To: Ausdauer who wrote (13478 ) 8/1/2000 10:14:22 PM From: hueyone Read Replies (1) | Respond to of 60323 Hello Aus, Thanks for your reply again. SSTI barters its IP for consideration of flash production. In the long run I see SSTI's biggest problem is the fact they have licensed their technology in return for production capacity. This seems a bit focused on near-term success, rather than long-term growth. Message 13873206 I have seen the suggestion from you several times that SSTI gives their IP away for flash production and that SST is focused on short term success. I respectfully disagree. From a 3/30/00 CSFB report (available on PDF at Schwab) SST uses a model it calls a virtual integrated device manufacturer (IDM) model. Unlike traditional fabless semiconductor companies, SST does not use a foundry's standard process. Instead, SST's proprietary process is installed at its foundry partners' fabs and is only used to manufacture devices for SST and its authorized licensees. We believe this is a distinct advantage for the company as it benefits from not having to invest in building an expensive wafer fabrication facility while maintaining competitive advantages through the use of proprietary manufacturing technologies. Further, the company maintains control of its most valuable intellectual property -its SuperFlash technology. Eric Ziegler's cool SNDK post #12443 also notes that SST's patents cover the production process. Message 13984637 SST is focused on long term growth and profitability. Their strategy is to focus on: 1. Dominating low density flash, 2. Dominating all code storage and then 3. Dominating data storage. Admittedly, this would be a gargantuan task to pull off, but in the meantime SST is doing quite well with regard to goal one and is making significant progress on goal number two and more limited progress on goal three. From the 7/27/00 CSFB report (available at Schwab on PDF): Both NOR and NAND Flash continue to experience phenomenal growth as virtually every supplier in the world of both flavors was unable to meet demand in the June quarter. Lately, some have argued that the NOR space is being cannibalized by the NAND. We would point out, however, that most applications that require NAND technology, also require NOR. Indeed, as cellular handsets become increasingly functional, the standard memory configurations will likely move towards 16-32Mbs of NOR Flash and a 32-64MB NAND Flash storage card. Aus, I can't profess to tell you exactly how SST's business model works with respect to recognition and classification of revenues. Admittedly SST's reported revenues in the royalty category is low. However, I can tell you that the bottom line for SST, EPS, is growing at a faster rate than any other stock I own, including SNDK. In the quarter just reported, EPS increased more than 109% on a sequential quarterly basis. Thanks for providing the reference to the July 25 press release regarding SST's investment in Apacer. I only had the original July 17 press release. You seem to be trying to speculate about the nature of SST's investment in Apacer and then contrasting it to SNDK's investment in Tower and UMC. I don't know enough about the circumstances surrounding these equity investments to intelligently comment about why or why not the investments were made. I also have no reason to believe that SNDK generally cuts better deals than SST to get items manufactured. The fact that both SST's gross profit margin and net profit margin were higher than SNDK's equivalent margins in the most recent quarter would seem to indicate otherwise. SST has great relationships with many businesses in Taiwan. As of March 30, SST's foundry partnerships in Taiwan included TSMC, TASMC, Sanyo, Samsung, Seiko Epson, and UMC. The two principals of the company, Dr. Bing Yeh and Dr.Yaw Wen Hu, have degrees from both Stanford University and National Taiwan University ---not too shabby a background for cutting deals between Sunnyvale and Taiwan. Aus, let's hope both SNDK and SSTI continue to grow at tornado speed and that the market in due time rewards this exceptional growth. Best, Huey