To: Alastair McIntosh who wrote (15400 ) 10/8/2000 12:19:33 PM From: Ausdauer Read Replies (3) | Respond to of 60323 Alistair, Thanks for the flash information. The article you linked stated...Price-wise, the market has leveled off somewhat from last week for 32-Mbyte, 5-V TSOPs . Less expensive product has been bought up, leaving pricing between $36 and $55. ...and continued...Paul Zecher, NECX commodity manager, reports on erratic movement in the flash market. "This week, open market prices have ranged from $28-$55," he says. While the end of the quarter is an excuse for such turbulence in the market, Zecher believes it’s a correction. There is more flash x/s available at the end of this quarter rather as opposed to previous ones, and he says that OEMs are looking to move their flash."Cell phone manufacturers such as Ericsson and Motorola have overestimated how many cell phones are going to be produced this year. Therefore, they overestimated how much flash they need," he reports. He also predicts that Intel is going to release a large quantity of flash from the beginning of next week into the beginning of October. ____________________________________________________________________________________ I think it is important to take such warnings as a potential sign of falling demand within the flash industry, but have some trouble generalizing this report or interpreting this erratic pricing as a systemic problem. First, I don't believe that SanDisk is selling 5V TSOP's. (Are they speaking of 32Mbit or 32 Mbyte TSOP's?) In fact, I don't believe SanDisk sells any TSOP's currently. Likewise, the cell phone market (embedded flash products) does not pertain to SanDisk. It is important to take into consideration sub-segmentation within the flash industry when reading these progress notes. For instance, when this type of information became available a few weeks ago some flash companies, notably SSTI, tried to distance itself from the cell phone market entirely. Second, SanDisk is not selling "naked" flash on the open market, rather it is consuming its own production for use in its removable flash card products. Thus, SanDisk's profitablility may bear little relation to open market pricing. Finally, I don't think that flash market segmentation is well understood by the analysts. At the end of last quarter I believe that SanDisk stated that demand was high, customers were on allocation (and only higher volume customers were having orders filled going forward), the pricing environment was "benign" and visibility was good. Certainly this can change in the course of 3 months, however even the smaller "trickle down" flash card producers such as Centennial are demonstrating success and are even cautioning that supply of high-density flash is tight. I suspect their relationship with Intel has allowed them special considerations for supplying flash for their CompactFlash (which tops out at 48 megabytes) and PC card products for industrial applications. I think the upcoming quarterly report from SanDisk will give us a better barometric reading of demand going forward. Best, Aus