WDC/Sandisk Corporation Message Board

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Technology Stocks : WDC/Sandisk Corporation

WDC 152.20

-3.7%

Nov 4 3:59 PM EST

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To: Art Bechhoefer who wrote (10658)	4/28/2000 8:42:00 AM
From: Ausdauer	Read Replies (3) of 60323

This is only my opinion. The most interesting piece of information that has not been discussed here relates to the relationship between flash manufacturers, such as Hitachi and Samsung, and the card assemblers, such as Simple, Delkin, Viking, etc... It seems obvious to me that if the CF assembly patents were invalid that we could go to our local electronics retailer and purchase either Hitachi/Samsung branded CF or Hitachi/Samsung manufactured CF under private label. Instead these giants like Hitachi supply small-time CompactFlash assemblers with both the controller chip and the flash memory. Assemblers basically add the firmware and put the package together for the retail and OEM markets. Hitachi, Samsung and Toshiba's absence from the retail and OEM markets is telling. I question whether the prior SanDisk IP defenses against these companies strongly discourage their entrance into the manufacturing of the final CF product. They have a lot more to lose than say a Lexar or a Delkin or a Simple Technology has to lose should CF assembly patents be enforced. It goes without saying that any of these flash giants have the technical skill to make CF themselves. Why did Hitachi private label Lexar Media CompactFlash in 1997? Hell, Hitachi has already announced that they can make MMC. And we all know MMC manufacture is a much more complex task than CF assembly. Hitachi and Samsung are content to sell raw materials for CF cards. They likely are avoiding the predicament that Lexar finds itself in given the precedent of prior court rulings and the possible risk of injunctions that SanDisk has already employed successfully. Toshiba will be given special status now that the MOU seems to be nearly a done-deal with Toshiba offering its considerable lithographic skills and certain portions of the NAND IP in return. I see the Toshiba/SanDisk JV as presenting a major problem for Hitachi and Samsung going forward given the cost structure that will be gained by the synergy of the JV. Currently I am skeptical that the royalties paid indirectly to SanDisk by the smaller CF assemblers through Hitachi or Samsung or Toshiba even scratch the surface of the possible royalties to be realized by a successful defense of the '987 patent. Here are some older links that help to spell out the suppositions mentioned above... Message 13387110 Message 13369885 Message 13331999 Message 13332349 Message 13291273 Message 12833589 SanDisk's three-pronged revenue model is alive and well and it is also on track. Message 13371770 When the analysts finally figure this out we will be setting new highs once again. In the mean time I am tucking away shares at these prices. ALL IMHO, Aus

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