Summary
1. Sandisk purchased M-Systems approximately 4 years ago, and has finally been able to introduce to the market the X-4 ( 4 bit per cell technology) that M-Systems had announced but never had brought into production.
2. The 4 bit per cell technology not only requires a new NAND chip technology, but a new controller technology that enable the NAND flash to be functional in a system.
Analysis
1. Being able to build 4 bit per cell technology in 43 NM technology potentially gives SanDisk a 20-30% cost advantage.over competitors who do not have 4 bit per cell technology to market yet. This includes key competitors such as Samsung and Hynix.
2. Taken together with the rising prices of NAND flash on a per bit basis this year, this will enable SanDisk to have higher level of profitability for the balance of 2009 and going into 2010.
3. It will be interesting to see if SanDisk licenses 4 bit per cell technology in the future to obtain an even larger flow of royalty money.
