The Company procures substantially all of its flash-based memory wafers from its business ventures with Kioxia Corporation (“Kioxia”), which consists of three separate legal entities: Flash Partners Ltd. (“Flash Partners”), Flash Alliance Ltd. (“Flash Alliance”) and Flash Forward Ltd. (“Flash Forward”), collectively referred to as “Flash Ventures.”


	October 2, 2026		July 3, 2026
	(in millions)
Notes receivable, Flash Partners	$	22	$	21
Notes receivable, Flash Alliance	33		13
Notes receivable, Flash Forward	672		543
Investment in Flash Partners	23		25
Investment in Flash Alliance	77		76
Investment in Flash Forward	—		—
Total notes receivable and investments in Flash Ventures	$	827	$	678

The Company makes, or will make, loans to Flash Ventures to fund equipment investments for new process technologies and additional wafer capacity. The Company aggregates its Flash Ventures’ notes receivable into one class of financing receivables due to the similar ownership interest and common structure in each Flash Ventures entity. For all reporting periods presented, no loans were past due, and no loan impairments were recorded. The Company’s notes receivable from each Flash Ventures entity, denominated in Japanese yen, are secured by equipment owned by that Flash Ventures entity.

The Company’s maximum reasonably estimable loss exposure (excluding lost profits) as a result of its involvement with Flash Ventures, based upon the Japanese yen to U.S. dollar exchange rate at October 2, 2026, is presented below. Investments in Flash Ventures are denominated in Japanese yen, and the maximum estimable loss exposure excludes any cumulative translation adjustment due to translation from the Japanese yen to the U.S. dollar.

The Company is obligated to pay for variable costs incurred by Flash Ventures in producing the Company’s share of Flash Ventures’ flash-based memory wafer supply, based on its rolling three-month forecast. The Company’s share generally equals 50% of Flash Ventures’ output. In addition, the Company is obligated to pay for half of Flash Ventures’ fixed costs regardless of the output the Company chooses to purchase. The Company cannot estimate its total wafer purchase commitment obligation beyond its rolling three-month purchase commitment because the price is determined by reference to the future cost of producing the semiconductor wafers. In addition, the Company is committed to fund 49.9% to 50.0% of each Flash Ventures entity’s capital investments to the extent that the Flash Ventures entity’s operating cash flow is insufficient to fund these investments.

The Company has facility agreements with Kioxia related to the construction and operation of Kioxia’s 300-millimeter wafer fabrication facility in Kitakami, Japan, referred to as “K1”, a wafer fabrication facility in Yokkaichi, Japan, referred to as “Y7”, and a wafer fabrication facility in Kitakami, Japan, referred to as “K2”. In connection with the construction of these facilities, the Company makes prepayments toward Kioxia’s future building depreciation. In connection with the start-up of the K1, Y7 and K2 facilities, the Company has made prepayments over time, and as of October 2, 2026, $835 million, with $137 million recorded within Other current assets and $698 million recorded within Other non-current assets in the Condensed Consolidated Balance Sheets, remain to be credited against future building depreciation charges and ultimately released within Cost of revenue when the Company’s inventory is sold. As of October 2, 2026, the Company is also committed to making additional building depreciation prepayments of $459 million, based on the Japanese yen to U.S. dollar exchange rate of ¥157.56 as of such date, payable at varying dates through fiscal year 2035. The amounts payable in the next five succeeding fiscal years are $104 million in 2027, $253 million in 2028, $71 million in 2029, and $31 million on varying dates through fiscal year 2035. Similar to other prepayments made to Flash Ventures, these amounts will be credited against future wafer purchases by the Company.

On January 29, 2026, Sandisk entered into an FAL Second Commitment and Extension Agreement (the “FAL Second Extension Agreement”) by and among Sandisk, Kioxia, SanDisk LLC (“SanDisk LLC”), and SanDisk (Ireland) Limited (“SanDisk Ireland”), under which the parties thereto extended the term of Flash Alliance from December 31, 2029 to December 31, 2034.

On January 29, 2026, Sandisk entered into an FPL Second Commitment and Extension Agreement (the “FPL Second Extension Agreement”, and together with the FAL Second Extension Agreement, collectively, the “Extension Agreements”) by and among Sandisk, Kioxia, SanDisk LLC, and SanDisk (Cayman) Limited (“SanDisk Cayman”), under which the parties thereto extended the term of Flash Partners from December 31, 2029 to December 31, 2034.

In connection with the Extension Agreements, on January 29, 2026, Sandisk entered into an Agreement to Enhance Collaboration by and among Sandisk, Kioxia, SDT, SanDisk LLC, SanDisk Ireland and SanDisk Cayman, under which SDT will make certain payments directly to Kioxia totaling $1.2 billion over the years 2026 through 2029 in consideration of Kioxia’s manufacturing services and the continued availability of supply, from execution through December 31, 2034.

Off-Balance Sheet Liabilities. Flash Ventures sells to, and leases back from, a consortium of financial institutions a portion of its tools and has entered into equipment lease agreements of which the Company guarantees half of all of the outstanding obligations under each lease agreement. The lease agreements are subject to customary covenants and cancellation events that relate to Flash Ventures and each of the guarantors. The occurrence of a cancellation event could result in an acceleration of Flash Ventures’ obligations and a call on the Company’s guarantees.

The following table details the components of the Company’s remaining guarantee obligations between the principal amortization and the purchase option exercise price at the end of the term of the Flash Ventures lease agreements, in annual installments, in U.S. dollars, based upon the Japanese yen to U.S. dollar exchange rate as of October 2, 2026:

The Company and Kioxia have agreed to mutually contribute to and indemnify each other and Flash Ventures for environmental remediation costs or liabilities resulting from Flash Ventures’ manufacturing operations in certain circumstances. The Company has not made any indemnification payments nor recorded any indemnification receivables under any such agreements. As of October 2, 2026, no amounts have been accrued in the Condensed Consolidated Financial Statements with respect to these indemnification agreements.

In March 2024, SanDisk China Limited (“SanDisk China”), an indirect wholly-owned subsidiary of WDC, entered into an equity purchase agreement to sell 80% of its equity interest in SanDisk Semiconductor (Shanghai) Co. Ltd. (“SDSS”), an indirect wholly-owned subsidiary of WDC which holds one of the Company’s manufacturing facilities, to JCET Management Co., Ltd. (“JCET”), a wholly-owned subsidiary of JCET Group Co., Ltd., a Chinese publicly-listed company, thereby forming a venture between SanDisk China and JCET (the “Transaction”). The venture aims to provide independent semiconductor assembly, testing, and other related services in the People’s Republic of China for customers including, but not limited to, the Company and its affiliates.

The Transaction closed on September 28, 2024 and proceeds from the sale, including working capital adjustments, were $659 million (pre-tax). As of October 2, 2026, the Company had received $536 million and the remaining pre-tax proceeds are payable in three equal installments of approximately $37 million on September 28 of each year through September 28, 2029.

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 to $27 million. The Company recognized the adjustment as a Loss on business divestiture for the three months ended October 3, 2025.

As of October 2, 2026 and July 3, 2026, the outstanding consideration receivable was recognized at its present value of $103 million and $139 million, with $37 million classified as Other current assets in both periods, and $66 million and $102 million classified as Other non-current assets in the Condensed Consolidated Balance Sheets for each period, respectively. The remaining present value discount of $10 million as of October 2, 2026 will be recognized as Interest income in the Condensed Consolidated Statements of Operations using the effective interest method over the next three years.

The Company accounts for its 20% interest in SDSS as an equity method investment within Other non-current assets in the Condensed Consolidated Balance Sheets. The Company’s 20% interest in the earnings of SDSS is recognized one quarter in arrears and is reported in Other income (expense), net in the Condensed Consolidated Statements of Operations. As of October 2, 2026, the 20% retained interest in SDSS was valued at $168 million.

Subsequent to and in connection with the Transaction, the Company is a party to a five-year supply agreement with SDSS (the “Supply Agreement”), which was originally entered into by a WDC affiliate and assigned to the Company on January 10, 2025, to purchase certain flash-based products with a minimum annual commitment of $550 million (the “minimum annual commitment”). The Supply Agreement contains specific penalties the Company must pay if it fails to meet its minimum annual commitment. The Supply Agreement also provides that if the Company’s purchases exceed the minimum annual commitment in any of the two years immediately succeeding any annual period where a shortfall penalty has been paid, SDSS shall reimburse the Company an amount not exceeding the previously paid penalty amount. The Supply Agreement expires on September 28, 2029, and automatically renews for additional one-year terms unless earlier terminated by either of the parties. The Company also entered into an agreement to grant SDSS certain intellectual property rights on a royalty-free basis for use in manufacturing products on the Company’s behalf for the term of and under the Supply Agreement. For the three months ended October 2, 2026 and October 3, 2025, the Company made purchases of $141 million and $139 million, respectively, under the Supply Agreement. As of October 2, 2026 and July 3, 2026, the Company had a $157 million and $143 million accounts payable balance due to SDSS, respectively.

On January 24, 2025, the Company and WDC entered into an equity transfer agreement (the “Equity Transfer Agreement”) to transfer WDC’s entire equity interest in its venture with Unisplendour Corporation Limited and Unissoft (Wuxi) Group Co. Ltd. (“Unis”), referred to as the “Unis Venture”, to the Company. The Unis Venture is 48% owned by the Company and 52% owned by Unis. The Unis Venture markets and sells the Company’s products in China and develops data storage systems for the Chinese market.

Prior to the execution of the Equity Transfer Agreement, the Unis Venture was not historically managed as a component of the Company and, as such, the related equity method investment was not reflected within the Company’s Condensed Consolidated Financial Statements. After the execution of the Equity Transfer Agreement, the Company accounts for its investment in the Unis Venture under the equity method of accounting. The Company’s 48% interest in the earnings of the Unis Venture is recognized one quarter in arrears from the date the Unis Venture was transferred to the Company and is reported in Other income (expense), net in the Condensed Consolidated Statements of Operations.

For the three months ended October 2, 2026 and October 3, 2025, the Company recognized approximately 0.4% and 1.3%, respectively, of its condensed consolidated revenue on products distributed to the Unis Venture. Due to estimated amounts earned under sales incentive programs exceeding open accounts receivable balances, the Company recognized a refund liability of $20 million to the Unis Venture as of October 2, 2026. The outstanding accounts receivable due from the Unis Venture was 1% of Accounts receivable, net, as of July 3, 2026.

•Employee Matters Agreement - The Employee Matters Agreement allocates liabilities and responsibilities relating to employment matters, employee compensation and benefit plans and programs and other related matters. Pursuant to this agreement, during the three months ended October 3, 2025, the Company received reimbursement of short-term employee incentives totaling $22 million from WDC. The Company did not receive any reimbursements from this agreement for the three months ended October 2, 2026.

•Tax Matters Agreement - The Tax Matters Agreement governs, among other things, WDC’s and the Company’s respective rights, responsibilities and obligations after the spin-off with respect to tax liabilities and benefits, tax attributes, the preparation and filing of tax returns, the control of audits and other tax proceedings, and other matters regarding taxes. In addition, the Tax Matters Agreement imposes certain restrictions on the Company and its subsidiaries (including restrictions on share issuances, business combinations, sales of assets, and similar transactions) that are designed to preserve the tax-free status of the spin-off and certain related transactions.