Aus, I do not know how smart the flash industry is going to be, yet, despite the fact that it was a "nascent" technology during the last cycle, it suffered from price erosion as well (but not as dramatically as DRAM). The point is that industry is not learning from history and every three years or so, greed leads to oversupply. You can call it greed, or the desire for market dominance (to go down another step on the learning curve, you need to increase production ten fold or so) which allows for cost reduction. My bullishness about SNDK is based on the fact that even under dire conditions (extreme competition) they still will rake in royalties at the tune of what I believe might be a floor of $250 MM annually, some four to five years hence. The stock, however will amplify the cycle of the semis, and by this time next year, the downswing in the semi (the stocks, rather than shipments) may very well be in full force.
Zeev |
