Sandisk Corporation Common Stock

Capital structure and performance · Financial performance volatility

Our operating results may fluctuate due to changes in demand, industry cycles and the timing of customer deployments, including AI-related data center investments, and our ability to accurately forecast demand as a result of these changing market conditions. As a result of the above or other factors, our forecast of financial results for a given quarter may differ materially from our actual financial results.

Cybersecurity and data protection · Third party data security and vendors

In addition, the technology infrastructure and systems of some of our suppliers, vendors, service providers, contract manufacturers, cloud solution providers and partners have in the past experienced, and may in the future experience, such incidents. Cybersecurity incidents can be caused by ransomware, computer denial-of-service attacks, data exfiltration, worms and other malicious software programs or other attacks.

Cybersecurity and data protection · Insider threats and access controls

Cybersecurity incidents may result from social engineering or impersonation of authorized users, and may also result from efforts to discover and exploit any design flaws, bugs, security vulnerabilities or security weaknesses, intentional or unintentional acts by employees or other insiders with access privileges, intentional acts of vandalism or fraud by third parties and sabotage.

Digital transformation and innovation · Artificial intelligence and automation

We may be adversely affected by the risks, challenges, and evolving regulatory landscape associated with the use of AI in our operations, product development, and business practices. We are increasingly leveraging AI technologies, including generative AI applications and tools, to support and enhance our various operational processes. While AI may promote efficiency and offer analytical advantages, it is complex and rapidly-changing, and its implementation carries inherent risks.

Digital transformation and innovation · Technology implementation and upgrades

In addition, we are in the process of implementing a new version of an enterprise resource planning (ERP) system. Implementing a new ERP system is costly and complex, requires significant management attention and resources, and may introduce quality, control, or cybersecurity issues into our systems, particularly during the transition. Any disruption in, or failure to successfully implement, our new ERP system or other key information systems could adversely affect our business and operations.

Digital transformation and innovation · Digital transformation and modernization

In connection with our separation from WDC, we have established, and are continuing to develop and refine, the standalone financial, administrative, governance, public company compliance, information technology, and other organizations, systems, and processes necessary to operate as an independent, publicly traded company. Building and maturing these functions is a complex, multi-phase undertaking, and we cannot assure you that we will complete it on a timely or cost-effective basis.

Technology infrastructure · Technology systems and infrastructure failure

The compromise, damage or interruption of our technology infrastructure, systems or products by cybersecurity incidents, data security breaches, other security problems, design defects or system failures could have a material negative impact on our business. If efforts to breach our infrastructure, systems or products are successful or we are unable to protect against these risks, we could suffer interruptions, delays or cessation of operations of our systems, and loss or misuse of proprietary or confidential information.

Customer and revenue · Customer concentration and key customer dependence

For 2026, 2025, and 2024, 44%, 40% and 41%, respectively, of our total revenue came from sales to our top ten customers. These customers have a variety of suppliers to choose from and therefore can make substantial demands on us, including demands on product pricing, contractual terms and the environmental impact and attributes of our products, often resulting in the allocation of risk or increased costs to us as the supplier.

Customer and revenue · Revenue concentration in specific products or segments

Demand for our products depends increasingly on the use of NAND flash memory in AI infrastructure, and new or alternative technologies could emerge that perform these functions more efficiently or reduce the storage required per unit of AI compute. If adopted at scale, such technologies could rapidly reduce or eliminate the importance of, and demand for, our technology in the AI infrastructure.

Innovation and product development · Product development and randd investment risks

If we fail to adapt to or implement new technologies or develop new products desired by our customers quickly and cost-effectively, or if technology transitions negatively impact our existing product roadmaps, our business may be harmed. The success of our technology transitions and product development depends on a number of other factors, including research and development expenses and results; difficulties faced in manufacturing ramp; market acceptance/qualification.

Innovation and product development · Time to market and commercialization risks

If we fail to adapt to or implement new technologies or develop new products desired by our customers quickly and cost-effectively, or if technology transitions negatively impact our existing product roadmaps, our business may be harmed. Moving to new technologies and products may require us to align to, and build, a new supply base. Our success in new product areas may depend on our ability to enter into favorable supply agreements.

Innovation and product development · Intellectual property protection and infringement

Our reliance on intellectual property and other proprietary information subjects us to the risk that these key components of our business could be copied by competitors. Our success depends, in significant part, on the proprietary nature of our technology, including non-patentable intellectual property such as our process technology. If we fail to protect our technology, intellectual property or contract rights, our customers and others may seek to use our technology and intellectual property without the payment of license fees and royalties.

Market position and competition · Competitive pressure and market share loss

We participate in a highly competitive industry that has been, and may continue to be, subject to declining average selling prices, volatile demand, rapid technological change and industry consolidation, as well as lengthy product qualifications, all of which can negatively impact our business. Demand for and prices of our products are influenced by, among other factors, actual and projected data growth, the balance between supply and demand in the storage market, including the effects of new fab capacity, macroeconomic factors and geopolitical tensions.

Market position and competition · Industry consolidation and market concentration

The semiconductor memory chip and data storage industries have experienced consolidation over the past several years, which could enhance the resources and lower the cost structure of some competitors. Additionally, if there is consolidation among our customer base, our customers may be able to command increased leverage in negotiating prices and other terms of sale, which could negatively impact our profitability.

Market position and competition · Pricing pressure and margin compression

Our average selling prices and gross margins tend to decline when there is a meaningful shift in the mix of product sales to lower priced products. We have faced declining gross margins relating to our business in the past, and may face potential gross margin pressures in the future, resulting from our average selling prices declining more rapidly than our cost of revenue.

Market position and competition · Market cyclicality and demand volatility

The storage market has in the past experienced, and may continue to experience, periods of excess capacity leading to liquidation of excess inventories, inventory write-downs, underutilization charges, significant reductions in average selling prices and negative impacts on our revenue and gross margins, and volatile product life cycles that harm our ability to recover the cost of product development.

Strategic execution · Strategic transformation and turnaround risks

Failure to successfully execute on strategic initiatives including acquisitions, divestitures or cost saving measures may negatively impact our future results. In order to successfully execute on strategic initiatives, we must successfully complete attractive transactions, some of which may be large and complex, and manage post-closing issues such as integration of an acquired company or employees and integration of processes and systems.

Strategic execution · Merger acquisition and divestiture risks

We may make acquisitions and divestitures and engage in cost saving measures. Even if we identify and complete suitable corporate transactions, we may not be able to successfully address any integration challenges in a timely manner, or at all. Failing to successfully integrate or realign our business to take advantage of efficiencies or reduce redundancies of an acquisition may result in not realizing all or any of the anticipated benefits of the acquisition.

Strategic execution · Joint venture and partnership risks

We rely substantially on strategic relationships with various partners, including Kioxia, which subjects us to risks and uncertainties that could harm our business. We have entered into and expect to continue to enter into strategic relationships with various partners for product development, manufacturing, sales growth and the supply of technologies, components, equipment and materials for use in our product design and manufacturing, including our business ventures with Kioxia.

Economic and market conditions · Economic recession and downturns

Adverse changes in global or regional economic conditions, including, but not limited to, volatility in the financial markets, tighter credit, recession, inflation, rising interest rates, slower growth in certain geographic regions, political uncertainty, geopolitical tensions or conflicts, trade war, other macroeconomic factors, or changes to social conditions and regulations, could significantly harm demand for our products, increase credit and collectability risks, result in revenue reductions, reduce profitability as a result of underutilization of our assets.