An in-depth review of SanDisk's 2Q14 earnings and plans (Part 3 of 12)
SanDisk (SNDK) is keen to increase the contribution of client SSDs to its total revenues as it offers a stable pricing environment and high margins. The company’s efforts are showing that client SSD, along with enterprise SSD, has led SSD contribution to increase from 9% in 2012 to 19% in 2013.
Intel (INTC), Micron Technologies (MU), and Samsung are some of the leading client SSD manufacturers. Flexstar expects the client SSD market to grow at a five-year compound annual growth rate or CAGR of 39% from 2011 to 2017. Client SSDs have a lighter workload and are usually used by PC OEMs, ultra books, laptops, tablets, and HDD replacement.
Client SSD are designed to be used for the office hours—eight hours a day, five days a week—and are optimized for read speed, implying a quicker download.
An increase in SanDisk’s Client SSDs revenue growth is likely to benefit ETFs like the PHLX SOX Semiconductor Sector Index Fund (SOXX) and the SPDR MS Technology (MTK) .
The chart above shows the increase in client SSD shipments expected in the future.
In 2012, SanDisk acquired FlashSoft and Schooner Information Technology, a developer of SSD-optimized software. These acquisitions were in line with the company’s strategy to acquire solid traction in the client SSD market and enhanced its SSD-software competence.
New products – SanDisk Ultra II and SanDisk Extreme PRO
In August 2014, SanDisk launched the SanDisk Ultra II, a triple-level cell (or TLC) NAND flash-based client SSD with 1 terabyte of capacity. The company claims it’s offered at the lowest price point to date in the industry. The price is 44 cents per gigabyte of capacity for a flash drive.
Triple-level cell flash means that three bits of data are stored per memory cell, versus the two bits with multi-level cell (or MLC) NAND flash. As TLC flash is equipped to store data more densely than MLC, it can be offered at a lower price point.
In June 2014, SanDisk launched SanDisk Extreme PRO, a client SSD that offers up to 1 terabyte of capacity and a ten-year warranty. The company is in the process of shipping X3-based client SSDs in retail and distribution channels. Intel expects a slight revival in the PC market and an increasing attach rate of SSDs to notebook computers—particularly in corporate PC platforms. This augurs well for the company’s client SSD prospects.
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