If Apple Acquires Anibot, Sandisk Better Watch Out

The rumors of a potential acquisition of Israeli component supplier Anobit, an Isreali flash storage solutions provider for the Enterprise and Mobile markets, by none other than Apple (NASDAQ:AAPL) is leading to speculation about the possible disruptive effects it could have on the NAND flash industry. ^[1] Below we take a look at how this move could impact the NAND flash industry as well as the current leader in the flash memory controller chip market, SanDisk (NASDAQ:SNDK).

We currently have a $50.60 Trefis price estimate for SanDisk which is in line with market estimates.

See our full analysis of SanDisk

About Anobit

Anobit produces flash memory controller chip which manages the data stored on flash memory and communicates with computers or other electronic devices. Anobit’s MSP™ (Memory Signal Processing) technology is comprised of proprietary signal processing algorithms combined with advanced error correction and innovative flash management schemes that help improve flash memory’s endurance, performance and cost.

Why Apple’s Purchase of Anobit Could Be Disruptive to the NAND Industry?

According to Sanford Bernstein’s Mark Newman, flash memory controller chips “are becoming more critical to the performance of NAND flash” as they control error correction and signal processing.

The rumors of Apple’s interest in Anobit give weight to Newman’s claim. If Apple indeed acquires Anobit, it is likely that the computer maker will be making its own advanced NAND controller for its line-up of consumer hardware – the iPhones, the iPads and the Macbook Airs – in the future.

It is also possible that Apple will be providing its advanced NAND controllers to other consumer electronics vendors and storage system providers which would essentially commoditize flash memory suppliers.

SanDisk Will Be Worst Hit

The potential acquisition of Anibot by Apple could be bad news for SanDisk, the current leader in NAND controllers as well as other industry players like Micron Technologies (NASDAQ:MU), Samsung , and Toshiba, as Apple’s future dominance in the market could reduce them to mere suppliers of raw NAND.

SanDisk is primarily a flash memory storage solution provider to consumers as well as OEMs and not majorly into supplying raw NAND flash memory unlike Samsung and Toshiba. Apple’s entry into the flash memory controller chips would mean SanDisk will be the one to take the worst hit.

We are updating our SanDisk model to better account for new markets like enterprise and tablet SSDs.

Understand How a Company’s Products Impact its Stock Price at Trefis

1. Apple May Disrupt NAND Industry, Says Bernstein, barrons.com [↩]