Hi Steve,
Real fun begins when they have production version of 4Gbit MLC chip ready for the stores (risk production begins this Q and production version next Q)! As per Eli Samsung won't have a competing product for 12-18 months (that's what he said if I remem correctly). Hope to see some nice bargains for the high-end products this Christmas!
Since Samsung doesn't have MLC chips the only way for them to compete with this 4Gbit MLC chip from Sandisk/Toshiba is to move to 70nm technology to manufacture their version of 4Gbit chip with same die size! But hopefully Sandisk/Toshiba will have 8Gbit NAND MLC chip ready by that time for 70nm technology! Way to go Eli, SNDK is certainly going to be a moving target for the next few years (if you have seen the roadmap Toshiba outlined a while ago).
Also, you may have noticed how pissed-off Eric Stang was on the last earnings conf calls and he is still pissed-off with his comments (ref: Oligopoly) from this morning. Lexar will have to absorb the higher cost of inventory in the pipeline because of the pre-emptive strike from Sandisk.
Eli is playing his cards very nicely (ref my earlier post when they announced the price cuts). Also, in the meantime Samsung can't drop the prices too much to prevent Sandisk from eating away some market share because it will hurt them more than Sandisk/Toshiba as they have 60% Flash chip mkt vs. 30% for Sandisk/Toshiba!! Going into 3Q, even if Samsung tries to stop Sandisk it will be hard because with 4Gbit MLC chip, Sandisk/Toshiba will be lowest cost producer of these chips which probably are more expensive than the price of Gold:-)
In any case, everything is not as rosy as it sounds (else the stock would be flying) because the big unknown in the whole thing is consumer demand, which is very hard to predict and to some extent the new supply. Everyone knows the trend is up, but the timing of the growth can come in spurts and as for the other minor unknown- how much excess cap will come online from the new players. The reason, I say minor, because for now it will take them a while to have competing high-end chips (learning curve involved) plus the IP issues will have to be tackled. Who knows some of them may even dropout after they see the roadmap from Toshiba and the manufacturing prowess of Samsung!
Regards,
Pam |
