Will SanDisk continue to make money from digital camera memory?

SanDisk is the world leader in flash memory which is a type of storage memory used frequently in digital cameras, MP3 players and other digital devices.  SanDisk makes money by selling flash memory products to companies that make PCs, digital cameras, music players and mobile phones.  The company’s digital camera flash memory business has experienced steep pricing declines which are expected to continue.  Despite this, SanDisk will continue to make money from digital camera flash memory.

Price per Gigabyte (GB) of flash memory for digital cameras has fallen from $43 per GB in 2005 to $1.1 per GB today.  We expect prices to continue falling to about $0.08 per GB by the end of the Trefis forecast period.  Despite the tremendous drop in pricing, memory makers like SanDisk are expected to continue making money due to growing volumes of memory sold.  This is similar to the PC memory (RAM) industry, which has also witnessed falling prices over time while memory volumes (size of memory x units sold) rise.

SanDisk’s digital camera flash business is driven by the number of digital cameras sold.  We estimate that 133 million digital cameras will be sold in 2009, up from 99 million in 2005 and that this figure will grow to 180 million cameras by the end of the Trefis forecast period.  We estimate that the number of digital camera flash cards being sold is about 2.3 per camera sold which includes new camera buyers purchasing flash cards as well as replacement buyers.  The average size of a camera flash card is around 5 GB today and expected to increase to nearly 100 GB over time.  These figures imply that worldwide digital camera memory demand will rise from 1.5 billion GBs today to nearly 47 billion GB (an average annual growth rate of 77%).  Pricing per GB, in comparison, is expected to fall at an average annual rate of 36% meaning overall that SanDisk’s revenues from selling GBs of digital camera memory will continue to rise.

Within SanDisk’s content on our platform, you can see how Price per Gigabyte, Total Digital Cameras Sold, Flash Cards per Camera and Capacity per Card all impact SanDisk’s digital camera flash card business.