Line an 8×8-inch pan with parchment paper or foil, leaving an overhang. Grease lightly for easy removal.

In a medium saucepan over low heat, combine white chocolate chips and sweetened condensed milk. Stir continuously until smooth, about 5–7 minutes.

Remove from heat and stir in peppermint extract and a pinch of sea salt. Add red gel coloring if using and swirl gently.

Fold in 1 cup of crushed candy canes until evenly distributed, reserving a handful for topping.

Pour the fudge mixture into the prepared pan and smooth the top with an offset spatula.

Sprinkle reserved candy cane pieces over the surface, press lightly, then cover and refrigerate for at least 1 hour until firm.

Use the parchment overhang to lift fudge out of the pan. Trim edges and slice into 36 squares with a warm knife for clean cuts.