Plus, as this Eric Jhonsa post notes, SSTI may be making a move into the high-density flash market, competing with the likes of SNDK for the storage of MP3s, digital photos, etc.
That's not exactly what I was saying. While SST does compete in the removable flash card market (Sandisk's core business), they're a second-tier player in this field, and I don't expect that to change. Rather, what I was discussing was the company's plans to move into the high-end of the code storage flash market itself.
As you probably know, SST's quickly on its way to attaining a preeminent position in the market for code storage chips with densities of 8 Mb (that's megabit, not megabyte) and lower. While there's definitely a large number of products that only require code storage flash chips at these density level (see Slide 11 at www2.vcall.com, in terms of dollar amounts, this market's still much smaller than the code storage flash market for chips with densities of 16-128 Mb. For PDAs, advanced DVD players, next-generation set-top boxes, $3,000 laser printers, high-end routers, 512-port optical switches, and the lion's share of all modern-day wireless handsets, code storage flash chips with densities of 8 Mb or less just don't cut it. Furthermore, as routers and switches get more powerful, as set-top boxes start incorporating more and more interactive features, and as handsets begin to run more advanced applications, the code storage flash requirements of these devices will inevitably grow at a nosebleed trajectory.
The leaders in the high density code storage flash market include Intel, AMD, Samsung, and a slew of Japanese manufacturers. As SST begins to scale its product line so as to enter this market segment, all the while bringing with it the cost/size advantages provided by its self-aligned, split-gate SuperFlash architecture, it'll be interesting to see how the company fares against such entrenched giants.
In a sense, all of this makes me think that the company, in terms of its current market position, may bear a strong resemblance to Network Appliance circa 1997, albeit with a lower valuation.
Eric
PS - This isn't to say that SST doesn't have the potential to continue to experience significant growth within its core < 8 Mb code storage flash market. According to a First Union report I read, while SST's believed to have had 43% of the market for flash chips operating at densities of 2 Mb and under during the first half of 2000, it only had 6.3% of the market for 2-8 Mb flash chips. Even if that number's above 10% by now, there's still plenty of room for major market share gains within this segment. Also, as more and more devices begin to have low-cost microprocessors embedded into them (e.g. coffeemakers, refirgerators, kids' toys), as GPS and Bluetooth chipset sales begin to skyrocket (each GPS and Bluetooth chip requires a small amount of flash...SST's size advantage should help out considerably here), and as greater numbers of processing chipsets begin to have flash directly embedded onto their circuitry, the revenue growth found within the < 8 Mb flash chip market at large should also be substantial. |
