The share price of memory chip manufacturer SanDisk Corporation (Nasdaq: SNDK) is one of the sensations of the past year. Together with the stocks of other memory giants such as Micron and SK hynix, SanDisk has soared, rising by 3,400% within a year. In August last year, its share price was at $37. Last Friday, it closed at $1,596.
The company has not been in such a good position for a long time. Earlier this month, it smashed revenue and profit estimates, and reported a margin of nearly 85%. Its order book swelled to $91 billion, mostly in long-term contracts with leading cloud and AI players. The proportion of revenue accounted for by server farms and AI jumped from 12% to 38%, while cash flow from operations soared to $7.1 billion. Bank of America raised its price target for the company to $2,500.
"Globes" has learned however that dozens of employees out of the 700-strong workforce at SanDisk’s development center in Kfar Sava were laid off last week. The move surprised many workers and raised a storm on social networks, mainly because of the company’s excellent financial results. The workers are aggrieved at the timing of the layoffs, which were carried out just a few months before the scheduled launch of an ESPP (employee stock purchase program). The program will enable employees to buy shares in the company at a substantial discount through a deduction from their salaries. After the sharp rise in SanDisk’s share price, the target price in the program is especially low, giving a discount that could amount to hundreds of dollars per share. The layoffs could therefore save the company millions of dollars.
Deep roots in Israel
SanDisk’s development center in Kfar Sava is one of the oldest among such centers maintained by multi-national semiconductors in Israel. It arose from the acquisition of Dov Moran’s M-Systems, in which Moran invented the Disk-on-Key, for $1.55 billion twenty years ago. SanDisk itself has deep Israeli roots. It was founded by entrepreneur Eli Harari and run by him for 22 years.
A decade ago, SanDisk was acquired by Western Digital, which produces data storage devices, but last year it was spun off again. In the course of the spin-off, the company set up a program enabling employees to buy its shares through a deduction from their salaries, and allocated to it 4.3 million shares, representing some 2.9% of its share capital. This is a fairly generous grant, and does not include another 17.4 million shares allocated to a separate stock-based compensation program.
Missing out
The employees who were laid off are greatly disappointed at the loss of a compensation program that could be worth tens or even hundreds of thousands of dollars each.
Ronen Solomon, founder and CEO of equity and options management company altshare explains the mechanism. "An ESPP program enables an employee to deduct part of his or her salary each month, and at preset dates to use the money to buy shares in the company at a discount, usually of 15%. In some programs, the purchase price is also based on the share price at the beginning of the savings period, and so when the stock rises sharply over the period, that can generate a very substantial gain for the employee.
"In situation such a that of SanDisk, an employee can buy a share currently worth $1,500-1,600 for $700-800, in accordance with the terms of the program and the price set when it began. So for an individua employee, an ESPP exercise date can be worth a great deal of money. But what could be a significant financial event for the individual employee looks different from the point of view of the company. I’m very skeptical about the possibility that a major corporation would decide to lay off workers because of an approaching ESPP purchase date. Even when the rise in the share price creates an especially large benefit for the employees, for a corporation that employs thousands or tens of thousands of people such plans are part of its routine compensation mechanism."
The assessment that the layoffs are not connected to the stock purchase program is bolstered by the fact that SanDisk is not laying off employees outside Israel. Hundreds of SanDisk employees in Israel will still gain a large benefit by the end of the year, perhaps worth hundreds of thousands of dollars for some of them.
Nevertheless, Solomon explains, the difference between the average value of the stock in the 30 trading sessions preceding the purchase date and the price at which the employee receives the share is considered ordinary income and is taxed at the employee’s marginal income tax rate. There is also exposure to exchange rate fluctuations, as the employee’s salary and deductions are in shekels, whereas the stock is priced in US dollars.
"The recommendation is generally to deduct the maximum that the program allows, and when the shares are purchased to sell them immediately to realize the benefit, and not to continue to be exposed to fluctuations in the share price and in the exchange rate," Solomon says.
Transferring to India?
According to industry sources, the layoffs at SanDisk were carried out because of a decision by the company’s management to transfer an important development project to its development center in India. Development of NVMe SSDs for cloud and AI servers will be transferred, while the Israeli development center will be given responsibility for developing a new platform called Stargate based on new controllers and chips that supports higher storage volumes and is aimed at cloud and server farm giants.
If it were only a matter of an exchange of projects, however, the company would not have embarked on a process of reducing job numbers. Whereas in the past Western Digital employed about 1,200 people in Israel, SanDisk now employs only about 700. SanDisk thus joins other US companies that over the past year have increased their activity in India, among them Intel and Intuit.
Eyal Solomon, head of technology and biotech placement company Ethosia, explains that in the past companies were burned from working with development centers in India because of low loyalty, nepotism, and language barriers, but that the picture has changed. "India has become a country to which companies from Israel, the US, and the whole world transfer jobs effortlessly," he says. "From conversations with senior executives a worrying picture emerges of low availability of Israeli workers because of extended periods of military reserve duty, together with a strong shekel that makes them more expensive. The result is that an Israeli worker can cost a company up to 40% more than their Indian counterpart, if the social benefits element of compensation is also taken into account," he adds.
No response to the report was forthcoming from SanDisk.
Published by Globes, Israel business news - en.globes.co.il - on August 24, 2026.
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