SanDisk Corporation (NASDAQ:SNDK) is a global leader in the flash memory card market and competes with Hynix, Micron (NASDAQ:MU), Samsung (SSNLF.PK), STMicroelectronics (ADR:STM), Toshiba (TOSBF.PK) and IM Flash (a joint venture of Micron and Intel). In recent years the increasing popularity of smartphones and surging mobile phones sales have made mobile phones flash cards the most important segment for SanDisk. We estimate that the mobile phones flash cards division makes up nearly 53% of our $50.60 Trefis price estimate for SanDisk’s stock. Our estimate is about 13% above the market price.
Rapid Growth in Mobile Phone Sales
Unit sales of mobile phones have increased from 904 million units in 2005 to 1.5 billion units in 2010 at an annualized rate of 11% according to our estimates.
Going forward we estimate mobile phones sales will continue to increase driven by the following factors:
1. Increasing reliance on mobile phones as a primary means of communication globally
- The consumer’s needs for mobile phones have increased over time. Increased functionality and as prices have dropped, mobile phones enable people to keep in touch for business and personal communication effortlessly.
- Also, as smartphones become capable of serving a multitude of purposes, they are fast becoming a necessity for the newer generation of consumers who want greater functionality such as email and Internet access. Smartphone sales are estimated to reach a staggering 900 million units in 2014, up from ~300 million units in 2010.
(Chart created by using Trefis' app)
2. Declining handset pricing as well as more flexible pricing plans
- The handset pricing has been on a continuous decline due to decreasing input costs associated with making a mobile phone. On top of that, wireless carriers are giving highly subsidized phones along with a 1-2 year contract to customers. These factors have contributed to increase in sales across the world.
- We currently estimate global mobile phone sales will increase from 1.5 billion units in 2010 to 2.1 billion units by end of the forecast period. [1]
You can drag the trend lines in the interactive charts above to see how various scenarios for global mobile phones units will affect SanDisk’s stock value.
See our full estimates for Sandisk stock.
Notes:
- 2011 Analyst Day Presentation, SanDisk [↩]
