Comments on: We Tell You: Why Samsung wants SanDisk

By: Korean

Korean — Thu, 13 Nov 2008 11:05:32 +0000

it’s too sad again to hear that Samsung have to shell astronmical figures of something like nuts

By: Rob

Rob — Thu, 18 Sep 2008 08:04:51 +0000

It’ll be interesting to see if Toshiba decide to do anything such as their own takeover bid or investment into SanDisk.
This could also be a lot about brand, since I believe, certainly in Europe, that Samsung is still associated with the budget low-end of the market for cheap plastic electronics, regardless of just how much they actually manufacture into premium brands. I for one would and do, buy SanDisk branded memory products over Samsung branding, even at a premium price.

By: Simon

Simon — Wed, 17 Sep 2008 20:03:56 +0000

A 4GB thumb-drive is exotic? I just bought one for $10. Shh. Don’t tell the ladies.

By: Simon

Simon — Wed, 17 Sep 2008 20:03:56 +0000

A 4GB thumb-drive is exotic? I just bought one for $10. Shh. Don’t tell the ladies.

By: Nobody

Nobody — Wed, 17 Sep 2008 17:10:42 +0000

Miles Arnone and Ben are right. IP access, IP right, Toshiba competition are strong reasons for Samsung to go after SanDisk. The other reason is a very strong consumer brand. While people associate Samsung with TVs, Microwaves and Phones consumers do not think of Sasung when they buy flash cards or USB sticks. Samsung is currently trying to recruit a team that would allow them to set up a Flash consumer brand. In a market that is so tough, buying a market leader might be the easier option. This could help them kill off their current NAND customers, like Transcend, A-Data who are a pain in the butt in some markets as they are just driving prices down.
Oh, and by the way: Kingston is doing $4.5 billion with Flash and DRAM.

By: Chikodi

Chikodi — Wed, 17 Sep 2008 16:26:33 +0000

But why? Why would a massive South Korean company with factories around the world be focused on a fairly small memory manufacturer with a total revenue of $3.9 billion?

For SanDisk – well, the hope is SanDisk can stand on its own and keep selling flash memory to a hungrier audience. $3.9 million is nothing to scoff at – Lexar did $412 million but Kingston did $4.5 billion, placing SanDisk spot in the middle.

Which one is it?

By: Ben

Ben — Wed, 17 Sep 2008 16:23:24 +0000

I’ll agree with Mr. Biggs that it’s absolutely important for Samsung to get control of the Flash IP that Sandisk controls, but I think he’s completely off on the manufacturing capacity issue. For multiple reasons:

1. Samsung is the 2nd largest manufacturer of semiconuctors, and the world’s largest memory chip supplier. If they don’t have enough capacity, no one in the world does. The issue of not being able to meet demand is an issue with forecasting and with being able to ramp — not of capacity.

2. Sandisk’s manufacturing is done almost completely through a Toshiba-Sandisk Joint Venture. Samsung acquiring Sandisk would not give them control over these fabs or the process technology (which is probably incompatible with Samsung’s), and seeing how Samsung and Toshiba are manufacturing competitors, this does not seem to make a lot of sense.

Instead, I believe this deal is motivated by 2 things — the first is the Flash memory IP, and the second is the scale afforded by buying a top vendor of Flash memory — this gives Samsung more supplier power, and also feeds them more product to feed through their very expensive fabs/foundries.

By: Ben

Ben — Wed, 17 Sep 2008 16:23:23 +0000

By: JoeA

JoeA — Wed, 17 Sep 2008 16:12:00 +0000

Dam…Canyada stoll mye comentt…

By: Terry

Terry — Wed, 17 Sep 2008 16:10:33 +0000

Found a typo:

“SanDisk can stand on its own and keep selling flash memory to a hungrier audience. $3.9 million is nothing to scoff at – Lexar did $412 million but Kingston did $4.5 billion, placing SanDisk spot in the middle.”

The first paragraph says 3.9 Billion but later on you say 3.9 million, that would put them at the bottom.

By: Miles Arnone

Miles Arnone — Wed, 17 Sep 2008 16:10:12 +0000

The original post by John Biggs notes that Samsung is pursing SanDisk because they need manufacturing capacity. This is incorrect on two fronts. First, there is massive overcapacity and the big firms are reducing their productive capacity. Second, SanDisk buys the vast majority of its product from Toshiba, Samsung and others. Buying SanDisk wouldn’t increase Samsung’s productive capacity, even if they were interested to do that.

This article is ill-informed and factually incorrect.

Samsung is likely trying to buy SanDisk to (a) mitigate IP costs, (b) to gain preferential access to IP, (c) to improve their position against tough competitor Toshiba, and (d) gain a better outlet for their memory products (i.e. one that is closer to the end users).

By: Canyada

Canyada — Wed, 17 Sep 2008 15:50:14 +0000

Good points but a painful read. Did anyone edit this?

“manufacturers ramped up production *buy* building factories.”
“make up the other *to* points in the triangle”
“$3.9 *million* is nothing to scoff at”

By: Branden Silva

Branden Silva — Wed, 17 Sep 2008 15:44:14 +0000

I think hard drives won’t be dead in 15 years. I do think 10 years they will be phased out in the majority. However with the current economy looking poorer each day or month the future looks a lot less predictable.

By: Avichal

Avichal — Wed, 17 Sep 2008 15:19:45 +0000

lol, your intro paragraph is hilarious…great article all around

By: Darth Mac

Darth Mac — Wed, 17 Sep 2008 15:14:47 +0000

I’m glad that Samsung is doing something about their lack of capacity to produce the memory for my iPods and iPhones. This lack of resources must not slow our dominance of the technology Galaxy.

I also commend Samsung for their efforts to claim control of all flash memory production. Controlling the IP will give them near monopolistic control in the future. They have a long way to go, but Emperor Steve appreciates their efforts.

By: edc

edc — Wed, 17 Sep 2008 14:48:42 +0000

Hahahahah.

By: Ankush

Ankush — Wed, 17 Sep 2008 14:44:05 +0000

I think the hard drive will be dead in the next 10 years instead of 15years. Agreed solid state is yet out of reach of many, but the costs are bound to come down drastically in the next couple of years. Also, consider that new technologies will continue to come around and if one of them is a hit, it becomes a threat to Solid States as much as Solid state is to the hard drive.

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By: Kyle

Kyle — Wed, 17 Sep 2008 14:33:20 +0000

That’s sad, I didn’t know Samsung was an orphan.

By: John Biggs

John Biggs — Wed, 17 Sep 2008 14:24:31 +0000

Agreed. The IP is definitely valuable as well.

By: Chris

Chris — Wed, 17 Sep 2008 14:10:58 +0000

The reason is clearly parents which SanDisk has and Samsumg doesn’t. Samsung shells out over $440 million a year to license those patents, imagine how much others pay as well. Going forward, those patents will be priceless.