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Technology Stocks : WDC/Sandisk Corporation
WDC 167.47-0.8%11:42 AM EST
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To: Steve 667 who wrote (3394)6/28/1998 11:34:00 PM
From: Ausdauer  Read Replies (1) of 60323
 
re: private labels and resale

Steve,

For example, Casio and Kodak purchase finished CF cards from SanDisk and put on their own label. They pay SNDK for each unit.

Package assemblers pay only for the each individual component of the chip and have their own assembly/production line. The flash chip in the final product is manufactured by a chip maker and their are some royalties paid to that company. That could be a Japanese firm or anyone else capable of making it to CFA standards. There are hidden royalty costs in that component. Because Hitachi, Samsung, etc... have cross licensing agreements with SNDK some of the royalty cost presumably trickles down to SNDK. The problem area is the final CF card. The sum total of the basic components is also an invention. That is the core of the Lexar suit.

This is the best that I can clarify a situation which I have learned about through information in the annual report and other tidbits offered by others on the thread.

Please correct me if my information is faulty or my reasoning clouded.

I understand from Jerome that SNDK receives some royalty payments for components of SmartMedia although the final product, the SmartMedia card, is the property of a competitor.
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