SanDisk Corporation (SNDK): A Joint Venture That Will Rule the NAND Industry

It’s worth noting that Micron Technology, Inc. (NASDAQ:MU) also manufactures DRAM modules (while Toshiba and SanDisk do not), which has been its key growth driver. Due to the shortage of DRAM supply, prices of DRAM modules have appreciated by nearly 185% over the last six months, which has been beneficial for Micron Technology. The company would also be acquiring Elpida, which should further boost its overall market share.

Conclusion

But, the bottom line is that the demand for DRAM modules is fading due to the slowdown in PC sales. Companies had cut down their DRAM production last year, which resulted in lower supply and eventually inflated its prices.

Now that prices have risen significantly, DRAM manufacturers are ramping up their production. This should balance the demand and supply, which suggests that the rally in its prices may not continue.

In my opinion, investing in the flash memory industry would be a relatively safer play. Most investment research firms have an outperform rating on SanDisk, with a price target of up to $70 per share (nearly 30% premium).

Piyush Arora has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

The article A Joint Venture That Will Rule the NAND Industry originally appeared on Fool.com and is written by Piyush Arora.

Piyush is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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