AINEWS
Micron says memory supply will stay 'much tighter' than 2026 through 2028. Sandisk's multi year customer contracts with variable pricing lock the squeeze into revenue at 85% margins.
Micron CEO Sanjay Mehrotra said on the company's Sept. 30 fiscal-Q4 earnings call that memory and storage supply, the data-storage flash memory used in phones, SSDs, and AI servers, will be much tighter than in 2026 in both 2027 and 2028. Three months earlier, in the June quarter, his company had pointed to 2028 as the year industry supply would begin to improve gradually. That framing is now withdrawn.
That revision matters for Sandisk, a data-storage flash memory chipmaker and the S&P 500's top performer of 2026, which just printed a quarter that looks more like a contract than a commodity. Sandisk shares trade near $1,730, up about 629% year-to-date from a $237 close at the end of 2025.
Sandisk's fiscal Q4, the three months ended July 3, delivered $8.97 billion in revenue, up 372% year over year. The non-GAAP gross margin reached 85%, roughly what a software company runs. The story of how a once-volatile chip business got there is in the contracts.
Under what Sandisk calls its "New Business Model," the company sells multi-year customer supply contracts with a built-in variable price component. When the deals were negotiated, the chips were already committed to specific buyers, with prices that move with the market. The customer gets guaranteed supply in a shortage. Sandisk gets multi-year revenue visibility and a live read on price.
That is why fiscal Q4's 51% sequential revenue growth is the right number to read, not the headline deceleration. Three months earlier, in fiscal Q3, sequential growth had been 97%. Now it is slowing into fiscal Q1's guided 15–20% range, with margins holding at 83–85%. The market read the deceleration as a 23% quarterly decline for the stock, Sandisk's first since the second quarter of 2025. The contracts say something more durable: the company has already locked in the next several years of revenue at near-record margins, with a variable component that still tracks the spot market if prices keep climbing.
The supply side is what made that possible. Micron's fiscal Q4 NAND flash business, the same three-month period Sandisk just reported, hit a record $14.1 billion, up 526% year over year and 42% sequential. Bit shipments rose about 10% sequentially; average selling prices rose about 30%, down from mid-80% sequential price gains the prior quarter. The price spike is moderating. The supply picture is not.
Read together, the two quarters describe how a once-volatile commodity business is being repriced. The shortage is the precondition: it gave chipmakers the leverage to demand long-term contracts. The contracts are the conversion mechanism: they turn the shortage into booked cash flow, with a variable component that still tracks the spot market if prices keep rising. For the AI hardware build-out, the practical effect is that memory costs for 2027 and 2028 are now known quantities for Sandisk's contracted customers, even as they remain wildcards for everyone else.
For the people pricing the next phase of phones, PCs, and AI servers, that is the structural signal. The memory cycle still moves on supply and demand, but the leaders are increasingly selling years of demand in advance. The watch item for fiscal Q1 is whether Sandisk's contract book keeps absorbing the volume Micron's revised 2028 outlook implies.