Financial Data and Key Metrics Changes - Revenue for the second quarter was $3,025 million, up 31% quarter-over-quarter and 61% year-over-year, exceeding guidance of $2,550-$2,650 million [15] - Non-GAAP gross margin for the second quarter was 51.1%, up from 29.9% in the prior quarter, and above guidance of 41%-43% [15] - Non-GAAP EPS for the second quarter was $6.20, up from $1.22 in the prior quarter, exceeding guidance of $3.00-$3.40 [16] Business Line Data and Key Metrics Changes - Data center revenue was $440 million, up 64% sequentially [15] - Edge revenue was $1,678 million, up 21% sequentially [15] - Consumer revenue was $907 million, up 39% quarter-over-quarter [15] Market Data and Key Metrics Changes - The NAND market is experiencing structural evolution driven by AI, with data center demand significantly increasing [11] - Bids were up 22% year-over-year and low single digits quarter-over-quarter [15] - The company expects the data center to become the largest market for NAND in 2026 [20] Company Strategy and Development Direction - The company is transitioning to multi-year agreements with customers to ensure supply certainty and better align planning cycles with demand [4] - Focus on disciplined execution and innovation in NAND technology to support long-term demand and profitability [10] - Continued investment in R&D and capital expenditures to maintain competitive advantage in the NAND market [18] Management's Comments on Operating Environment and Future Outlook - Management noted that customer demand is expected to remain well above supply beyond calendar year 2026 [10] - The company anticipates a structural shift in the NAND market that will reduce cyclicality and create higher long-term margins [11] - Management expressed optimism about the evolving business practices in the data center market, which is becoming increasingly strategic [70] Other Important Information - The company generated $843 million in adjusted free cash flow, representing a 27.9% free cash flow margin [17] - The Yokkaichi joint venture with Kioxia has been extended through December 31, 2034, ensuring continued product supply [18] - The company plans to maintain capital expenditure plans while supporting mid- to high-teens bit growth through the BiCS8 transition [12] Q&A Session Summary Question: How are you thinking about long-term agreements given the rapid price increases? - Management acknowledged the pros and cons of long-term agreements and emphasized the need for confidence in sustained demand to justify such agreements [24][29] Question: What are your plans regarding supply-demand balance and potential supply additions? - Management indicated that they are focused on aligning supply with long-term demand and are cautious about increasing capital spending without visibility into sustained demand [25][34] Question: Can you quantify incremental demand for NAND related to AI infrastructure? - Management noted that they are seeing significant increases in exabyte demand in the data center, projecting high 60s exabyte growth for 2026, primarily driven by AI [47] Question: What is the breakdown between TLC and QLC in the Enterprise SSD opportunity? - Management stated that the current mix is predominantly TLC, with QLC products expected to contribute to growth once they begin shipping [42] Question: How do you view the urgency of customers committing to NAND supply? - Management expressed that there is a growing urgency among customers, particularly in the data center market, to secure supply commitments for the future [68]