Overview
- SanDisk shares fell about 5% to 6% Wednesday after the company disclosed a $1 billion investment in Nanya and Google introduced TurboQuant, a compression tool that could cut AI memory needs.
- A private placement announced Wednesday covers roughly 139 million Nanya shares for about a 3.9% stake at a 15% discount with a three-year lockup, and it includes a multi-year DRAM supply deal that still needs approval in Taiwan.
- Owning part of a key supplier can help a buyer secure production slots during shortages because equity ties and supply agreements can move a customer closer to the front of the line.
- SanDisk has the cash to fund the move, with Q2 revenue around $3.0 billion, free cash flow of $980 million, and $1.539 billion in cash and equivalents reported in recent filings.
- Management still guides for Q3 revenue of $4.4 billion to $4.8 billion, non-GAAP EPS of $12 to $14, and gross margins of 65% to 67%, while investors debate the deal’s merits after a year in which the stock rose more than 1,000%.