WDC/Sandisk Corporation Message Board

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Technology Stocks : WDC/Sandisk Corporation

WDC 172.20

-1.2%

1:36 PM EST

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To: wily who wrote (13747)	8/8/2000 11:11:43 PM
From: Ausdauer	Read Replies (2) of 60323

Wily, I think you have the chronology a bit mixed up. 1) Core flash patents (totally unrelated to CF or MMC assembly) appear to make up the bulk of SanDisk's current royalty revenue stream. As Eli stated, no new licensees contributed to the phenomenal Q2 royalty revenues. I suspect Sharp, Samsung, Toshiba and Hitachi account for the majority of these dollars. Toshiba's contribution may decline with time depending on how the FlashVision JV is constructed. In any case I am anticipating at least $70 million in royalties in 2000 which us up steeply compared to 1999. 2) Prior to this current quarter I believe that only SST was signed on as a CompactFlash licensee. The Lexar Media suit has likely been precedent setting and encouraged other assemblers to seek agreements sooner rather than later. This could include competing assemblers like Simple, Kingston, Delkin, Centennial, Viking, PNY, Centon,... Hitachi may be included in this group as others have posted that they are selling Hitachi branded CF in Japan (but not in the US). The fact that TDK has capitulated is important as Mitsubishi is contesting the CF patents in Japan. This may pressure Mitsubishi to settle. 3) It is doubtful that CF royalties contributed significantly to Q2 royalties based on SST's small share in the small form factor flash card market. "Pass Through" royalties --(I term that I use here only for descriptive purposes)-- from stand-alone flash sold to CF assemblers (see #2 above) likely contributed in a more indirect fashion. 4) Per card CF royalty revenues could be significant based on the projections presented by Hitachi that you uncovered. The Q3 and Q4 royalty income will be key indicators. 5) MMC is a wild card. I have already posted the information that the prior SanDisk CFO gave me over two years ago regarding SanDisk and Infineon (then Siemens) splitting the licensing fees. The "MMC interface" is almost certainly proprietary and may lead to further royalty revenues. Currently only Hitachi is able to make a competitive MMC product. Because MMC is in relatively early stages of consumer acceptance and it may be premature to comment further. _______________________________________________________________________________ Would you be willing to contact SNDK an inquire about what proprietary technologies included in MMC are likely to be licensed to Hitachi or if such licensing agreements already exist? Aus

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