Sanford Bernstein’s Mark Newman, who follows SanDisk (SNDK) and Micron Technology (MU), among others, writes this afternoon that the rumors Apple (AAPL) may purchase Israeli component supplier�Anobit support his view for some time now that flash memory controller chips “are becoming more critical to the performance of NAND flash.”
As NAND chips take on finer line widths, notes Newman, controllers are more and more necessary to improve performance with things such as error correction and signal processing.
He notes that SanDisk is the leader in such NAND controllers, but Newman thinks Apple could end up causing “significant repercussions for the NAND industry.”
“With this move, we believe Apple is intentionally attempting to commoditize NAND suppliers by�providing their own advanced NAND controllers, therefore buying just raw NAND from suppliers.”
SanDisk doesn’t currently sell to Apple, he notes.
For the moment, at least, Newman maintains an Outperform rating on SanDisk and a $75 price target.
SanDisk shares today are up 47 cents, or 1%, at $50.51, perhaps in part because Apple is demonstrating the general value of controller chips, and in part because of enthusiasm for flash as an alternative to disk storage amidst the disruption in the drive industry.
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