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

To: EJhonsa who wrote (14844)	9/18/2000 10:16:03 AM
From: Ausdauer	Respond to of 60323

Eric, I guess the point that I'm trying to get at is that, given Sandisk and Hitachi are at the same level in terms of maximum card capacity (ignoring Dane-Elec's 128MB card), the MMC market might become commodotized, with Sandisk being just another player that's subject to the whims of supply and demand, market conditions, component shortages, etc... Is commoditization a bad thing? If SanDisk has no proprietary interests in MMC it could be a bad thing. If SanDisk has a proprietary interest it could be a fantastic thing. And as far as whims of supply and demand I think it comes down to the current estimates of both ends of this balance. Currently supply and demand are inverted and I suspect it may remain in this imbalance for at least another few years. Dane-Elec definitely uses Hitachi's chips, but given what I read at Hitachi's site (see semiconductor.hitachi.com, I think that they assemble the cards they sell on their own. Eric, maybe someone should call SanDisk IR and learn more about MMC and its assembly. My understanding, as I stated earlier, is that MMC is manufactured and packaged with the flash, controller, circuit board and contacts in a unit and is then cased in plastic. Because of the card dimensions this is a difficult proposition (as Eli has mentioned on at least 2 conference calls). If assembly were easier than that it would reason that then Lexar, Simple, PNY, Viking,... would all be making MMC. Aus

To: EJhonsa who wrote (14844)	9/18/2000 11:46:47 AM
From: The Prophet	Read Replies (1) \| Respond to of 60323

Harari has said that SNDK enjoys 30% market share on flash cards. He has also said that approx 10% of sales last quarter were royalties and that he anticipates this ratio to continue, and that all flash card makers must necessarily use SNDK patents. So, applying the math: x = total market for flash cards y = SNDK royalty rate on flash cards .3x = SNDK market share (sales) .7x = Non-SNDK share (sales) .03x = SNDK royalties (.3x * 10%) .7x * y = .03x y = approx 4.2% This is obviously highly inexact, but is suggests a royalty rate of approx 4%. By the way, your analogy to QCOM's handset division is not quite applicable yet as SNDK enjoys a lead in proprietary technology called multilevel cell technology which allows them to build flash at 30% margins.