Interview with SanDisk executive vice chairman, Nelson Chan
digitimes.com
Hans Wu, Taipei; Carrie Yu, DigiTimes.com [Thursday 31 March 2005]
SanDisk, the world’s top flash memory card maker, recently announced its decision to venture into the MP3 player market, where it expects to have the same share it has for the small-size memory market (28%). DigiTimes recently had the opportunity to sit down with Nelson Chan, executive vice president and general manager, Consumer and Handset Business, SanDisk. Chan detailed the company’s view of the global NAND flash market and demand for small-size memory cards and MP3 players.
Q: What is your outlook for the global flash market next quarter? Will the capacity that newcomers Micron Technology, Infineon Technologies, Hynix Semiconductor and Renesas Technology bring to the market outpace demand growth?
A: Demand for MP3 players has been stimulated by Apple’s iPod series and that will be the major sales-driving force for the flash industry. Sony has launched seven MP3 player models to compete against Apple. Personally, I am confident about Sony’s ability to drive sales due to its strong brand recognition. Hence, I am optimistic about the global NAND flash market.
As for NAND flash, although new participants will add NAND flash supply, demand will also increase with a similar speed. Currently, supply of NAND flash chips is a little bit behind demand. In the long run, supply is not likely to exceed demand but possibly there will be a supply/demand balance.
Although companies such as Micron, STMicroelectronics (ST) and Hynix have been aggressive in taking share of the NAND flash market, Samsung Electronics and Toshiba are retaining their leading positions and investing in new technologies. Toshiba has already adopted 90nm and even 70nm process technologies for its NAND flash chip production. To stay competitive, SanDisk is using multi-level cell (MLC) technology to lower production costs.
Q: Sources said that SanDisk is planning to build a third 12-inch wafer fab. Can you confirm that? If so, will SanDisk cooperate with Toshiba again?
A: The second wafer fab established by Toshiba and SanDisk will start operation in the second half of this year, with an initial monthly capacity of 10,000 wafers, which will later be increased to 37,500 by September 2007. As far as I know, we have no plans for a third 12-inch wafer fab.
Q: SanDisk’s MP3 player was the top selling flash model in the US market. Can you talk about SanDisk’s strategies in the MP3 player segment? How are you going to compete against other players?
A: Since our product launch last October, it took less than two months for it to become the top selling flash MP3 player, and we currently have 23% of the US market.
Our competitive edge lies in part to our ability to secure NAND flash supply. Also, we have a complete distribution channel, due to our experience selling small-size memory cards. Best Buy, for instance, has good relations with SanDisk; that’s why the supply of our MP3 players can barley meet demand upon hitting the market. Moreover, SanDisk can stay flexible with its R&D ability.
Q: Although SanDisk is a relatively late entrant into the market, other firms are also aggressively moving into the market, such as motherboard makers Gigabyte Technology and Micro-Star International (MSI), international system makers and even DRAM module makers. Which parties do you think stand a better chance of succeeding in the market?
A: Although international companies are likely to have more of an advantage due to their brand recognition, companies that can control their costs in the long-run will be able to remain competitive. International system makers still will have to buy chips from NAND flash companies.
On the other hand, DRAM module companies have yet to become familiar with the NAND flash market, as DRAM is mostly applied in the PC industry and NAND flash is more consumer electronics-oriented.
For SanDisk, on the other hand, we already have nearly 30% of the small-size memory card market and it is easy for us to venture into the MP3 player market. We have been in the consumer electronics market long enough for us to keep up with the market trends without much effort.
Q: What will be the mainstream standard for the small-size memory card market? SD (Secure Digital), MMC (MultiMediaCard) or CF (CompactFlash)?
A: The global small-size memory card market is marching toward integration. Although there are still various standards in the market, CF cards will surely have a smaller share while share for MMC cards will also not grow too significantly.
SD cards (including various kinds of SD cards), on the other hand, are expected to remain ahead of other standards. The segment will be more widely applied in mobile phones, DSCs (digital still cameras) and other portable devices.
Q: Demand for flash cards is now fairly strong and so is SanDisk’s brand recognition; we have heard that fake products are quite a problem in the market. What is your opinion on that? Also, although SanDisk has begun using the latest anti-counterfeiting stickers from Dupont, the stickers are only pasted onto the boxes and not on the cards themselves. How is SanDisk going to guarantee the authenticity of its cards?
A: SanDisk will launch a larger-scale campaign for licensing its products in China. We will equip the distributors with a better ability to tell the real from the fake products. We will also grant legal distributors labels and customers will be able to purchase qualified SanDisk products.
Nelson Chan, executive vice president and general manager, Consumer and Handset Business, SanDisk
Chan joined SanDisk in 1992 and has more than 20 years of high-technology marketing, sales and engineering experiences. At SanDisk he has held the positions of vice president of marketing, senior vice president of worldwide marketing and sales and senior vice president and general manager, Retail Business Unit. He has held marketing and engineering posts at Chips and Technologies, Signetics and Delco Electronics. Chan was one of the principal organizers of the CompactFlash Association (CFA) and the MultiMediaCard Association (MMCA) and has met frequently with manufacturers of DSCs, mobile phones, on-line music players and other mobile devices to discuss design aspects and storage issues relative to their future products. Chan is an officer and board member of the CFA. He holds a B.S. degree in Electrical and Computer Engineering and an MBA degree.
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