Flash Usage in Smartphones Could Soar on High Streaming Video Demand, SanDisk Says

SanDisk is looking to 4K video and services from streaming video providers to help drive higher density storage capacities in smartphones, CEO Sanjay Mehrotra said on the company’s Q3 2013 earnings call. Features that used to be available only in premium smartphones are transitioning to mid- and low-end smartphones, driving higher average capacities in a broader segment of the smartphone market, he said. Emerging 4K video and content from YouTube and Amazon that can be downloaded to a smartphone for later viewing are the start of trends that will proliferate across devices and manufacturers, he said. Average capacities are expected to double by 2016, Mehrotra said, citing “exciting opportunities ahead” for flash usage in smartphones.

SanDisk continues to shift its portfolio to SSD from hard disk drives, with SSD now accounting for a higher than expected 20 percent of revenue for the quarter from client and enterprise business, Mehrotra said. He cited continued customer preference for “instant-on” capability of SSDs in “thin and sleek” form factors. SanDisk’s SSDs are now qualified at all PC OEM’s, he said. SSDs are expected to account for 25 percent of revenues in 2014, he said.

In the iNAND segment, SanDisk has made “significant inroads” into fast-growing mid- and low-tier tablet and smartphone segments, Mehrotra said. Smartphone and tablet OEMs in China in particular are hoping to ride the growing mobile trend and are launching products with strong technical specifications and growing average storage capacity, he said.

Mehrotra pegged 2013 industry bit supply growth at 40 percent and predicted similar results for 2014. SanDisk 2013 bit supply growth will be approximately 20 percent and between 25-35 percent next year, he said. Industry bit growth estimates are based on assumptions of 2D NAND transitions, new wafer capacity additions and conversions from DRAM wafer capacity to NAND, along with early production of 3D NAND, he said. Industry demand drivers will continue to be strong and fundamentals will remain “healthy” in 2014, he said.

Revenue in Q3 grew 28 percent to $1.63 billion over the year-ago quarter and net income more than tripled to $277 million for the period, the company said. For Q4, SanDisk forecasts revenue of $1.65 billion-$1.725 billion on “continued healthy demand with blended price declines” higher than in Q3 due to a higher mix of holiday retail sales, according to Chief Financial Officer Judy Bruner.