Nice find. The author of that blog post seems to beDeepak Sekar.
I was aware that SanDisk's 3D R/W plans were to replace the Matrix diode array by cells with resistance changes. I think they must have recently chosen to use the term ReRAM to help distinguish what they used to call 3D from other 3D projects inside and outside SanDisk, including 3D NAND variants such as BiCS. Or perhaps they want to indicate that other companies working on ReRAM are not ahead of them.
There have been a few products already mixing an SSD with a HDD to allow oft-used data to be quickly read and written while rarely used bulk data that get's streamed (rather than random access) e.g. video is relegated to the HDD. Why not do the same with two grades of NAND? A few GB of SLC (or MLC) for OS files and frequently accessed and rewritten program files, and several hundred GB of TCL (or QLC, etc) for less frequently written data that it is still desirable to access quickly (e.g. game textures & FMVs). Faster than a HDD hybrid, cheaper than an all-SLC/MLC design, and just as fast in the vast majority of consumer use cases (exceptions including non-linear video editing, large-array data processing).
Of course SanDisk already does this in their AFM. They can configure some of the memory to be SLC and use it as a cache, thereby increasing both the external performance and the reliability versus pure MLC or TLC.
At today's close of 81 Yen/$, the Yen has now declined about 2% from its average closing value for 2011. I understand that the company has purchased production forward at a fixed (higher) Yen value for the first few months of 2012, but all else equal this decline should result in a 1 percentage-point improvement in gross margin for SNDK. This is according to the function Judy Bruner provided on the recent conference call:
"A 5% appreciation in the yen impacts our gross margins by approximately 2 to 3 percentage points."
2%/5% X 2.5 = 1 GM point
Of course, this assumes the function works continuously and equally both ways (i.e.; with a falling Yen).
They said that they hedged about half of their wafers, although I am not certain if that applies to all of 2012 or only to Q1 or H1. Hard to believe that they actually knew in Q4 how many wafers they would be purchasing for all of 2012. If anyone is going to the MS conference (or if Atif reads this!), maybe someone could ask them for more specifics on this.
"We have locked in approximately 60% of our yen requirements for 2012, and based on the cost of those contracts, as well as current market rates, we forecast an approximately 5% increase in the dollar cost of our yen-based wafer purchases."
Well, that was the prudent thing to do, since no one could know where the yen would bottom. Heck, we still don't really know that it has bottomed, even though fundamentally it seems like it should. But it has seemed that way for a long time now.
But it will mute the effects of a stronger dollar for 2012.
I'm not disagreeing with you Sam. Just trying to add some clarity to the discussion. Hedging costs money. The Barcelona Mobile Show is starting so we'll hear of many new mobile devices, all presumably using NAND. I think someone posted this piece earlier, but I just got around to reading it:
SanDisk Setting Up For Positive Surprises While we have a favorable view on shares, we have one fairly meaningful concern. We were surprised by how emphatic management was about pushing out Fab 5. Historically, former CEO and co-founder Eli Harari spoke tirelessly about the price elasticity of NAND. Lower prices spurred adoption and opened new markets, and also shifted consumers to using higher capacities (ie a 4GB card instead of a 2GB card). If capacity came on too soon, it would result in a weak period followed by an explosive period. Perhaps we are reading too much into it, and SanDisk is merely timing the market. It's just somewhat strange that SanDisk wouldn't be prepared with more internal capacity in front of an "inflection point" for SSDs.
This is something we'll monitor closely. Nonetheless, with shares at current levels, we believe the risk/reward is too compelling not to own.