While the market struggles to move out of the red for the year, SanDisk
SanDisk addressed some of these concerns at the recent ThinkEquity Seminconductor Conference. At the conference, SanDisk highlighted how it's benefiting from very favorable conditions. First, memory demand of all types is soaring. Second, the company is advantageously positioned to supply that memory in the booming mobile device segment. How big is the mobile opportunity? From 2005 to 2009, the mobile end market increased from 25% of SanDisk's sales all the way up to 49%.
Beyond the mobile boom, the company also has another key opportunity. It should contribute from the adoption of solid-state drives (SSDs). However, the SSD market is extremely competitive. Intel
Assessing each competitor's strengths is key. STEC is focusing on higher-end enterprise offerings, while Intel has predominately targeted lower-end offerings like notebooks. Seagate and Western Digital still mostly sell traditional magnetic hard drives. In the end, the fiercest competition will probably come from larger diversified competitors like Samsung and Micron
While flash memory is effectively a commodity product, continuing shortages should keep fueling SanDisk's growth in the coming quarters. However, the company has other advantages over competitors as well. In 2009, SanDisk collected 12% of its revenue on royalty payments from competitors licensing its technology. While these payments should decrease in coming years, the royalties give SanDisk a cushion of high margin revenue even if memory prices dip back in coming years.
Still, the good times can't stay this good forever. SanDisk actually saw the price of its memory sequentially rise in a recent quarter, a thought normally unheard of in a computer industry where prices are constantly on an aggressive downward march. However, SanDisk finds itself at the forefront of two very attractive growth areas. As mobile and SSD growth continues forging ahead, the company is the best pure-play on either trend.
To see SanDisk's complete presentation at the ThinkEquity conference, view the slideshow below.
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Eric Bleeker owns shares of no companies listed above. Intel is a Motley Fool Inside Value recommendation. The Fool owns shares of and has written puts on Intel. The Fool owns shares of Intel. Try any of our Foolish newsletters today, free for 30 days. The Motley Fool has a disclosure policy.