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Technology Stocks : Flash Memory - Players & Prospects
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To: hueyone who wrote (27)1/19/2001 9:14:51 AM
From: Ausdauer   of 50
 
There is no evidence that Sandisk has more "control"
over its manufacturing than SSTI does.
How do you distinguish between the SST/Vanguard agreement
(or other SST foundry agreements)
and the Toshiba/Sandisk Flash Vision, LLC agreement?

I think SNDK and SSTI have both been successful with their
approach to manufacturing thus far. The major difference
between the companies to date has been that SNDK has licensed
their flash technology in return for others' technology plus
a net positive royalty schedule. Until the Fall of 2000, to
my knowledge, SNDK has never licensed technology in return for
production considerations. The one exception has been Hitachi's
renewal of binary flash licenses with SNDK and additional new
cross-licensing of MLC patents. SanDisk made arrangements in this
case for the purchase of leading-edge flash from Hitachi which
will be qualified before it can be worked into SanDisk's
product line. (The same qualification will be needed for the
new NAND and NAND-MLC products.)

SanDisk's position has been licensure in return for a licensing fee
plus a technology exchange. Presumably in order to control quality
of the flash product (and to simplify assembly), SNDK has relied on a
fabless arrangement with UMC for their ultra-high density NOR flash.
I am not aware of any other external sources of SNDK's flash.

I expect royalty revenues to reach $30 million for Q4 of 2000.

With upcoming purchasing agreements with Hitachi and product
availability from the FlashVision JV, SanDisk will be able to produce
more flash cards and boost product revenues. The licensing strategy,
while relatively immune to pricing pressures, limits their current
production capacity and therefore limits potential gains from
manufacturing.

SSTI has used taken the opposite approach, first emphasizing
manufacturing during a period of stable pricing, then going after
licenses. The licensing portion of their business model will improve
in 2001 according to the CFO, but as a portion of total revenues
will remain relatively small.

All IMHO.

Aus

Both models have been used successfully. It is my hope that
as flash production as a whole ramps up in the next 12 to 36 months,
SanDisk's licensing agreements will become increasingly more valuable.
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