The Hitachi deal, while it provides SNDK more capacity, suggests a narrowing of product differences between the major producers of removable flash memory cards, SanDisk, Hitachi, and Toshiba. As flash memory becomes more of a commodity and less of a proprietary product, margins will fall and profits will accrue to the low cost producer. Since SanDisk at the moment has no facilities which it owns and are currently in production, the company is somewhat at the mercy of others--Taiwan Semiconductor, Toshiba, Hitachi, UMC, etc. Once SanDisk production begins at its joint venture plant in Virginia, the situation could change for the better. What I see now, however, is some of the intellectual property of SanDisk being sacrificed to meet the huge current demand. Bottom line: There are good and not so good points to this deal.
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