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Technology Stocks : WDC/Sandisk Corporation
WDC 173.75+6.6%10:42 AM EST
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To: Art Bechhoefer who wrote (12446)7/2/2000 3:27:27 PM
From: Ausdauer  Read Replies (2) of 60323
 
Art,

Eric's detailed analysis touched on several issues.

First, as I have stated before, I don't see much overlap at all between SSTI and SNDK. I think if fat margins are there in the lower density applications that SanDisk would consider entering that market. I don't anticipate them spreading the company that thin at the moment. I think we all know that fat margins are open invitations to competition unless technological barriers permit entry.

Second, 2Mbit, 4Mbit, 8Mbit and 16Mbit chips are a long way from 256 and 512Mbit chips and beyond. Maybe we should really be talking about ultra-low, low, moderate and high density flash chips to be more exact. I see barriers to entry being much lower in the low density flash market. The important thing is that demand is strong now and a high tide floats all ships. That is probably supporting margins for right now. An analogy would be passive electronics components such as capacitors. No rocket science involved, but little spare capacity to be had.

As applications become more sophisticated I would expect the requirements placed on embedded chips will push OEM's to look for higher capacity TSOP's. How much information can you store on a 500KB or 2MB embedded chip? At some point in the future SNDK may wish to reassess its position and consider branching out to embedded applications.

Right now SNDK's plate is full.

Ausdauer
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