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

To: Road Walker who wrote (28021)	4/29/2005 7:24:39 AM
From: Ausdauer	Read Replies (1) \| Respond to of 60323

John and others who have talked about commodity status... This is a valid concern. I wanted to say that there are some factors which argue against a pure commodity market for SanDisk. If we state that a "commodity" is a product which sells on the basis of price alone and that there is essentially no difference perceptible to the consumer which differentiates one product from another, then SanDisk does not manufacture a pure commodity. First, some cards, especially those based on the SD standard, have a proprietary structure and a proprietary controller. This is important as SD may be a dominant standard in the handset market. Also, at some point assembly of very small cards may be technically unfeasible for smaller card assemblers. In addition to this, they will need a license from the SD consortium. With respect to basic flash patents, currently FlashVision is the only flash manufacturer who incorporates MLC technology in the bulk of their production. As process technology begins to reach a lower limit it will be necessary to have an investment in MLC manufacture either with one's own patents or a license. It may even be possible that SNDK has developed special controller technology for MLC flash that is incorporated in an MLC license. This would act as a barrier to competitors as an MLC license increases the cost of competitors "commodities". It is possible that some competitors may not be able to match yields on their brand of flash. We have seen this in the form of a much slower introduction of high density flash into the market from competitors like Hynix and Micron, and even Hitachi. Other steps like the creation of U3 act to differentiate SanDisk's finished products from those of would-be competitors. The major unknowns here are what the ultimate demand for flash will be in 3 to 5 years and whether Samsung and other competitors of FlashVision can completely saturate and satisy the market. Aus