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Record revenue growth for client SSDs stimulated SanDisk’s growth

Anupama Shukla

An in-depth review of SanDisk's 2Q14 earnings and plans (Part 3 of 12)

(Continued from Part 2)

SanDisk’s growth

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.

Strategic acquisitions

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.

Continue to Part 4

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