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

To: ralessipvh who wrote (14833)	9/18/2000 12:19:35 AM
From: Ausdauer	Respond to of 60323

"I'm having trouble recalling the exact relationship Hitachi has w/ SanDisk." Well, maybe because there has never been a clarification of the relationship!!! Be forewarned, that which follows is conjecture! In my investment thesis I have split royalty and licensing revenues into two separate streams. The first stream is related to the agreements penned in 1997 with Samsung, Toshiba and Hitachi. These relate to fundamental flash memory patents, I believe, as revenues generated from these agreements antedated CompactFlash and MMC sales. Message 13792202 It is important to recall that the big three -- Samsung, Hitachi and Toshiba -- have been, in general, content with selling flash as a component rather than as a complete card product as it relates to CompactFlash. Thus, you will probably never see CompactFlash sold under any of these brand labels in the USA. It is my understanding that this is not the case in Japan. Message 13792202 Why are the big three content to sell flash as a component part? Remeber there are numerous CF assemblers like Lexar and Simple that consume the output from these flash giants. I have recently disclosed Lexar's significant purchases from Toshiba (and hinted that this is why Lexar has not gone after Toshiba with respect to the SmartMedia patent infringement). Message 14355016 Because CompactFlash and MultiMediaCard are open standards I was unsure whether SanDisk would have any proprietary claims against the big three (Samsung, Hitachi and Toshiba), but for reasons I have just explained (the big three don't seem to be making CompactFlash in any significant volume) this issue has not been tested. SanDisk's first CF suit is against Lexar Media, a package assembler. It would seem that fundamental flash memory patents are not at issue since the CF assemblers purchase flash from the big three (with passive "pass through" royalties to SanDisk), rather flash memory card assembly/controller/'987 patents take the center stage. Thus, CF could represent a "double-dip" for SanDisk with the big three paying royalties on the flash portion and card assemblers (Lexar, Simple, Viking, PNY) paying royalties on the assembly/controller/'987 patents. Thus, CompactFlash becomes both open and proprietary. Because MMC uses a controller/disk drive emulation/flash memory combo like CF it would appear that competing manufacturers (primarily Hitachi) may be required to pay additional royalties specifically for MMC assembly. Siemens would be the only possible exception to this rule as we have discussed (see link below). Thus, Mr. Chan's statements may still be correct, as "open" and "proprietary" need not be mutually exclusive. Message 14400123 Ausdauer