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Strategies & Market Trends : Gorilla and King Portfolio Candidates -- Ignore unavailable to you. Want to Upgrade?

To: EnricoPalazzo who wrote (38171)	1/20/2001 2:27:39 AM
From: EJhonsa	Read Replies (1) \| Respond to of 54805

Plus, as this Eric Jhonsa post notes, SSTI may be making a move into the high-density flash market, competing with the likes of SNDK for the storage of MP3s, digital photos, etc. That's not exactly what I was saying. While SST does compete in the removable flash card market (Sandisk's core business), they're a second-tier player in this field, and I don't expect that to change. Rather, what I was discussing was the company's plans to move into the high-end of the code storage flash market itself. As you probably know, SST's quickly on its way to attaining a preeminent position in the market for code storage chips with densities of 8 Mb (that's megabit, not megabyte) and lower. While there's definitely a large number of products that only require code storage flash chips at these density level (see Slide 11 at www2.vcall.com, in terms of dollar amounts, this market's still much smaller than the code storage flash market for chips with densities of 16-128 Mb. For PDAs, advanced DVD players, next-generation set-top boxes, $3,000 laser printers, high-end routers, 512-port optical switches, and the lion's share of all modern-day wireless handsets, code storage flash chips with densities of 8 Mb or less just don't cut it. Furthermore, as routers and switches get more powerful, as set-top boxes start incorporating more and more interactive features, and as handsets begin to run more advanced applications, the code storage flash requirements of these devices will inevitably grow at a nosebleed trajectory. The leaders in the high density code storage flash market include Intel, AMD, Samsung, and a slew of Japanese manufacturers. As SST begins to scale its product line so as to enter this market segment, all the while bringing with it the cost/size advantages provided by its self-aligned, split-gate SuperFlash architecture, it'll be interesting to see how the company fares against such entrenched giants. In a sense, all of this makes me think that the company, in terms of its current market position, may bear a strong resemblance to Network Appliance circa 1997, albeit with a lower valuation. Eric PS - This isn't to say that SST doesn't have the potential to continue to experience significant growth within its core < 8 Mb code storage flash market. According to a First Union report I read, while SST's believed to have had 43% of the market for flash chips operating at densities of 2 Mb and under during the first half of 2000, it only had 6.3% of the market for 2-8 Mb flash chips. Even if that number's above 10% by now, there's still plenty of room for major market share gains within this segment. Also, as more and more devices begin to have low-cost microprocessors embedded into them (e.g. coffeemakers, refirgerators, kids' toys), as GPS and Bluetooth chipset sales begin to skyrocket (each GPS and Bluetooth chip requires a small amount of flash...SST's size advantage should help out considerably here), and as greater numbers of processing chipsets begin to have flash directly embedded onto their circuitry, the revenue growth found within the < 8 Mb flash chip market at large should also be substantial.

To: EnricoPalazzo who wrote (38171)	1/20/2001 1:27:20 PM
From: hueyone	Read Replies (2) \| Respond to of 54805

Ardethan, SST is a great pick and I will second your nomination for the W&W. I was going to wait until June to make this nomination so I could pound the thread over the head with a few more quarters of incredible performance, but I guess I will make a few limited comments now. I figured some more quarterly shellacking was going to be necessary to overcome the all or none sentiment for Sandisk currently permeating the Round Table <ggg>. We are going to try to begin sorting out market share issues and growth issues on the new SI Flash Players thread following the rest of the flash companies' CCs next week. That information will certainly be helpful. There are many players in the flash business and sorting out market share issues is quite a task---especially since many of the players are foreign companies. But here is my take on some market share items. SST's unit shipments of flash are likely to increase from 100 million in 1999 to approximately 300 million for year 2000 just completed. As of October, I believe SST had approximately a 15% share of the world market for unit shipments. During this year, SST says they expect to become number one in the world for unit shipments. (Note: I got this stat out of the investor conference listed below and believe the stat refers to world unit shipments rather than US unit shipments.) I believe program code storage constitutes approximately 75% to 80% of the flash market and SST is placed squarely in this space. Of course, most of SST's product units are very low cost items compared to products from companies like SNDK, who target the high density data storage market. In terms of quarterly revenue run rate, I expect SST to secure the third place position in the United States for flash, behind Intel and AMD, following the release of Q4 results next week. For Q3 flash revenues, ATML, SST, and SNDK came in at 143 mill, 163.8 mill and 170.8 mill respectively. Intel and AMD are number one and two in the United States for flash revenues, but I don't have their respective, revenue breakouts yet. SST's strategic objectives are to: 1. Dominate code storage 2. Be the #1 supplier of embedded flash 3. Penetrate the Mass Storage Flash Market 4. Become the #1 Wireless Memory Solution Provider Keying SST's hyper- growth is SST's patented Superflash technology. The advantages to Superflash are --lower cost tructure --inherent small sector --superior reliability --less peripheral circuitry --low power consumption/low voltage --scalable as die sizes shrink --fast, fixed erase time --logic compatibility ---important for embedded flash applications. SST is moving along quite well with regard to their first two objectives and is only beginning with objective number three and four. With regard to dominating code storage, I believe SST now has a 70% market share for 2 megabit and below. With regard to embedded flash technology, TSMC (Taiwan Semiconductor Company), will be pushing SST's embedded flash hard this year under the TSMC trademark-- Emb-FLASH. TSMC is the largest foundry in the world. As of November, TSMC had over 50 sub licenses for SST's embedded flash including big names such as Sony. With regard to mass data storage, SST is only just now entering this market with their ATA controller. Early indications are that sales of this product are excellent, but we should get more color on this area at next week's CC. With regard to wireless penetration, SST has been held back by lack of access to smaller process geometries which will allow them to scale Superflash to the higher, low densities necessary for internet-enabled cell phones. This will change this year as TSMC, UMC, Samsung and Vanguard will all be allocating SST smaller process geometries. I believe most cell phones are now being assembled in Taiwan. SST, with its unbeatable Taiwan connections, should penetrate wireless flash in a big way this year. Apollo, you might be interested to know, that as of October, SST code storage was already in over 40% of all digital cameras. I remember the digital camera tornado was one of the items that propelled Sandisk to the W&W. I have put the link below up on this board before, but I don't think many gamers have listened to it yet. It takes some speech recognition training to get comfortable with Bing Yeh's accent, <ggg> but once you do, you will love the guy. I suggest anyone considering investing in SST listen to this presentation as well as double check my data given above. vcall.com SST is truly a diamond in the rough waiting to be plucked. It doesn't have the triple digit PEs that often flag early stage gorilla games, but the market has simply got the CAP and GAP wrong on this security. If you are willing to get down and dirty and truly dig through the nuts and bolts of this company, I think you will conclude SST is an undiscovered gem. During the last month I have made my SST my largest tech holding. Where else can you buy tech hyper-growth at a reasonable price like this? Best, Huey