Sandisk and Kioxia Plan to Invest More Than $31 Billion in Japanese Memory Plants — About 60% of What They Have Spent There in 25 Years.

Flash memory specialist Sandisk (SNDK +0.00%) and its long-term manufacturing partner Kioxia said Thursday that they plan to invest more than $31 billion in Japan through 2032. The money is earmarked for infrastructure at the Yokkaichi and Kitakami plants (the factories where the two companies produce their NAND flash memory), along with related technology development.

The plan is contingent on Japanese government support.

Over the alliance’s more than 25 years, the two companies have invested more than $50 billion in Japan, according to the announcement. The new plan would spend about 60% of that sum again in about six years.

Both figures are floors (“more than”), so the proportion is approximate. The plan’s scale is not. And the announcement looks odd next to what Sandisk management itself told investors three weeks earlier: that the company is increasing supply through technology improvements rather than large capacity expansions, with capital expenditures falling as a percentage of revenue.

So which one is it?

Image source: Getty Images.

Who pays what

The plan is joint, not a $31 billion check from Sandisk alone. The two companies manufacture through a joint venture structure called Flash Ventures, which operates at eight facilities in Japan (six in Yokkaichi and two in Kitakami). In January, they extended that framework through December 2034.

Sandisk holds a 49.9% stake in the Flash Ventures entities, and Kioxia owns the facilities themselves. Each side gets roughly half of the production. And Sandisk’s annual report says the company is obligated to finance between 49.9% and 50% of the capital expenditures that the joint ventures decide to make, to the extent that the joint ventures’ own cash flow cannot cover them.

Neither company has detailed its share, and Sandisk’s obligation covers only the joint ventures’ own investments. But if about half of the plan flows through Flash Ventures, something close to $1.3 billion a year falls on Sandisk, before what the Japanese government contributes.

Doesn’t that break the capital-light story?

“We grow supply primarily through nodal transitions rather than wafer additions, delivering mid- to high teens bit growth,” CEO David Goeckeler said on the company’s earnings call on Aug. 5. And chief financial officer Luis Visoso supplied the figure, guiding capital expenditures to about 6% of revenue for fiscal 2027 even as the company accelerates its newest manufacturing technologies.

At first glance, a $31 billion build program appears to contradict all that. But if you follow how the money flows, I would say the capital-light story holds up for the most part.

For one thing, Sandisk’s funding obligation is a backstop, not a blank check. The company covers its share of the joint ventures’ investments only when Flash Ventures’ own operating cash flow cannot.

That said, the 6% guidance and the $31 billion plan are the same money. What Visoso guided is gross capital expenditures, which already includes Sandisk’s share of what Flash Ventures builds. The company’s own property purchases totaled just $177 million in fiscal 2026, far short of 6% of revenue, and it also put a net $275 million into the joint ventures. So the plan’s bill has to fit within that guidance, not sit beside it.

And then there is Sandisk’s explosive revenue base. The company’s revenue in fiscal 2026 rose 175% year over year to $20.25 billion, and guidance for the fiscal first quarter of 2027 alone projects revenue of $10.3 billion to $10.8 billion. Against a business of that size, that bill fits within Sandisk’s 6% guidance.

Demand still has to last

Of course, the hardest issue for shareholders is durability. The plan runs through 2032, and memory has long been a wildly cyclical business.

However, Sandisk has more visibility on that than in past cycles. Long-term agreements with eight customers already cover about half of the company’s expected bit shipments for fiscal 2027, and Sandisk values those agreements at $93.9 billion over their lives, based on the minimum prices they guarantee. The demand secured in writing may be what makes a six-year build plan defensible.

Today’s Change

(0.00%) $0.03

Current Price

$1,484.98

Key Data Points

Market Cap

$217BMarket cap calculated using publicly traded shares outstanding only. Does not include unlisted, private, or dual-class non-traded shares. Implied market cap may vary.

Day’s Range

$1435.61 – $1517.75

52wk Range

$50.07 – $2354.39

Volume

8.1M

Avg Vol

13.7M

Gross Margin

71.47%