When SanDisk (Nasdaq: SNDK) issued its earnings warning last week, a lot of semiconductor investors panicked. Coming just weeks after Micron's (Nasdaq: MU) similarly disappointing Q2 earnings news, SanDisk's warning seemed to confirm that the market for solid-state memory is in free fall, and investors must flee quickly, or else lose all their money. Which couldn't be further from the truth.
Last week, around about the time SanDisk was scaring the bejeezus out of semiconductor investors, a little-noted report appeared in the virtual pages of Taiwanese semiconductor specialist Digitimes. The headline -- "New iPad did not impact notebook shipments in March" -- indicated a story about how Apple (Nasdaq: AAPL) hasn't beaten Hewlett-Packard (NYSE: HPQ) and Dell (Nasdaq: DELL) just yet. But the story's contents also hold promise for the companies that make components for all these companies.
According to Digitimes, Apple's strong iPad sales last month did not have the expected result of diverting consumer dollars away from laptop purchases. Instead, laptop makers such as Acer are said to have enjoyed "excellent" sales. And with Intel's support for ultrathin notebooks -- which, like the iPad, rely on SSD rather than hard discs for their memory -- finally kicking into high gear, it seems likely that laptop sales will only surge higher now that the initial wave of new iPad purchases has passed.
Of course, the best news of all for investors in the SSD makers is that when you get right down to it, it doesn't really matter whether Apple or Hewlett-Dell-Acer-Lenovo ultimately dominates the market for laptops/tablets/smartphones. It doesn't even matter whether consumers prefer iPads over other tablets, or tablets over laptops. All of these products are selling just fine. Yes, Intel-allied PC makers are making a big push into ultrabooks, but at the same time, the company that invented the ultrathin notebook concept, Apple, plans to ship 200,000 15-inch MacBook Pros a month, beginning mid-April, then introduce a 13-inch MacBook in June that it will manufacture at a monthly rate perhaps twice as fast.
As key suppliers for the kinds of devices that everyone seems to want, the future looks bright for all the major SSD companies: SanDisk, Micron, Samsung, STEC -- you name it.
Fool contributor Rich Smith owns shares of SanDisk, but he holds no other position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool owns shares of Apple. Motley Fool newsletter services have recommended buying shares of Apple. Motley Fool newsletter services have recommended creating a bull call spread position in Apple and writing covered calls on Dell. The Motley Fool has a disclosure policy.
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