On Monday night, SanDisk reported
financial results for the company's most recent fiscal quarter that Chairman and CEO Eli Harari admitted were disappointing. SanDisk provides Flash memory to the market, which one would think would be an insanely brisk market. Au contraire,
Harari explains:
Starting with the current conditions in our markets, I believe that SanDisk and our industry are currently facing excess supply because of two factors: first, while the demand for Flash megabytes has continued to grow, the rate of growth is slower than expected due to the weakening U.S. economy; second, supply has been growing rapidly because of the high productivity of 300-millimeter dedicated Flash fabs transitioning successfully from the 56- and 60-nanometer technology to 43-nanometer. This divergence has resulted in unsold inventories which has led to depressed or negative margins.
The answer, Harari explained, includes SanDisk shelving or delaying some capital expenditures on fabrication plants and cutting some other costs. The company is also hoping for a boost from its introduction - - next year - - of 32-nm technology and higher-performing NAND products.
SanDisk's revenue mix is 61 percent from retail and 39 percent from OEMs, meaning the company needs to keep focused on staying up with the breakneck pace of innovation in the electronics space, in particular.
