How Has SanDisk’s SSD Division Performed Over The Last Few Years?

by Trefis Team
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SanDisk Corporation (NASDAQ:SNDK) is a storage company most widely known for selling memory cards and USB flash drives in the consumer market. However, over the last few years it has expanded its presence in the enterprise storage segment, particularly the solid state drive (SSD) division. As you can see in the table below, SSD sales grew at a tremendous pace over the last five years, with revenues jumping from only about $150 million in 2011 to nearly $2 billion in 2014. As a result, its contribution to SanDisk’s net revenue rose from 3% in 2011 to 29% in 2014. Comparatively, 2015 was a tough year for the company due to certain product qualification delays through the first half of the year and lower than anticipated demand in the enterprise storage market leading to a slowdown in enterprise SSD sales.

SNDK_SSD1SanDisk witnessed a huge spike in client SSD sales through 2012 and 2013 as the smartphone and tablet market expanded globally with more device makers switching to flash-based storage attached to host boards within devices. After the smartphone penetration in emerged markets plateaued, demand for client SSDs slowed down. Subsequently, client SSD revenues plummeted in 2015 as SanDisk lost out on a major customer in January last year. It is widely believed that the major customer is Apple (NASDAQ:AAPL), which has switched to Samsung (PINK:SSNLF) for sourcing SSDs. [1] [2]

SNDK_SSD2

Despite a weak set of results in 2015, SanDisk is still a prominent flash storage player with a leading market position. As a result, hard drive maker Western Digital (NASDAQ:WDC) acquired SanDisk for $19 billion in late 2015. The growth in enterprise storage is expected to continue in the coming years, which prompted Western Digital to pay a premium of over 50% to SanDisk’s rolling 3-month stock price before the announcement.

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Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for SanDisk

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Notes:
  1. SanDisk cuts revenue outlook, Market Watch, March 2015 []
  2. Samsung seals big SSD chip deal with Apple, Korea Times, March 2015 []
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