A leaked internal memo from Meta has laid bare the tech giant's ambitious plans for expanding its AI infrastructure, triggering significant moves in related supply chain stocks on Thursday.
According to the memo, reported by Reuters, Meta has entered into long-term supply agreements with SanDisk Corp., Samsung Electronics Co., Ltd., and Sumitomo Electric Industries, Ltd. These pacts cover flash storage, memory chips, and optical fiber equipment, respectively, to support its massive AI compute build-out. The memo outlines Meta's goal of deploying 7 gigawatts of compute infrastructure by 2026 and doubling that capacity to 14 gigawatts in 2027, with projected annual capital expenditure reaching as high as $145 billion.
Following the news, shares of SanDisk Corp. surged over 6.8% intraday to $1,844.96, while Sumitomo Electric Industries, Ltd. American Depositary Receipts rose approximately 4.7%. Samsung Electronics Co., Ltd. shares listed in Korea gained about 2.5%. In contrast, Meta Platforms, Inc. shares fell around 2.2%, reflecting market apprehension over the immense cost burden of its spending plans.
Key Details of the Compute Roadmap and Custom Chip Progress
The memo provides granular details on the infrastructure expansion. Meta aims to complete the deployment of 7 gigawatts of compute by 2026 and increase the total to 14 gigawatts the following year. It also clarifies the timeline for Meta's in-house AI chip, "Iris," which is slated to enter mass production in September 2026. The chip has reportedly completed six weeks of bug testing without uncovering major issues.
"Iris" is the fourth-generation product of Meta's MTIA project, whose long-term objective is to reduce the company's reliance on hardware from NVIDIA Corp. and Advanced Micro Devices, Inc.. The memo further indicates that Meta plans to maintain a cadence of roughly one new chip every six months through 2027, underscoring its sustained commitment to a proprietary compute strategy.
Regarding supply chain arrangements, the agreement with SanDisk Corp. is specific to flash storage, the pact with Samsung Electronics Co., Ltd. covers memory chips, and the deal with Sumitomo Electric Industries, Ltd. focuses on optical fiber equipment. All three are multi-year, long-term agreements. However, neither Meta nor SanDisk Corp. has officially confirmed specific terms or monetary values of the contracts.
SanDisk Leads Rally as Storage Sector Rebounds
SanDisk Corp. emerged as the most direct beneficiary from the memo's disclosure, with its shares staging a sharp rebound after being explicitly named as Meta's flash storage supplier. This move reversed a prolonged period of weakness in the NAND flash segment.
From a fundamental perspective, SanDisk Corp. recently reported quarterly revenue that nearly doubled to $5.95 billion, with non-GAAP gross margins soaring to 78.4%, highlighting severe supply constraints in the NAND flash market. The company disclosed in its latest earnings report that it has secured multi-year supply agreements with minimum contracted revenue of approximately $42 billion. SanDisk Corp., which spun off from Western Digital in February 2025 with an IPO price around $38.50, has surged over 800% year-to-date, ranking among the best performers in the S&P 500 for the first half of the year.
Thursday's rally lifted the broader storage and memory sector. Micron Technology gained about 8%, while Western Digital and Seagate Technology PLC each rose approximately 7%, extending a recovery from steep declines earlier in the week.
Massive Spending Sparks Market Debate, "Chipflation" Emerges as New Factor
Despite the broad gains among suppliers, the decline in Meta Platforms, Inc.'s own stock price reveals the market's complex reaction to the scale of its expenditures. Meta's projected $145 billion AI infrastructure spend for 2026 constitutes a significant portion of the estimated collective $700+ billion outlay by major tech firms.
Analysts have noted that rapidly rising memory and chip prices have elevated "chipflation" to a macro-level concern. This trend benefits suppliers like SanDisk Corp. but simultaneously increases cost pressures for buyers like Meta, a dynamic that is being directly reflected in stock price movements.
Additionally, SK Hynix Inc.'s planned pricing for its U.S. Nasdaq IPO on July 10th is seen as a real-time test of institutional investor appetite for risk in the AI memory space, potentially influencing further capital flows within the sector.
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