SanDisk Claims Healthier Times Ahead

Data StorageStorage

SanDisk CEO Eli Harari explains that 2009 could well be significantly better for the NAND flash storage maker than anticipated only five months ago

NAND flash storage maker SanDisk, down in the dumps after reporting a $1.9 billion (£1.22bn) loss in the fourth quarter of 2008, apparently is back on the road to financial black ink.

Chief executive Eli Harari on May 19 told attendees of the Reuters Global Technology Summit in New York that 2009 could well be “significantly better” for SanDisk than anticipated only five months ago, thanks mainly to cutbacks in NAND flash memory production.

The bulk price for 1GB of NAND flash memory had dropped for the first time to about $1 in January, and manufacturers were swimming in excess stock. In the last four months, however, flash makers have trimmed back production to bring balance back into the industry, and the price has now more than doubled to over $2 per gigabyte.

Despite the price increases, demand remains steady, industry analysts have reported.

SanDisk is the world leader in supplying flash memory cards for digital cameras and handheld devices. But the company, with a market capitalisation of $3.24 billion (£2.1bn), had suffered for months along with the rest of the flash industry through an oversupply of NAND chips—especially those destined for use in servers and laptops.

SanDisk also received big help from Japanese systems maker and longtime partner Toshiba, which agreed to pay $1 billion to SanDisk in October 2008 in exchange for 30 percent of its NAND flash production.

“After the shock of the fourth quarter, our balance sheet is much better,” Harari told Reuters. “This year could turn out to be significantly better than what we thought at the beginning of the year. Consumer demand has been stronger than we expected.

“I feel as good now as I’ve felt at any time in the last three or four years. The pressure for financing [has] definitely subsided.”

Harari, whose company competes mainly against Samsung, Micron Technology and Hynix Semiconductor, said SanDisk has cut operating expenses to aid the balance sheet.

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