ve got the second leg of that growth coming. Where’s that going to lead to over the next year? I think you’re going to see the mix of data center go higher... I’m not going to put a specific number on it... We believe that a robust portfolio where we can cover as much of the market as possible is the best for long-term profitability of our franchise... We have a global consumer business that already gives us a great starting point. We have a great client business, and now we’re building out that great enterprise SSD business.”