Of course there are risks associated with being a manufacturer...labor costs, energy costs, faulty equipment...but a manufacturer also has the ability to be a low cost producer, has a guarantee to certain amount of product, etc... Certainly Intel has been able to drive prices down in some of its areas to gain market share.
SSTI will be at the whim of their contract suppliers and their contracts for allocation of product. This has been a problem while supply has been tight. With more supply coming in production, then being fabless may not be a bad business model, but it certainly was restricting when demand greatly exceeded supply for flash. Now, going forward, as SNDK enters the competition for embedded flash memory, time will tell how well a fabless company competes with a company which has control over its manufacturing. When comparable, substitute products exists, people often go with the cheaper one.
Disclosure: I do not have a stake in SSTI, although I have been following it for 3 years. Kicking myself for not buying recently at 10. Of course, I suggested to holders to sell when it was at 100 (pre-split) because I sensed it had gotten too far ahead. I have owned FLSH, bought at 10 and sold at 72 (pre-split) for the same reason I suggested selling SSTI. |
