SanDisk Corporation (SNDK), Micron Technology, Inc. (MU): Is It Time to Sell This Flash Memory Supplier?

Samsung recently began producing the industry’s first three-dimensional vertical NAND (V-NAND) flash memory, thus challenging SanDisk’s market dominance. As the name suggests, vertical NAND layers the memory chips on top of each other, thereby saving space and making the memory faster. Apart from being faster and more efficient, V-NAND will also increases the storage capacity to as much as 128GB. This eliminates the need of providing a separate slot for microSD cards and will surely damage SanDisk’s sales.

The bad news for SanDisk is that a similar chip for the SSD’s is expected to be developed by the end of 2013, while V-NAND will make it in the mobile devices by 2014. This technology is guarded by numerous patents, and SanDisk will have to come up with an entirely new advancement in the foreseeable future if it is to challenge V-NAND, which may not be possible.

Micron Technology, Inc. (NASDAQ:MU) is involved in manufacturing and marketing semiconductor devices around the globe. The company has a wide range of products, but our main concern lies with its range of NAND flash memory.

The previous quarter was disappointing, as Micron Technology, Inc. (NASDAQ:MU) reported a 12% decline in revenue year-over-year. This dip was chiefly driven by the plunge in DRAM and NAND-product sales. The company is reducing prices and cutting down on operating expenses to ease the downward pressure on its earnings.

Presently, because of the reduced expenditures, Micron Technology, Inc. (NASDAQ:MU) is not planning any new manufacturing capacity for the future. However, as the PC market is declining, Micron Technology, Inc. (NASDAQ:MU) is planning to heap on its supply of NAND memory to make up for the loss.

Foolish summary

Keeping in mind that Samsung is the world’s biggest smartphone company, I believe that the recent advancement of V-NAND technology will knock back SanDisk’s hope of sustaining its current success. SanDisk may perform better in the coming quarters, but I think that the company won’t be able to achieve similar results in the long run. Also, given the fact that it took Samsung 10 years to develop the V-NAND chips, it’s almost impossible for SanDisk to come up with a more advanced technology any time soon.

The article Is It Time to Sell This Flash Memory Supplier? originally appeared on Fool.com and is written by ANUP SINGH.

ANUP SINGH has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. ANUP 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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