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

To: Jason Rooks who wrote (12401)	6/29/2000 11:05:40 PM
From: Ausdauer	Read Replies (2) \| Respond to of 60323

Jason, You are absolutely correct. I wanted to echo some of the salient points of your last post. [continue reading here at your own risk] Eli clearly appears to be concerned more about the promulgation of flash memory standards and solutions (and impediments thereof) rather than a problem of oversupply. We are in a situation currently typified by a drastic undersupply of flash memory. As a result, as you pointed out, OEM's may be hesitant to design-in flash solutions if flash memory supply remains constrained. Conversely, as flash availability eases the design-in rates will increase concomitantly. Flash prices and ASP's will fall as a result of economies of scale from efficient mass production (a side benefit of Moore's Law) in concert with escalating consumer demand and demands for improved pricing. Margin "erosion" (I use quotations because Eli hinted that to some degree cost savings from economies of scale would be voluntarily passed on to the consumer as lower retail pricing.) may be a planned and desirable end-point. To those who have drawn comparisons to the shortcomings of the DRAM market in the late 1990's due to gluttony I would reply that I believe their fears are premature for reasons I just explained. Secondly, I am reasonably hopeful that the peak demand for flash memory in the next few years will rival or surpass the maximal demand for DRAM (on a terabyte basis) which resulted from the mass adoption of PC's during the 80's and 90's. To claim a flash oversupply is imminent or inevitable without first addressing the demand side of the equation is careless. Similarly, as the Post PC Era fuels demand for many varieties of semiconductors we may see shortages and undersupply in multiple segments of the semi market simultaneously. Since increasing fabrication capacity is a costly and risky endeavor there will be some inherent disincentives to an overbuild, thus perpetuating a situation of relative undersupply in select high demand segments. Further, I have not heard anyone who has used the 1990's DRAM argument present an updated status of the DRAM market today. To fail to include this type of analysis while making this doomsday argument amounts to nothing but rampant supposition. I am a believer in the vastness of the target megamarkets for flash memory. I am a believer in the notion of "market elasticity" as Eli has proposed. I am a believer that a build out of manufacturing capacity is a "necessary evil". I am a believer that worse case scenarios prognosticating an impending flash glut are premature, speculative, superficial and unsubstantiated. Ausdauer (In a particularly opinionated frame of mind.)

To: Jason Rooks who wrote (12401)	7/2/2000 12:50:34 PM
From: Art Bechhoefer	Respond to of 60323

Jason, I think your interpretation of Eli's concerns is correct. If the shortage of flash memory is too great, manufacturers will look for substitutes, and that will result in several different products on the market. It would certainly be better if manufacturers are assured of adequate supplies so that they need not look for alternative types of storage. If SanDisk wants to keep its OEM customers happy, it will probably be not too concerned about high prices for flash memory purchased at retail, thereby limiting retail demand while it tries to meet its OEM orders as promptly as possible. Better to be in this situation than not knowing how to get rid of excess inventory! Art