Summary
The NAND flash market will continue to see strong price declines, driven by a combination of Moore's law and new technologies like x4. This makes it difficult to find profits for any NAND chip maker that does not have a competing technology. The move has strong implications for Toshiba, Samsung, Hynix, Intel, Micron, Numonyx, and even Spansion.
Analysis
SanDisk is bent on continuing to reduce NAND manufacturing costs by the technology's historical rate of 40% per year, even though Moore's Law only supports 32% annual cost reductions. The company has accomplished this higher rate in the past through five important shifts in which they moved: 1) From SLC NOR to MLC NOR. 2) From MLC NOR to SLC NAND, 3) From SLC NAND to MLC NAND, 4) From a trailing position in process migration to the lead, and 5) From 200mm to 300mm wafers. Today the company is shifting production to x3 (3-bits per cell) with the intent to move to x4 (4 bits per cell) next year. Objective Analysis' report: "Understanding the NAND Market" available at www.Objective-Analysis.com/Reports focuses on these shifts and explains how NAND has used them to become the fastest-growing market in the history of semiconductors. One important point is that SanDisk owns much, if not all, of the patents covering x3 and x4 technology, and will both profit from the lower cost structure they will enjoy and from the royalty stream they will receive from their licensees, who comprise everyone in the NAND flash market.
