Memory chip manufacturer SanDisk Corporation reduced its Kfar Sava development center workforce by dozens of employees last week, according to industry sources reporting on the Kfar Sava operations. The reductions at the 700-strong Israeli center arrived alongside surging revenues driven by cloud and artificial intelligence contracts, alongside a 3,400% stock price increase over the past year recorded on Nasdaq.
SanDisk Layoffs Hit Israeli R&D Center Despite Record Financial Growth
SanDisk closed trading at $1,596, marking a dramatic ascent from $37 in August of the previous year, according to market data. Earlier in the month, the company reported financial results featuring a margin of nearly 85% and an order book swelling to $91 billion. Long-term contracts with cloud and artificial intelligence players fueled this expansion, lifting the revenue proportion from server farms and AI to 38% from 12%, while cash flow from operations reached $7.1 billion, as stated in corporate financial reports. Bank of America responded by raising its price target for the company to $2,500.
Despite these figures, management cut dozens of jobs at the Kfar Sava development facility last week. The site traces its roots back twenty years to the $1.55 billion acquisition of Dov Moran’s M-Systems, the creator of the Disk-on-Key, and to founder Eli Harari. Western Digital acquired SanDisk a decade ago before executing a spin-off last year, which brought total local headcount down from roughly 1,200 under Western Digital to approximately 700 workers under SanDisk.
Employee Frustration Over Employee Stock Purchase Program Timing
The workforce reductions sparked grievances among employees regarding the timing, which fell just months before a scheduled employee stock purchase program (ESPP) launch, according to social network reports and employee accounts. The program allows staff to buy shares at a steep discount through monthly salary deductions. Allocations during the spin-off included 4.3 million shares, or about 2.9% of share capital, set aside for the ESPP, alongside another 17.4 million shares assigned to a separate stock-based compensation program.
Ronen Solomon, founder and CEO of equity and options management company altshare, explained the mechanics of such plans. An ESPP typically permits employees to dedicate a portion of monthly salary to purchase discounted shares, often at a 15% discount, with purchase prices tied to the stock value at the start of the savings period. Solomon noted that while individual employees might miss out on benefits worth tens or hundreds of thousands of dollars—potentially buying shares valued around $1,500 to $1,600 for $700 to $800—major corporations view these plans as standard routine compensation mechanisms rather than triggers for layoffs.
Pro Tip: According to altshare founder and CEO Ronen Solomon, financial advisors generally recommend deducting the maximum allowed amount in an ESPP, then immediately selling the purchased shares to lock in gains and avoid exposure to currency exchange rate fluctuations between shekels and US dollars, as well as share price volatility.
Furthermore, Solomon pointed out that the difference between the average stock value in the 30 trading sessions preceding the purchase date and the discounted acquisition price is classified as ordinary income subject to marginal income tax rates.
Shift of Development Projects Toward India Amid Local Cost Pressures
Industry sources indicated that the layoffs occurred because management decided to transfer a key development project involving NVMe SSDs for cloud and AI servers to the company’s development facility in India. Meanwhile, the Israeli center received responsibility for a new platform named Stargate, which relies on advanced controllers and chips designed to support higher storage volumes for cloud and server farm operators.
Eyal Solomon, head of technology and biotech placement firm Ethosia, noted that while companies previously faced hurdles such as low loyalty, nepotism, and language barriers in India, the operational landscape has shifted. India has evolved into a destination where firms from Israel, the US, and globally transfer jobs efficiently, according to Ethosia’s executive conversations.
Additionally, local cost and availability factors influence regional allocations. Eyal Solomon highlighted that extended periods of military reserve duty reduce Israeli worker availability, while a strong shekel inflates local expenses. Factoring in social benefits, an Israeli employee can cost a company up to 40% more than an Indian counterpart, according to the placement firm head. SanDisk did not provide a response regarding the workforce reductions.
Frequently Asked Questions
What caused the SanDisk layoffs in Israel?
Industry sources attribute the reductions to a management decision to transfer NVMe SSD development projects for cloud and AI servers to India, while assigning a new platform called Stargate to the Israeli center.
How did SanDisk’s stock price perform recently?
SanDisk shares rose by 3,400% over a one-year period, climbing from $37 in August of the prior year to close at $1,596, according to Nasdaq market data.
What is the Employee Stock Purchase Program (ESPP)?
The ESPP allows participating employees to use monthly salary deductions to acquire company shares at a discount based on preset valuation dates, generating potential financial gains when stock prices rise sharply.
Why are Israeli employees facing higher operational costs?
According to Ethosia placement head Eyal Solomon, extended military reserve duty limits local availability, and a strong shekel combined with social benefits makes Israeli workers cost up to 40% more than their Indian counterparts.
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