Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : WDC/Sandisk Corporation -- Ignore unavailable to you. Want to Upgrade?

To: Artslaw who wrote (8117)	11/14/1999 8:24:00 PM
From: gdichaz	Read Replies (1) \| Respond to of 60323

How about a start at the beginning? What is a multi-level cell and what function does it perform? Chaz

To: Artslaw who wrote (8117)	11/14/1999 8:51:00 PM
From: Ausdauer	Respond to of 60323

Steve, regarding D2, First, thanks for pointing out some of the difficulties which are inherent to multilevel technology. Again, having the technology is not equivalent to successfully employing technology. In fact, over a year ago I was convinced that D2 would never be useful for applications such as digital photography. So much has changed in the past 12 months alone that I am indeed surprised. Second, I do know that reliability is a central piece of SanDisk's long-term vision. In fact, you can imagine that reliability is paramount in the business of data storage. Just ask how much the recent class action lawsuit cost Toshiba after a defect in their floppy disc drives was uncovered. I sincerely doubt that Eli and Crew would consider shipping the 256Mbit/D2 product unless they were absolutely convinced of its ruggedness and reliability. Third, there is no doubt that the multiple bit per cell technology has presented challenges to the SanDisk design team. Write speed is one of these problems. Reliability may be a second issue. Maximizing production yields may be yet a third. We will not know for several quarters whether these hazards will trip up SanDisk. The Q3 of 1999 already exposed some vulnerability in this regard. In working around production issues they are gaining invaluable knowledge and experience which will be extremely useful in future production runs. Fourth, I still believe that SanDisk will continue to push their engineering to the limit in an effort to reduce production costs. They are striving to be the lowest cost, highest reliability producer of flash memory. My recollection from the c.c. is that the 256Mbit D2 technology will triple megabyte capacity per wafer compared to the binary 64 and 128MBit technology employed in 1999. Also, I believe the 256 D2 allows them to manufacture MMC without stacking chips. (Recall that the Secure Digital Memory Card is similar to MMC except for the number of pin connections and the height of the form factor.) Thus, if market demand remains so high as to outstrip global flash production it would seem relatively easy to recoup some or all of the initial start-up costs you mention. Finally, my vision of the SanDisk's future in the flash memory market includes growth in three main revenue groups: 1) The Intellectual Properties including basic memory design and CF card assembly. This includes the current royalty revenue streams in addition to potential gains from the CompactFlash card assembly patents currently recognized by another flash memory innovator, SSTI, and under intense litigation with Lexar. And if the Lexar suit is litigated successfully I anticipate further lawsuits to be announced concurrent with the court decision. 2) State-of-the-art chipset manufacturing (lowest cost, highest density) facilitated by SanDisk's engineering strength and an intended hybridization of SanDisk talent with the strength and capability of Toshiba. This is the fusion of (arguably) the two leaders in flash memory technology. 3) Retail presence and market share based on reliability, name brand and cost in addition to increasing OEM/governmental partnerships. The retail presence will also be greatly influenced by the potential cost savings noted in (2). Also, as engineering tolerances get narrower and narrower (and eventually the flash market migrates away from CF toward MMC and SD) I think it is reasonable to expect that there will be companies that fall by the wayside either because of the cost associated with buying chipsets from competitors or because they will simply be unable to master the engineering techniques required to manufacture the smaller form factor cards. Combining the fact that SanDisk's royalty stream gives them a distinct cost advantage over competitors (who are paying royalties), the fact that SanDisk/Toshiba JV will create a leading edge, high capacity production facility and the fact that SanDisk has already roughly charted the next several generations of flash design, it seems that they are positioned for outstanding growth over the next several years. Ausdauer SanDisk...See the Big Picture