Sandisk Corporation, which produces flash memory, the device that goes into the USB memory that is ubiquitous among computer users, is the largest manufacturer of such devices.
Judy Bruner, chief financial officer and an executive vice-president of administration, SanDisk Corporation, spoke to The Hindu about the new technologies the company is working on, the performance of the company’s different lines of business and about the plans the company is making to move away from NAND memory, the staple technology since Toshiba introduced it in the late 1980s. Sandisk, the leader in the flash memory business, earned revenues of $5.7 billion in 2011. Excerpts:
What are the main areas of focus for Sandisk?
There are three broad markets that we address — consumer, mobile and computing. The consumer markets includes flash memory that goes into digital cameras, audio and video products, USB drives, and memory that goes into gaming devices. These are a wide variety of products. The mobile market is the biggest contributor to our revenues, contributing half of all revenues. Our memory goes into phones, tablets, e-readers and a variety of mobile-type devices. The memory we supply is either embedded in the devices themselves or are removable cards. The third segment, the computing business, contributes about 10 per cent to the revenues, but is now our fastest-growing business globally. We believe that this segment will contribute 25 per cent to our revenues by 2014. This segment is growing so fast that our product mix is shifting towards computing.
What is the kind of memory that Sandisk makes for the computing business?
There are two major categories in the computing solid-state drives (SSD) market — clients and enterprises. A lot of the enterprise SSDs are going into data centres, which is the main driver of demand for flash memory in the computing segment. In the client side, growing demand for SSDs in notebooks, which enable instant-on capability, longer battery life, and are more rugged and lighter, is the main driver.
How fast have prices dropped as a result of greater diffusion?
Prices are always dropping in our industry because we are always reducing costs. And, technology has evolved in order to achieve this. The market also expands as we reduce prices. This is exactly what has happened in the computing market. As the price of flash memory has come down, they have become a viable replacement for hard drives in both notebooks as well as data centres. It is thought that as the price of flash memory for the end consumer falls below a dollar per gigabyte, it will spur further adoption.
So, where are we now, in terms of price?
We reached that point in the latter part of 2012, what we think is the tipping point. In the last 20 years, our costs have dropped by something like 50,000 times. In this period, our capacity has increased by 30,000 times. The largest chip we have in production in the fab is a 128 GB memory chip, 30,000 times that largest chip we made 20 years ago. On the client side of the business, we now make SSDs that go into computers or as standalone drives. Our average capacity in the client side is about 50 Gb, while the average in the enterprise side is about 500 GB. In fact, the reason why the computing side of our business is growing much faster is because the average capacity of the devices that go into the computers is much bigger that those that go into mobile phones.
What is the picture of your performance in terms of the geographies that you address?
Roughly, 40 per cent of our revenues are coming from the Asia-Pacific (APAC), about 35 per cent from the U.S., 15 per cent from Europe and the remaining from the rest of the world. Within the APAC, China and India are the fastest growing markets.
Where are your manufacturing bases?
As a branded semiconductor company, we have two major manufacturing bases, memory fabs in Japan and assembling units in Shanghai. The memory fabs are based on a partnership with Toshiba. Over the last 10 years together with Toshiba we have operated mega fabs in Japan. In this period, we have invested more than $10 billion in the fabs. Although we go to market as competitors, we share the technology and manufacturing costs. Toshiba has brought to the partnership a lot of process knowledge, while Sandisk has brought in a lot of technology innovation and intellectual property.
How has your innovation resulted in packing in more memory on silicon wafers, which not only increase capacity but also result in the reduction of prices?
Basically, there are two ways in which you can get more chips onto a single silicon wafer. One way is to keep reducing the line widths on the wafer. For example, we are moving from 24 nanometres to 19 nanometres; next year, they will be still smaller, but we have not yet defined it. In the last 10 years, we have gone through 10 such technology transitions. The second method is to incorporate more in the design of the chip itself. We started with one bit per cell on a chip, then went on to two bits per cell. Now Sandisk is the first to achieve three bits per cell. In the last three years, we have had more than half our revenues coming from memory that has three bits per cell. Our biggest advantage vis-à-vis competition is the extent of our vertical integration. We are established all the way from production in the fab to the backend of chip design and right up to retail distribution. The two assemblies in Shanghai ship more than two million units a day.
What are the alternative technologies you are investing in to move to a post-NAND flash memory world?
I will give you an example. In 2006, we acquired Matrix Semiconductor, a start-up that had developed three dimensional resistive RAM technology. The technology basically tries to build vertically on the wafer, potentially having eight different levels on the wafer. After developing the technology further we believe that it is a prime contender to succeed NAND flash memory when it can no longer scale up any further. We have developed the technology in association with Toshiba and we believe the technology can come into play before the end of the decade. We are the only flash memory company that does chip design in India, in Bangalore, where we employ 350 employees.
