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

To: Sam who wrote (36066)	4/16/2007 12:33:10 PM
From: Pam	Respond to of 60323

If this is true, and there is a shortage in 2H, then those 60% declines we have been reading about for 07 will not transpire. Could be '05 all over again. Of course, that is a big "if". If the iPhone fails to excite (or if high capacity phones in general don't sell well), if PMPs don't take off, if Vista and PCs don't soak up DRAM supply and, one hopes, keeps pricing at least relatively firm to prevent switching to NAND by other vendors, then all bets are off. There is no question that Samsung's margins in nand will improve significantly in 2Q because their costs have been going down and Spot/Contract prices have perked-up and in the case of DRAM, costs are coming down but ASPs for 2Q will be a lot worse compared to cost-reduction achievements in 2Q. I am still not clear on the shortage in 2H07. Unless there are some applications in the works that we are not aware of, one can't be too sure. But a few things have happened to reduce the overall nand bit Supplies for the year. If Samsung is saying they will have 110% bit growth compared to 120% (thanks to 50nm transition difficulties) they had guided earlier, that means an industry capacity reduction of roughly 5% (based on a 50% market share just to make calculations a bit easier). Hynix has also reduced their nand bit o/p relative to what was expected. Now, on the Demand side, it is possible to see a robust growth in mobile but we will also need something else like flash based vPods or PMPs to do some heavy lifting to get to a shortage. I think, 1600-1700PB in 2007 is a lot of nand flash and we had about 675PB last year, and most of the time we were in overcapacity for whole of 2006! You have a lot of IFs in your last para, and rightly so. But there is no question in my mind that we will see about 60% ASP decline for the whole year and the reason being the free fall in ASPs in 1Q which sort of will affect the whole year's ASPs! This doesn't mean Sandisk cannot do well though because their bit growth is going to far exceed the industry's bit-growth albeit at lower GPMs.