If forgetting things drives you crazy, SanDisk's products might help preserve your sanity. The company is a top producer of data storage products based on flash memory, which retains data even when power is interrupted. Its products include removable and embedded memory cards used in digital cameras, mobile phones, digital audio/video players, USB drives, solid-state drives (SSDs), GPS devices, tablets, and other electronic gear. The company sells to such manufacturers as Samsung Electronics and Canon, as well as through retailers, including Amazon.com and Best Buy. Nearly 70% of sales come from the Asia/Pacific region.
Revenue rose 17% in 2011, after an increase of 35% in 2010, on a year-over-year basis. Net income for the year was down slightly, though SanDisk remained profitable. Sales of products, which represent more than 90% of sales, recorded an uptick of 18%, thanks mainly to strong sales of memory devices for mobile (smartphones and tablets) and gaming applications. The company also saw a slight increase in sales to the retail market, primarily due to higher sales of cards for mobile phones and USB drives.
Also, because the company has reduced the costs of its manufacturing operations, product gross margins as a percent of product revenue rose to 42% in 2010 from 27% in 2009, falling slightly in 2011 to 39% as average selling price reductions exceeded cost reductions for the year. The cost reductions come in part from the use of specialized manufacturing equipment and new technology platforms.
At the end of fiscal 2011, SanDisk held more than 2,000 US patents and 1,700 foreign patents. The company licenses its technology to such customers as Intel, Lexar Media, Sony, and Toshiba. The company's top 10 customers and licensees represent more than 48% of sales; Samsung is its largest single customer. SanDisk is branching out into other product areas that use flash memory, such as SSDs (a smaller, high-performance alternative to traditional hard-disk drives). The company once relied heavily on retailers and distributors to move its products, but most of its sales are now to OEMs.
In 2012 the company bought SSD caching software company FlashSoft. SanDisk will sell FlashSoft software by itself, but also use it to improve the performance of SanDisk SSDs. Also that year it bought Silicon Valley-based Schooner Information Technology, which develops flash-optimized database and storage software. In 2011 SanDisk paid more than $325 million for Pliant Technology, extending its reach into the fast-growing market for SSDs and adding enterprise-level storage systems to its product line-up.
The company has also become a leading competitor in the market for digital audio/video players with its Sansa brand. SSDs and digital music are just a two of the markets where SanDisk has expanded. The company's strategy for growth is focused on increasing overall revenue by lowering the cost of the NAND flash memory that powers its technology and by working with other companies to develop new NAND applications and products. To cushion itself against possible limits to the development of NAND, SanDisk also invests in alternative technologies including bit-cost scalable 3-dimensional NAND (BiCS) and 3-dimensional resistive RAM (3D ReRAM).
SanDisk outsources all of its controller component manufacturing and much of its assembly and test operations to foundries (contract semiconductor manufacturers). Its flash memory wafers primarily come from manufacturing joint ventures with Toshiba, which produce finished wafers in Japan that are sold to SanDisk and Toshiba. SanDisk also has in-house assembly and test operations in China.
The company has additional sales, marketing, and support facilities in China, France, Germany, India, Ireland, Israel, Japan, Russia, Singapore, Scotland, South Korea, Spain, Sweden, Taiwan, the United Arab Emirates, and the US. – less