SNDK 10-K & 10-Q changes, risk factors and insider trading

•Product defects could subject us to costly warranty claims, litigationlitigation, indemnification claims or indemnificationtermination claims.of long-term sales agreements.

•The compromise, damage or interruption of our technology infrastructure, systems or products from cybercybersecurity incidents, data security breaches or other related problems could have a material negative impact on our business.

•Competitive conditions, including declining average selling prices, volatile demand, technological change, industry consolidationconsolidation, lengthy product qualifications, and lengthy supply qualifications,constraints, in our industry can negatively impact our business.

•Our levelguarantees of debtcertain obligations of Flash Ventures may negatively impact our liquidity,financial position, and terms and conditions of our revolving credit facility may restrict our operations and ability to respond to future business opportunities and increase our vulnerability to adverse economic and industry conditions.opportunities.

•Our aspirations, disclosures and actions related to environmental, socialsustainability and governance matters expose us to risks that could adversely affect our reputation and performance.

•WDC’sMutual indemnification ofobligations between WDC and us for certain liabilities in connection with the spin-off may not be sufficient to protect us againstprovide the fullprotection amountwe ofexpect suchand liabilities,could or WDC may not be able to satisfy its indemnification obligationresult in thesignificant future.liabilities that could adversely affect our financial results.

•We may be unable to effectivelyimplement, makeon a timely or cost-effective basis, the changessystems, internal controls, and governance structures necessary to operate effectively as an independent company.

•Our certificate of incorporation contains an exclusive forum provision that could impact stockholder’s ability and interest in bringing lawsuits against us and any of our directors, officers or other employees;employees.

A large portion of our revenue is derived from our international operations, and substantially all of our products are produced overseas. As a result, our business depends significantly on global and regional conditions. 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, cause us to change our business practices, increase manufacturing and operating costs or result in impairment charges or other expenses. Public health crises and related government responses, including widespread disease outbreaks, quarantines, travel restrictions or business shutdowns, can also contribute to volatility in the financial markets, tighter credit conditions, reduced consumer and business spending and other adverse macroeconomic factors, any of which may negatively impact demand for our products and our financial performance.

Our revenue growth is significantly dependent on the growth of international markets, and we may face challenges in international sales markets. We are subject to risks and regulatory obligations associated with our global manufacturing operations and global sales efforts, as well as risks and regulatory obligations associated with our utilization of contractglobal manufacturers,suppliers, including:

•obtaining governmental approvals and compliance with evolving domestic and foreign regulations;

•the impacts of politicalsocial, political, immigration, and economictax instabilityand trade policies in the U.S. and abroad;

•weakervarying levels of protection of intellectual property rights;

For example, there are pending and ongoing investigations initiated by the United States hasunder recentlySection announced232 of the Trade Expansion Act of 1962 and Section 301 of the Trade Act of 1974 that may impact tariff rates for Sandisk products. We continue to monitor changes to the U.S. tradetariff policy, including increased tariffs on imported goods. In August 2025, President Trump and members of his administration have stated tariffs on semiconductors may be implemented soon, subject to exemptions. We are monitoringregime to assess potential implications on the Company. Though the majority of our products sold in the U.S. are currently exempt from tariffs, additional tariff increases or the loss of applicable exemptions would increase the cost of goods sold for our products sold in the U.S., which could negatively impact our margins and financial performance. Increases in the price of our products in response to increased costs may adversely impact demand for those products in the U.S., which could also negatively impact our performance and financial results. Future trade policies and regulations in the U.S. and other countries, the terms of any trade arrangements that may be negotiated between the U.S. and other countries, the scope, amount, or duration of tariffs that may be imposed by any country, and the impact of these factors on our business, either directly or as a result of the impact on the business of our customers, are uncertain and may contribute to increased costs and reduced demand for our products, each of which could harm our financial performance. Uncertainty surrounding international trade policy and regulations could also have an adverse effect on consumer confidence and spending.

We depend on an external supply base for technologies, software (including firmware), controllers, dynamic random-access memory,memory (“DRAM”), components, equipment and materials for use in our product design and manufacturing. We also depend on suppliers for a portion of our wafer testing, chip assembly, product assembly and product testing,testing and on service suppliers for providing technical support for our products. In addition, we use logistics partners to manage our worldwide just-in-time hubs and distribution centers and to meet our freight needs. Many of the components and much of the equipment we acquire must be specifically designed for use in our products or for developing and manufacturing our products and are only available from a limited number of suppliers, some of whom are our sole-source suppliers. We therefore depend on these suppliers to meet our business needs, including dedicating adequate engineering resources to develop components that can be successfully integrated into our products. For example, many of our enterprise-grade SSD products incorporate DRAM, which is a commodity component that has experienced supply constraints and may remain in short supply for extended periods. If we are unable to obtain sufficient quantities of DRAM on commercially reasonable terms, we may be required to allocate available flash memory and other resources to products that require less or no DRAM rather than to strategic products that may offer higher margins or stronger long-term growth opportunities. Such constraints could adversely affect our product mix, revenues, gross margins, customer relationships and competitive position.

Our suppliers have in the past been, and may in the future be, unable or unwilling to meet our requirements, including as a result of events outside of their control such as trade restrictions (including tariffs, quotasquotas, sanctions, and embargoes), supply chain shortages, labor disputes, geopolitical conflicts, industrial accidents, cybersecurity incidents, public health emergencies or natural disasters. If we are unable to purchase sufficient quantities from our current suppliers or qualify and engage additional suppliers, or if we cannot purchase materials at a reasonable price, we may not be able to meet demand for our products. Trade restrictions, including tariffs, quotas and embargoes, demand from other high-volume industries for materials or components used in our products, disruptions in supplier relationships or shortages in other components and materials used in our customers’ products could result in increased costs to us, longer lead times, or decreased demand for our products, which could negatively impact our business. Delays, shortages or cost increases experienced by our suppliers in developing or sourcing materials and components for use in our products or incompatibility or quality issues relating to our products could also harm our business.

We do not have long-term contracts with some of our existing suppliers, nor do we always have guaranteed manufacturing capacity with many of our suppliers, so we cannot guarantee that they will devote sufficient resources or capacity to manufacturing our products. Any significant problems that occur at our suppliers could lead to product shortages or quality assurance problems. When we do have contractual commitments with suppliers in an effort to stabilize the supply of our components, those commitments may require us to buy a substantial number of components or make significant cash advances to the supplier and may not result in a satisfactory supply of our components. Additionally, if such suppliers were to experience operational or financial difficulties, be acquired by a competitor, or fail to perform required obligations under our supply agreements, our ability to source critical components could be impaired, potentially disrupting our product manufacturing and harming our business. We may also cancel or defer outstanding purchase commitments with certain suppliers due to changes in actual and forecasted demand, which may result in fees, penalties and other associated charges. Such cancellations or deferments may also negatively impact our relationships with certain suppliers or lead to a decline in the financial performance of certain suppliers, each of which could result in even more limited availability of components needed for our products.

We conduct our operations at large, high-volume, purpose-built facilities in Japan, Malaysia and throughoutother locations in Asia. The facilities of many of our customers, our suppliers and our customers’ suppliers are also concentrated in certain geographic locations throughout Asia and elsewhere. If a fire (including a climate change-related fire), flood, earthquake, tsunami or other natural disaster, condition or event such as a power outage, contamination event, water scarcity, terrorist attack, cybersecurity incident, physical security breach, political instability, act of war, civil unrest, localized labor unrest or other employment issues,unrest, or a public health crisis or epidemic negatively affects any of these facilities,facilities or regions, it wouldcould significantly disrupt the supply of wafers, components, equipment or services; impair customer demand; significantly affect our ability to manufacture or sell our products; or otherwise materially adversely affect our business and sourcefinancial components and would harm our business.results. Possible impacts include work and equipment stoppages and damage to or closure of our facilities, or those of our suppliers or customers, for an indefinite period of time. Impacts of any of these events may also include closures of our manufacturing facilities, under-absorbed overhead, increased logistics, component and other costs, decreased demand for our products, and manufacturing challenges.challenges, delays in production ramps, and interruptions or inefficiencies in our operations. Climate change has in the past increased and is expected to continue to increaseincrease, the incidence and severity of certain natural disasters, including wildfires and adverse weather events. In addition, the geographic concentration of our manufacturing sites could exacerbate the negative impacts resulting from any of these problems.

The success of our business depends on our ability to attract, retain, and develop highly skilled management and technical talent capable of advancing NAND technology in an increasingly complex and competitive global environment. The rapid pace of innovation driven by AI, global research and development competition, evolving models of work, and intensifying customer demands for faster, more efficient solutions has significantly raised the bar for the type of technical expertise required to power current and next-generation technologies. As a result, acquiring and retaining such talent has become increasingly difficult. If we are unable to hire and retain key talent and to effectively manage succession planning for key leadership roles, our operating results could be harmed.

We warrantprovide warranties on the majority of our products for periods of one to five years. We test our products in our manufacturing facilities through a variety of means. However, our testing may fail to reveal defects in our products that may not become apparent until after the products have been sold into the market. In addition, our products may be used in a manner that is not intended or anticipated by us, resulting in potential liability. Accordingly, there is a risk that product defects will occur, including as a result of third-party components or applications that we incorporate in our products, which could require a product recall. Product recalls can be expensive to implement. As part of a product recall, we may be required or choose to replace the defective product. Moreover, there is a risk that product defects may trigger an epidemic failure clause in a customer agreement. If an epidemic failure occurs, we may face termination of long-term sales agreements and may be required to replace or refund the value of the defective product and to cover certain other costs associated with the consequences of the epidemic failure. In addition, product defects, product recalls or epidemic failures may cause damage to our reputation or customer relationships, lost revenue, indemnification for a recall of our customers’ products, warranty claims, litigation or loss of market share with our customers, including our original equipment manufacturerOEMs and original design manufacturerOEM customers. Our business liability insurance may be inadequate or future coverage may be unavailable on acceptable terms, which could negatively impact our operating results and financial condition.

Our standard warranty provisions attempt to put limits on damages and exclude liability for consequential damages and for misuse, improper installation, alteration, accident or mishandling while in the possession of someone other than us, but may be unenforceable or fail to limit our liability as intended. We record an accrual for estimated warranty costs at the time revenue is recognized.recognized and subsequently review and adjust those estimates as additional information becomes available. We may incur additional expenses if our warranty provisions do not reflect the actual cost of resolving issues related to defects in our products, whether as a result of a product recall, epidemic failure or otherwise. If these additional expenses are significant, they could harm our business.

The compromise, damage or interruption of our technology infrastructure, systems or products by cybercybersecurity incidents, data security breaches, other security problems, design defects or system failures could have a material negative impact on our business.

We experience cybercybersecurity incidents of varying degrees on our technology infrastructure and systems and, as a result, unauthorized parties may obtain access to our computer systems and networks, including cloud-based platforms.

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. CyberCybersecurity incidents can be caused by ransomware, computer denial-of-service attacks, data exfiltration, worms and other malicious software programs or other attacks, including the covert introduction of malware to computers and networks, and the use of techniques or processes that change frequently, may be disguised or difficult to detect, or are designed to remain dormant until a triggering event, and may continue undetected for an extended period of time. CyberCybersecurity 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. In some instances, efforts to correct vulnerabilities or prevent incidents may reduce the functionality or performance of our computer systems and networks, which could negatively impact our business. We believe malicious cybercybersecurity acts are increasing in number and that cybercybersecurity threat actors are increasingly organized and well-financed or supported by state actors, and are developing increasingly sophisticated systems and means to not only infiltrate systems, but also to evade detection or to obscure their activities. Geopolitical tensions or conflicts may create heightened risk of cybercybersecurity incidents.

Our increasing use of AI, including generative AI, agentic AI and AI-enabled automation technologies, may also elevate the risk of cybercybersecurity incidents.incidents, whether through our authorized use of such technologies to perform business or operational tasks with limited human oversight or through malicious use by threat actors to automate, scale or adapt attacks against our systems, products, employees, customers, suppliers or partners. These technologies canmay be leveraged by threat actors to automate and scale cyberattacks, generate highlymore convincing phishing or social engineering content, identify and exploit vulnerabilities more efficiently, or create malicious code that is more difficult to detect.detect, or automate, scale, adapt or obscure cyberattacks. In addition, generative AI modelssystems may inadvertently expose sensitive information if not properly securedsecured, governed, configured, monitored, or trainedconnected onto systems or data containing confidential data. The use of AI by malicious actors may also accelerate the development of novel attack techniques that are adaptive, evasive, and capable of bypassing traditional security controls.information. As AI tools become more accessible and sophisticated, the potential for their misuse increases, further complicating efforts to detect, prevent, and respond to cybercybersecurity threats.

Our products are also targets for malicious cybercybersecurity acts. While some of our products contain encryption or security algorithms to protect third-party content or user-generated data stored on our products, these products could still be hacked or the encryption schemes could be compromised, breached or circumvented by motivated and sophisticated attackers, which could harm our business by exposing us to litigation and indemnification claims and hurting our reputation. In addition, our products themselves may contain vulnerabilities, whether due to design flaws, implementation errors, or integration with third-party components, that could be exploited to gain unauthorized access to or disrupt functionality of the product. These vulnerabilities may be identified internally or disclosed by external security researchers, independent entities, or other third parties, including in the form of previously unknown or zero-day exploits. 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, IP or sensitive or personal information. Compromises of our infrastructure, systems or products could also cause our customers and other affected third parties to suffer loss or misuse of proprietary or confidential information, IP or sensitive or personal information, and could harm our relationships with customers and other third parties and subject us to liability. As a result of actual or perceived breaches, we may experience additional costs, notification requirements, civil and administrative fines and penalties, indemnification claims, litigation or damage to our brand and reputation. All of these consequences could harm our reputation and our business and materially and negatively impact our operating results and financial condition.

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. Implementation of AI technologies can be costly and time-consuming, and therethe iseffectiveness noor guaranteepotential thatbenefits of such technologytechnologies willmay bevary effectivedepending oron beneficial.use case, integration, and oversight. The incorporation of AI algorithms or training methodologies into our operations or decision-making processes may result in flawed, irrelevant, insufficient, inaccurate, biased or biasednon-compliant outputs, potentially impacting our strategic choices, operational effectiveness, and regulatory compliance. These inaccuracies can arise from limitations in training data, algorithmic design, or unintended consequences of machine learning models. Actual or perceived deficienciesdeficiencies, failures or failuresmisuse in our implementation or use of AI could result in competitive disadvantages, operational inefficiencies, regulatory action, legal liability, brand or reputational harm, and negative financial results.

In addition, the use of AI in the development of our products could potentially lead to ambiguities in intellectual property ownership, infringement or misappropriation risks, which could impact our competitive position and expose us to litigation, monetary penalties, or operational disruptions. The unauthorized or unapproved use of generative AI tools by our employees, contractors, or other third partiesparties, as well as overreliance on AI automation or agentic AI without appropriate human oversight, may lead to the inadvertent disclosure of confidential, proprietary, or personal information, flawed or unauthorized actions, or other adverse consequences, including disruptions to business operations, exposing us to data security, privacy, andlegal, legal risksregulatory, and reputational harm.risks. Misuse of such tools can also result in violations of applicable laws and regulations, including data protection and intellectual property laws. As legal and regulatory frameworks surrounding AI continue to evolve, we may be required to adapt our practices, policies, or systems, which could increase operational costs, limit innovation, or expose us to liability. This could materially affect our operations, financial condition, and ability to achieve our strategic objectives.

The terms of our agreements with Kioxia with respect to Flash Ventures require that substantially all of our flash-based memory be obtained from Flash Ventures, which limits our ability to respond to market demand and supply changes and makes our financial results particularly susceptible to variations from our forecasts and expectations. For example, we are contractually obligated to pay for 50% of the fixed costs of Flash Ventures regardless of whether we order any flash-based memory, and our orders placed with Flash Ventures on a rolling basis are binding. As a result, a failure to accurately forecast supply and demand could cause us to over-invest or under-invest in inventory, technology transitions or the expansion of Flash Ventures’ capacity. Over-investment by us or our competitors can result in excess supply and lead to significant decreases in our product prices, significant excess, obsolete inventory or inventory write-downs or underutilization charges, and the potential impairment of our investments in Flash Ventures. For example, in 2023, WDC incurred $296 million in charges for unabsorbed manufacturing overhead costs as a result of reduced utilization of its manufacturing capacity and $108 million in charges to write down ourits inventory as a result of decreases in market pricing. In 2025, we incurred $75 million in charges as a result of underutilization of our manufacturing capacity and $24 million in charges to write down our inventory. These charges were attributable to a significant imbalance of supply and demand and actions taken in response thereto. On the other hand, if we under-invest in Flash Ventures, or otherwise grow or transition Flash Ventures’ capacity too slowly, we may not have enough supply of flash-based memory, or the right type of flash-based memory, to meet demand on a timely and cost effective basis, and we may lose opportunities for revenue, gross margin and market share as a result. If our supply is limited, we might make strategic decisions with respect to the allocation of our supply among our products and customers, which could result in less favorable gross margins or damage customer relationships. In addition, while Flash Ventures is operating, our agreements with Kioxia contain certain restrictionslimitations on our ability to work with third parties to manufacture flash-based memory or to fabricate flash-based memory beyond the capacity specified in the agreements, or to manufacture flash-based memory ourselves except to the extent that we acquire any manufacturing capacity of a Flash Ventures entity as a result of that entity’s dissolution, termination of its joint venture agreements or acquisition by us. This could also impair our ability to consolidate with other industry participants who manufacture flash-based memory.

Our control over the operations of our business ventures may be limited, and our interests could diverge from our strategic partners’ interests regarding ongoing and future activities. For example, each Flash Ventures entity operates for a defined period of time agreed upon between the joint venture partners. Absent further extensions as mutually agreed between us and Kioxia, Flash Partners Ltd. andLtd., Flash Alliance Ltd. are currently set to expire on December 31, 2029, and Flash Forward Ltd. isare currently set to expire on December 31, 2034. Each Flash Ventures entity’s joint venture agreements may also earlier terminate upon the occurrence of certain specified events, including earlier dissolution by agreement of the parties or an event of default or bankruptcy. Upon the expiration of a Flash Ventures entity’s joint venture agreements, the applicable Flash Ventures entity will commence a wind-up process and be dissolved. Net proceeds from the dissolution will be distributed in kind or cash to us and Kioxia on a pro rata basis based on our respective ownership positions. The applicable Flash Venture entity will continue to operate during the period of winding up. Although we and Kioxia have agreed to extend the operating period for each Flash Ventures entity since the start of Flash Ventures, there is a risk that we and Kioxia will be unable to agree on a further extension of one or more of the Flash Ventures entities. Additionally, under the Flash Ventures agreements, we cannot unilaterally direct most of Flash Ventures’ activities, and we have limitedsome limitations on our ability to source or fabricate flash outside of Flash Ventures. Flash Ventures requires significant investments by both Kioxia and us for technology transitions and capacity expansions, and our business could be harmed if our technology roadmap and investment plans are not sufficiently aligned with Kioxia’s. Lack of alignment with Kioxia with respect to Flash Ventures could negatively impact our ability to react quickly to changes in the market, or to stay at the forefront of technological advancement. Misalignment could arise due to changes in Kioxia’s strategic priorities, management, ownership or access to capital, which have changed in recent years and could continue to change. Kioxia’s stakeholders may include, or have included in the past, competitors, customers, a private equity firm, government entities or public stockholders. Kioxia’s management changes, ownership and capital structure could lead to delays in decision-making, disputes or changes in strategic direction that could negatively impact the strategic partnership, and therefore us. There may exist conflicts of interest between Kioxia’s stakeholders and Flash Ventures or us with respect to, among other things, protecting and growing Flash Ventures’ business, intellectual property and competitively sensitive confidential information.

Together with Kioxia, we fundhave funded, and may continue to fund, a portion of the investments required for Flash Ventures through lease financings. Continued availability of lease financings for Flash Ventures is not guaranteed and could be limited by several factors, including investor capacity and risk allocation policies, our or Kioxia’s financial performance, changes to our or Kioxia’s financing strategy, business, ownership or corporate structure and the availability of tools and equipment eligible for lease financing. To the extent that lease financings are not accessible on favorable terms or at all, more cash would be required to fund investments.

We participate in a highly competitive industry that ishas oftenbeen, 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.

Further, 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 theour Flash Businessbusiness 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. Rapid technological changes oftenhave reduced, and may reduce in the future, the volume and profitability of sales of existing products and increase the risk of inventory obsolescence and write-downs. Finally, the semiconductor memory chip and data storage industryindustries hashave experienced consolidation over the past several years, which could enhance the resources and lower the cost structure of some competitors. These factors could result in a substantial decrease in our market share and harm our business.

As we compete in new product areas, the overall complexity of our business may increase and may result in increases in research and development expenses and substantial investments in manufacturing capability, technology enhancements and go-to-market capability. We must also qualify our products with customers through potentially lengthy testing processes with uncertain results. Some of our competitors offer products that we do not offer,offer (including DRAM), which may allow them to win sales from us,us or to more efficiently maintain product availability, pricing, and somemargins on products that incorporate DRAM, such as enterprise-grade SSDs. Some of our customers may also be developing storage solutions internally, which may reduce their demand for our products or shift their demand to potentially lower-margin component products. We expect that competition will continue to be intense, and our competitors may be able to gain a product offering or cost structure advantage over us, which would harm our business. Further, our competitors may utilize pricing strategies, including offeringthrough aggressive expansion of their output capacities, which may allow them to offer products at prices at or below cost,levels that we may be unable to competitively match. We may also have difficulty effectively competing with manufacturers benefiting from governmental investments and may be subject to increased complexity and reduced efficiency in our supply chain as a result of governmental efforts to promote domestic semiconductor industries in various jurisdictions.

The markets for our products continuously undergo technology transitions that may impact our product roadmaps and that we must anticipate in order to adapt our existing products or develop new products effectively. Additionally, advances in NAND technology, including higher-capacity and higher-layer architectures, as well as increasing customer requirements for performance, reliability, security, and power efficiency, may increase the complexity of our product development, qualification, manufacturing, and commercialization. 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.

Additionally, new technologies could impact demand for our products in unforeseen or unexpected ways andthat could harm our business. For example, new products could substitute for our current products and make them obsolete, eachor new technologies could reduce the importance of whichand woulddemand harmfor our business.technology. In particular, 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. We also develop products to meet certain industry and technical standards, which may change and cause us to incur substantial costs as we adapt to new standards or invest in different manufacturing processes to remain competitive.

Sales of manycertain of our products tend to be seasonal and subject to supply-demand cycles. ChangesAs our business has increasingly shifted toward enterprise and datacenter applications, and as we have entered into multi-year agreements with certain customers that provide greater visibility into future demand, the impact of traditional seasonality and certain supply-demand fluctuations has been reduced. Nonetheless, our business remains subject to changes in seasonal and cyclical supply and demand patternspatterns, which have made it, and could continue to make it, more difficult for us to forecast demand. ChangesAdditionally, indemand thefor product or channel mixcertain of our businessproducts mayis alsoincreasingly impactinfluenced seasonalby AI-related deployments and cyclicalour patterns.customers’ Forand example,partners’ weability oftento shiptimely build complex data center infrastructure. AI as a highnew percentagedemand driver is evolving rapidly, and the expected timing and magnitude of ourdemand totalrelated quarterlyto salesAI are difficult to predict. Delays in thedata thirdcenter monthbuild-outs could result in excess inventory, underutilization of thecapacity, quarter,or whichother makescosts itif difficultanticipated fordemand usdoes tonot forecastmaterialize ouror financialis resultsnot before the end of each quarter.sustained. 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.

The following discussion and analysis contains forward-looking statements within the meaning of the federal securities laws,laws and should be read in conjunction with the disclosures we make concerning risks and other factors that may affect our business and operating results. You should read this information in conjunction with the Consolidated Financial Statements and the notes thereto included in Part II, Item 8., of this Annual Report on Form 10-K. See also “Forward-Looking Statements” immediately prior to Part I, Item 1., of this Annual Report on Form 10-K.

For management’s discussion of our consolidated results for the year ended June 27, 2025 in comparison with the combined results for the year ended June 28, 2024 in comparison with the year ended June 30, 2023,2024, and other financial information related to fiscal year 2024,2025, refer to Part II, Item 2.,7., “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included in our 2025 Annual Report on Form 10, initially10-K, filed with the U.S. Securities and Exchange Commission (“SEC”) on NovemberAugust 25,21, 2024, and as further amended thereafter and declared effective on January 31, 2025 (as amended, the “Form 10”).2025.

Unless otherwise indicated,indicated or the context requires, references herein to specific years and quarters are to our fiscal years and fiscal quarters. As used herein, the terms “we,” “us,” “our,” and the “Company” refer to Sandisk Corporation and its subsidiaries.

On October 30, 2023, Western Digital Corporation (“WDC”) announced that its board of directors (the “WDC Board of Directors”) authorized WDC management to pursue a plan to separate the Company into an independent public company.company (the “separation” or “the spin-off”). The separation received final approval by the WDC Board of Directors and was completed on February 21, 2025. Prior to February 21, 2025, we were wholly owned by WDC.

On February 21, 2025, WDC executed the spin-off of the Company through WDC’s pro rata distribution of 116,035,464116,035,464, or 80.1%80.1%, of the Company’s outstanding shares of common stock of the Company to holders of WDC’s common stock. Each WDC stockholder received one-third (1/3) of one share of the Company’s common stock for each share of WDC’s common stock held by such WDC stockholder as of February 12, 2025, the record date of the distribution. Upon completion of the separation, WDC owned 28,827,78728,827,787, or 19.9%19.9%, of the outstanding shares of the Company’s common stock, which WDC was expected to retain for a period of up to twelve months following the distribution.stock. Following the distribution, the Company became an independent publicly listed company, and on February 24, 2025, the Company began trading as an independent publicly traded company under the stock symbol “SNDK” on Nasdaq.

As discussed in Part II, Item 8., Note 5, Supplemental Financial Statement Data of the Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K, subsequent to the separation, we conducted a quantitative analysis of potential goodwill and long-lived assets impairments, in accordance with Accounting Standards Codification (“ASC”) No. 350, Intangibles - Goodwill and Other. This analysis indicated that the estimated carrying value of our reporting unit exceeded its fair value. Consequently, we recorded a goodwill impairment charge of $1.8 billion during the third quarter of the fiscal year ended June 27, 2025.

As discussed in Part II, Item 8., Note 8, Debt of the Notes to the Consolidated Financial Statements included in this Annual Report on Form 10-K, on February 21, 2025, we entered into a loan agreement (the “Loan Agreement”) comprised of a seven-year Term Loan B facility in an aggregate principal amount of $2.0 billion (the “Term Loan Facility”) and a five-year revolving credit facility (the “Revolving Credit Facility”) in an aggregate principal amount of $1.5 billionbillion, withincluding up to $150 million available for letters of credit.

On February 21, 2025, we borrowed $2.0 billion under the Term Loan Facility. We used a portion of the proceeds of the borrowing to make a net distribution payment of approximately $1.5 billion to WDC, with the remainder to be used for general corporate purposes.purposes of the Company. The proceeds of the Revolving Credit Facility may be used by us for working capital and general corporate purposes.

As of JuneJuly 27,3, 2025,2026, we have drawn no amounts under the Revolving Credit Facility.

Additionally,There inare 2025,pending and ongoing investigations initiated by the U.S.United announcedStates changesunder toSection U.S.232 tradeof policy,the includingTrade increasedExpansion tariffsAct onof imported1962 goods.and Section 301 of the Trade Act of 1974 that may impact tariff rates for our products. Currently, the majority of our products sold in the U.S. are exempt from tariffs, but additional tariff increases, or the loss of applicable exemptionsexemptions, would increase the cost of goods sold for our products sold in the U.S., which could negatively impact our margins and financial performance. Increases in the price of our products in response to increased costs may adversely impact demand for those products in the U.S., which could also negatively impact our performance and financial results. Future trade policies and regulations in the U.S. and other countries, the terms of any trade arrangements that may be negotiated between the U.S. and other countries, the scope, amount, or duration of tariffs that may be imposed by any country, and the impact of these factors on our business are uncertain and may contribute to increased costs and reduced demand for our products, each of which could harm our financial performance.

On February 21, 2025, wethe Company became a standalone publicly traded company, and ourits financial statements are now presented on a consolidated basis. Prior to the separation, ourthe Company’s historical consolidated financial statementsinformation werewas derived from WDC’s consolidated financial statements and accounting records and prepared as if wethe Company existed on a standalone basis. The financial statements for all periods presented, including ourthe historical results of the Company prior to February 21, 2025, are now referred to as “Consolidated Financial Statements” and have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). and the policies and practices that are generally accepted in the industry in which it operates, consistent with prior statements.

The following table sets forth, for the periods presented, selected summary information from our Consolidated Statements of Operations by U.S. dollars and percentage of net revenue(1):

Our broad portfolio of technology and products addresses multiple end markets. CloudDatacenter represents a large and growing end market comprised primarily of products for public or private cloud environments and enterprise customers. Through the ClientEdge end market, we provide our OEM and channel customers a broad array of high-performance flash solutions across personal computer, mobile, gaming, automotive, virtualphysical reality headsets,AI, at-home entertainment, and industrial spaces. The Consumer end market is highlighted by our broad range of retail and other end-user products, which capitalize on the strength of our product brand recognition and vast points of presence around the world.

ClientNet revenue increased 1%,175%, or $58$12,893 million, in 20252026 compared to 2024, primarily2025, due to ana 8%437% increase in ASPDatacenter perrevenue, gigabyte,a partially195% offsetincrease in Edge revenue, and a 29% increase in Consumer revenue. Total products sold increased by amid-teens 7%percent decreaseon inan exabytesexabyte sold.basis.

ConsumerDatacenter revenue decreasedincreased $1437%, millionor $4,193 million, in 20252026 compared to 2024,2025, primarily due to ahigher 6%sales increaseand inhigher exabytespricing. sold,Total offsetproducts sold increased by aalmost 7%120% decreaseon inan ASPexabyte basis. Revenue per gigabyte dueincreased toby pricingalmost pressure.150%.

The changes in net revenue by geography in 20252026 compared to 20242025 primarily reflected higher revenue in the Asia and Americas regionregions from CloudEdge customers.and Datacenter customers, respectively.

Consistent with standard industry practice, we offer sales incentives and marketing programs that provide customers with price protection and other incentives or reimbursements that are recorded as reductions of gross revenue. For 2025,2026, 20242025 and 2023,2024, these programs represented 19%,11%, 19%, and 21%,19%, respectively, of gross revenues. The amounts attributed to our sales incentive and marketing programs generally vary according to several factors, including industry conditions, list pricing strategies, seasonal demand, competitor actions, channel mixmix, and overall availability of products. Changes in future customer demand and market conditions may require us to adjust our incentive programs as a percentage of gross revenue.

Research and development (“R&D”) expenses increased $71$196 million in 20252026 compared to 2024,2025, primarily due to a $32$136 million increase in compensation and benefits mainly due to higher variable compensation whichassociated includeswith short-termcompany incentives,performance anand $18increased headcount, a $28 million increase in spending for R&D projects,projects as we continue to invest in innovation, and a $15$24 million increase in materialstock purchases,based and a $5 million increase in legal and outside service fees.compensation.

Goodwill impairment increaseddecreased $1.8 billion in 20252026 compared to 20242025 due to an impairment charge resulting from the difference between the carrying value of our reporting unit and its fair value.value that was recognized in the previous fiscal year. No such impairment charge was incurred during the current fiscal year.

Business separation costs increaseddecreased $3$42 million in 20252026 compared to 2024,2025, primarily due to the completion of the separation from WDC.

Gain on business divestiture increaseddecreased $34$44 million in 20252026 compared to 20242025 primarily due to the pre-tax gain on the sale of SDSS.80% of the Company’s interest in SanDisk Semiconductor (Shanghai) Co. Ltd. (“SDSS”) recognized in the prior fiscal year and no comparable transaction in the current fiscal year.

Interest and Other Expense,Income (Expense), net

We have described under the heading “Risk Factors” included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on August 21, 2025 for the year ended June 27, 2025 a number of risks and uncertainties that could cause our actual results of operations and financial condition to vary materially from past, or from anticipated future, results of operations and financial condition. ThereExcept as set forth below, there have been no material changes from these risk factors previously described in our Annual Report on Form 10-K for the year ended June 27, 2025. These risks and uncertainties are not the only risks facing us. Additional risks and uncertainties not presently known to us or that we currently deem not material may also adversely affect our business, financial condition, results of operations or the market price of our common stock.

Sandisk is a leading developer, manufacturer and provider of data storage devices and solutions based on NAND flash technology. With a differentiated innovation engine driving advancements in storage and semiconductor technologies, our broad and ever-expanding portfolio delivers powerful flash storage solutions for artificial intelligence (“AI”) workloads in datacenters, edge devices, and consumer applications. Our technologies enable everyone from students, gamersgamers, and home offices to the largest enterprises and public clouds to produce, analyze, and store data. Our solutions include a broad range of solid-state drives (“SSD”), embedded products, removable cards, universal serial bus drives and wafers and components. Our broad portfolio of technology and products addresses multiple end markets of “Datacenter” (formerly referred to as “Cloud”), “Edge” (formerly referred to as “Client”), and “Consumer.”

Our fiscal year ends on the Friday nearest to June 30 and typically consists of 52 weeks. Approximately every five to six years, we report a 53-week fiscal year to align the fiscal year with the foregoing policy. Fiscal year 2025, which ended on June 27, 2025, was comprised of 52 weeks, with each fiscal quarter consisting of 13 weeks. Fiscal year 2026 will beis comprised of 53 weeks and will endends on July 3, 2026, with the first fiscal quarter consisting of 14 weeks.

On October 30, 2023, Western Digital Corporation (“WDC”) announced that its board of directors (the “WDC Board of Directors”) authorized WDC management to pursue a plan to separate the Company into an independent public company.company (the “separation” or the “spin-off”). The separation received final approval by the WDC Board of Directors and was completed on February 21, 2025. Prior to February 21, 2025, the Company was wholly owned by WDC.

On June 9, 2025, WDC disposed of 21,314,768, or 14.6%, of our common stock through an exchange of our common stock for WDC debt held by WDC creditors, which shares were sold by affiliates of the WDC creditors in a registered public offering by the Company. On February 18, 2026, WDC disposed of 5,821,135 outstanding shares of the Company through an exchange of Sandisk’s common stock for WDC debt held by WDC creditors, which shares were sold by affiliates of the WDC creditors in a registered public offering by us. All expenses for thethese offeringofferings were paid for by us. AsFollowing ofthis January 2, 2026,transaction, WDC retainedcontinued 7,513,019,to orretain 5.1%,1,691,884 of the outstanding shares of the Company’s common stock,stock whichand, WDCas of March 19, 2026, the sale of such shares is expectedno longer subject to divest within twelve months following the separation.restriction.

Prior to the separation, the Company received financing from certain of WDC’s subsidiaries in the form of borrowings under intercompany revolving credit agreements and promissory notes to fund activities primarily related to Flash Ventures. Additional information regarding our outstanding notes due to (from) Western Digital Corporation is included in Part I, Item 1, Note 10, Related Parties and Related Commitments and Contingencies of the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.

As of JanuaryApril 2,3, 2026, the Company has drawn no amounts under the Revolving Credit Facility.

InThe 2025,Trump theAdministration U.S.has began enactingmade a number of changes in U.S. trade policy, including increasedthe imposition of tariffs onunder importedthe goods.authority of the International Emergency Economic Powers Act, which the U.S. Supreme Court found unlawful in February 2026, the creation of a refund process for such tariff duties, and the imposition of new tariffs under other statutory authorities. Currently, the majority of our products sold in the U.S. are exempt from tariffs, but additional tariff increases, or the loss of applicable exemptions, would increase the cost of goods sold for our products sold in the U.S., which could negatively impact our margins and financial performance. Increases in the price of our products in response to increased costs may adversely impact demand for those products in the U.S., which could also negatively impact our performance and financial results. Future trade policies and regulations in the U.S. and other countries, the terms of any trade arrangements that may be negotiated between the U.S. and other countries, the scope, amount, or duration of tariffs that may be imposed by any country, and the impact of these factors on our business are uncertain and may contribute to increased costs and reduced demand for our products, each of which could harm our financial performance.

Net revenue increased 61%251% in the three months ended JanuaryApril 2,3, 2026 from the comparable period in the prior year, primarily due to a 36%248% increase in average selling prices (“ASP”) per gigabytegigabyte. and a 22% increase inThe exabytes sold dueremained toflat strongerfrom demandthe comparable period in ourthe dataprior storage products.year.

EdgeNet revenue increased 63%107% in the threenine months ended JanuaryApril 2,3, 2026 from the comparable period in the prior year, primarily due to a 55%76% increase in ASP per gigabyte and aan 10%18% increase in exabytes sold.sold due to stronger demand for our data storage products.

ConsumerDatacenter revenue increased 52%645% in the three months ended JanuaryApril 2,3, 2026 from the comparable period in the prior year, primarily due to a 30%186% increase in ASP per gigabyte and a 17%160% increase in exabytes sold.

ConsumerDatacenter revenue increased 40%191% in the sixnine months ended JanuaryApril 2,3, 2026 from the comparable period in the prior year, primarily due to a 24%79% increase in exabytes sold and a 13%63% increase in ASP per gigabyte.

The changes in netEdge revenue byincreased geography295% in the three and six months ended JanuaryApril 2,3, 2026 from the comparable period in the prior yearyear, primarily reflecteddue higherto revenuea 343% increase in theASP Asiaper region from Edge customers,gigabyte, partially offset by lowera revenue10% decrease in Europe,exabytes Middle East and Africa from Datacenter customers.sold.

Consistent with standard industry practice, we offer sales incentive and marketing programs that provide customers with price protection and other incentives or reimbursements that are recorded as a reduction to gross revenue. For the three months ended JanuaryApril 2,3, 2026 and DecemberMarch 27,28, 2024,2025, these programs represented 14%12% and 22%,19%, respectively, of gross revenues. For the sixnine months ended JanuaryApril 2,3, 2026 and DecemberMarch 27,28, 2024,2025, these programs represented 14%13% and 19%, respectively, of gross revenues. The amounts attributed to our sales incentive and marketing programs generally vary according to several factors, including industry conditions, list pricing strategies, seasonal demand, competitor actions, channel mix and overall availability of products. Changes in future customer demand and market conditions may require us to adjust our incentive programs as a percentage of gross revenue.

Gross profit increased by $935$4,280 million and $896$5,176 million, respectively, for the three and sixnine months ended JanuaryApril 2,3, 2026 from the comparable period in the prior year, primarily due to a higher ASP and an increase in exabytes sold.

Gross margin increased by 1,9005,600 basis points and 6003,000 basis points, respectively, for the three and sixnine months ended JanuaryApril 2,3, 2026 from the comparable period in the prior year, primarily due to a higher ASP and an increase in exabytes sold.

The higher ASP was primarily driven by favorable pricing conditions in the industry. As a result, for the three and sixnine months ended JanuaryApril 2,3, 2026, the increase in ASP has outpaced the movement in costs per gigabyte, inclusive of the $11 million underutilization charges incurred in the first fiscal quarter of 2026, resulting in positive margins from the comparable period in the prior year.gigabyte.

Research and development (“R&D”) expenses increased $48$52 million in the three months ended JanuaryApril 2,3, 2026 from the comparable period in the prior year, primarily due to a $30$42 million increase in compensation and benefits due to variable compensation associated with company performance and increased headcount and ana $8$5 million increase in stock-based compensation.

R&D expenses increased $81$133 million in the sixnine months ended JanuaryApril 2,3, 2026 from the comparable period in the prior year, primarily due to aan $46$88 million increase in compensation and benefits due to variable compensation associated with company performance and increased headcount, a $10 million increase in stock-based compensation, a $9$19 million increase in spending for R&D projects as we continue to invest in innovation and a $4$15 million increase in datacenterstock-based program material purchases.compensation.

Selling, general and administrative expenses decreasedincreased $3$22 million in the three months ended JanuaryApril 2,3, 2026 from the comparable period in the prior year, primarily due to a $40$15 million increase in compensation and benefits, mainly due to variable compensation associated with company performance and increased headcount, and a $6 million increase in customer marketing engagements, offset by a $5 million decrease in materials due to a change in business practice for the launch of new products,products whereby the Company is distributing fewer free samples and has started entering into contracts to sell certain qualification units to customers. The costcosts of qualification units are recorded in inventory until sold to customers and recognized as cost of revenue. The change contributed to a decrease in materials and production costs classified as selling expenses when compared to the prior year period, partially offset by ana $18$4 million increase in outsidestock-based service costs supporting operation and a $16 million increase in compensation and benefits mainly due to variable compensation associated with company performance and increased headcount.compensation.

Selling, general and administrative expenses increased $46$68 million in the sixnine months ended JanuaryApril 2,3, 2026 from the comparable period in the prior year, primarily due to a $30$43 million increase in compensation and benefits and employee-related costs mainly due to variable compensation associated with company performance and an increase in headcount, offset by a $35 million decrease in materials due to a change in business practice for the launch of new products,products whereby the Company is distributing fewer free samples and has started entering into contracts to sell certain qualification units to customers. The costcosts of qualification units are recorded in inventory until sold to customers and recognized as cost of revenue. The change contributed to a decrease in materials and production costs classified as selling expenses when compared to the prior year period, partially offset by a $28$22 million increase in compensationcustomer andmarketing benefitsengagements, anda employee-related$16 costs mainly due to variable compensation associated with company performance andmillion increase in headcount,stock-based compensation and a $26$9 million increase in outside service costs supporting operations and a $12 million increase in stock-based compensation.operations.

Employee termination and other charges decreased $7 million in the sixnine months ended JanuaryApril 2,3, 2026 from the comparable period in the prior year,year as there were no restructuring actions taken in the current period.

Business separation costs decreased $12$2 million in the three months ended JanuaryApril 2,3, 2026 from the comparable period in the prior year due to post-separation-related costs decreasing.

Business separation costs decreased $23$25 million in the sixnine months ended JanuaryApril 2,3, 2026 from the comparable period in the prior year due to post-separation-related costs decreasing.

(Gain) loss on business divestiture decreased $44 million in the sixnine months ended JanuaryApril 2,3, 2026 from the comparable period in the prior year as a result of the closing of the sale of SDSS on September 28, 2024 and an amendment to the Amended and Restated Equity Purchase Agreement with JCET, related to our prior sale of SDSS, in the current period that resulted in a loss. On September 25, 2025, SanDisk China and JCET entered into an Amendment No. 1 to the Amended and Restated Equity Purchase Agreement that included a $10 million provision for working capital support, resulting in a reduction of the September 28, 2025 installment payment from JCET. The Company recognized the adjustment as a Lossloss on business divestiture for the sixnine months ended JanuaryApril 2,3, 2026, as discussed in Part I, Item 1, Note 10, Related Parties and Related Commitments and Contingencies—Flash Ventures of the Notes to the Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q.

Interest and Other Expense,Income (Expense), net

Interest and other expense,income (expense), net increaseddecreased $106$16 million in the three months ended JanuaryApril 2,3, 2026 from the comparable period in the prior year, primarily due toa the settlement of certain non-operating legal matters, an increasedecrease in interest expense from our Term Loan Facility, and the impairment of an investment, partially offset by an increase in interest income related to cash and investment accounts and a gain on sale of investment.accounts.

Interest and other expense,income (expense), net increased $134$118 million in the sixnine months ended JanuaryApril 2,3, 2026 from the comparable period in the prior year, primarily due to the settlement of certain non-operating legal matters, an increase in interest expense from our Term Loan Facility, and the impairment of an investment, partially offset by an increase in interest income related to cash and investment accounts and a gain on sale of investment.

H.R.1,H.R. 1, more widely known as the One Big Beautiful Bill Act (“OBBBA”), was signed into law on July 4, 2025. It reversed the requirement for capitalization of U.S. research and development expenditures that came into law under the Tax Cuts and Jobs Act of 2017, but the mandatory requirement of capitalization of foreign research and development expenditures remains. The tax rates for income earned by our foreign subsidiaries will also be changed under H.R. 1, which applies to our fiscal years 2027 and onwards.onward. Depending on our operating results, these changes can materially impact our effective tax rate and operating cash flows. During the three and sixnine months ended JanuaryApril 2,3, 2026, we recorded a $10 million tax benefit in relation to the OBBBA’s impact on the Company’s 2025 tax provision.

On December 20, 2021, the OrganizationOrganisation for Economic Co-operation and Development G20 Inclusive Framework on Base Erosion and Profit Shifting released Model Global Anti-Base Erosion rules under Pillar Two (“Pillar Two”). Pillar Two is currently effective in most of the jurisdictions in which we operate. Accordingly, these taxes are included in the Company’s Income tax expense for the three and sixnine months ended JanuaryApril 2,3, 2026.

The relative mix of earnings and losses by jurisdictionjurisdiction, credits and tax holidays in Malaysia that will expire at various dates during years 2028 through 2031 resulted in decreases to the effective tax rate below the U.S. statutory rate for the three and sixnine months ended JanuaryApril 2,3, 2026.

The following table summarizes our Condensed Consolidated Statements of Cash Flows offor Januarythe 2,periods ended April 3, 2026 and DecemberMarch 27,28, 20242025:

In alignment with market conditions, we maintained what we believe to be a conservative capital expenditure strategy for fiscal year 2025. For fiscal year 2026, we anticipateincreased increasedour capital investments as we transition to newer nodes to meet the demand and technology needs of our product portfolio.

We believe our cash and cash equivalents will be sufficient to meet our working capital,capital debt andand, capital expenditure needsneeds, as well as to fund any repurchases of our shares under the Repurchase Program, for at least the next twelve months and for the foreseeable future thereafter. We believe we can also access the various capital markets to further supplement our liquidity position if necessary. Our ability to sustain our working capital position is subject to a number of risks that we discuss under the heading “Risk Factors” included in Part I, Item 1A.,1A. Risk Factors included in our Annual Report on Form 10-K.

A total of $476$2,001 million and $692 million of our cash and cash equivalents were held outside of the U.S. as of JanuaryApril 2,3, 2026 and June 27, 2025, respectively. There are no material tax consequences that were not previously accrued for the repatriation of this cash. Our cash equivalents are primarily invested in money market funds that invest in U.S. Treasury securities and U.S. Government agency securities.

Net cash provided by operating activities primarily consists of net income or loss, adjusted for non-cash charges, plus or minus changes in operating assets and liabilities. Net cash providedused as a result of changes in operating assets and liabilities was $313$396 million in the sixnine months ended JanuaryApril 2,3, 2026, as compared to $487$436 million net cash used in the sixnine months ended DecemberMarch 27,28, 2024,2025, reflecting an increase in the volume of our business, as discussed above.

For the three months ended JanuaryApril 2,3, 2026, DSO decreased 711 days primarily due to higher revenue during the period and continued strong receivables collections. During the three months ended JanuaryApril 2,3, 2026, DIO decreasedincreased 358 days over the three months ended DecemberMarch 27,28, 2024,2025, primarily due to aninventory increasebuilds into petabytesmeet shipped.demand. DPO increased 47 days over the comparable period in the prior year, primarily due to routine variations in the timing of purchases and payments during the period.

Net cash used in investing activities in the sixnine months ended JanuaryApril 2,3, 2026 primarily consisted of $89$165 million in net issuances from activity related to Flash Ventures and $134 million in capital expenditures, partially offset by $25 million in net proceeds from our sale of a majority interest in one of our subsidiaries, coupled with $127 million in net issuances from activity related to Flash Ventures.subsidiaries. Net cash usedprovided inby investing activities in the sixnine months ended DecemberMarch 27,28, 20242025 primarily consisted of $191$401 million in net proceeds from our sale of a majority interest in one of our subsidiaries and $92$330 million in net proceeds from activity related to Flash Ventures, partially offset by $115$159 million in capital expenditures.