SanDisk had record product revenue from solid-state drives in...

SanDisk had record product revenue from solid-state drives in Q4, with SSDs now comprising 19 percent of annual revenue, said CEO Sanjay Mehrotra on the company’s earnings call Wednesday. Opportunities continue to grow in client SSDs for SanDisk, which had 170 percent growth for the year in SSDs across all channels, Mehrotra said. The ongoing shift in consumer preference for “high performance, slim form factor, long battery life and instant-on capability” is driving demand for SSDs in notebook PCs and ultrathin devices, he said. In mobile, SanDisk’s embedded solutions -- including discrete iNAND, iNAND MCP and custom solutions -- drove “significant growth,” particularly in the China market where the company strengthened its position with entry and mid-range OEMs, Mehrotra said. The company expects iNAND products to be an important contributor to growth in embedded revenue this year, he said. SanDisk also set a record for annual retail product revenue in Q4, driven by USB flash drives and “a rich mix” of high-performance mobile cards, he said. Looking ahead, Mehrotra said the Internet of Things will drive “explosive growth in data generation, cloud computing and big data analytics,” each of which will have specific requirements for flash solutions that SanDisk can meet through its embedded solutions and SSDs “that can be deployed in all tiers of the data center.” Commenting on the transition to 1Y process technology, Mehrotra said 1Y technology achieved cost crossover with 19 nanometer technology in Q4, and Chief Financial Officer Judy Bruner said 1Y technology will account for roughly two-thirds of SanDisk’s bit output by year end. SanDisk expects to introduce X3-based embedded products during the year and is making good progress in developing the 1Z node, Mehrotra said. The company is on track for the production transition to 1Z technology toward the end of 2014 and plans to use new cleanroom space for pilot production of 3D NAND in the latter part of 2015, Mehrotra said. The company’s expectation for the production ramp of 3D NAND in 2016 “remains unchanged,” he said. On bit supply growth, Bruner said the current supply demand balance is “healthy,” but the company expects the industry price decline to be “somewhat more” than the price decline in 2013. SanDisk’s strategy for 2014 is to shift its portfolio to higher value-added solutions, “but there is obviously some expectation of price decline in the industry and in our business model as well,” she said. For Q4, SanDisk revenue was $1.7 billion compared with $1.5 billion, with gross profit of $857 million versus $603 in the year-ago quarter, the company said. Q4 and fiscal 2013 cash flow from operations set quarterly and annual records of $617 million and $1.86 billion, the company said. SanDisk shares closed 0.2 percent lower Thursday at $72.02.