Chase H&Q * Silicon Storage Technology, Inc. (SSTI)
$23.69 - $2.3B mkt cap: Initiating Coverage of SSTI With a Strong Buy & Our $50 Price Target
· The company, in our opinion, comes closest to being the only "pure play" public semiconductor supplier in the fast and
growing flash market segment.
· In our opinion, the company's SuperFlash thick-oxide, split gate flash design technology is the clear winner among
today's available flash technologies (all of them thin oxide based). SST's proprietary technology makes for a more
reliable, durable, and less expensive flash memory solution.
· SST currently holds a dominant position in the low density NOR segment of the flash market (256Kb-4Mbit) and is
starting to offer new high performance products focused on the high density NAND market.
· SST should benefit from its diverse exposure to many high-growth end markets such as networking, digital consumer,
wireless communications, and Internet computing.
· Based on the detailed flash demand vs supply analysis that we did in our note on August 16th of this year, we continue
to feel confident in our long term thesis that the current dislocation will continue in the flash marketplace through 2001and
quite possibly well beyond. To make a logical case for the dislocation to continue beyond CY01, we obviously need to
see the capital spending plans of the major flash IDMs for 2001 which we will start to get by early next year.
· We continue to be extremely bullish about the current dynamics in the flash marketplace as well as the company's
exceedingly critical role as a major player in it, and are thus initiating coverage with a STRONG BUY rating and our
conservative price target of $50, which is 20x our FY:01 estimate of 2.55.
From Chase |
