SanDisk Hurt By Weak Demand, Supply Glut

Flash-memory maker SanDisk Corp warned that tepid demand from mobile phone manufacturers and a glut in supply that has led to lower prices are putting a dent its revenue margins.

The maker of NAND chips — used as storage memory in smartphones and tablets — has recently seen demand taper with some of its key customers scaling back orders.

Smartphones and tablets have caused a boom in NAND production, but SanDisk’s customers have not all done equally well from the explosion in mobile gadgets.

“Anybody who is not a Samsung or an Apple is burning through some (mobile) handset inventory,” RBC Capital Markets analyst Doug Freedman said.

“Until we get the PC market, tablet market and handset market back buying, we’ll see an oversupply situation.”

SanDisk’s weak outlook mirrors warnings from rival flash-memory makers, who have also blamed weak prices and demand for their disappointing results.

Late last month, Micron Technology said it was facing persistently low prices for memory chips and posted a wider loss. Toshiba Corp, Japan’s biggest chip maker, also posted a drop in quarterly sales at its electronics devices business, which includes semiconductors, hit by lower prices for memory chips.

SanDisk in January expressed concerns about weaker demand weighing on sales in the first half of this year and forecast lower-than-expected revenue for the first quarter.

The Milpitas, California-based company, which is set to report results later this month, said its gross margins for the January-March quarter will come in below its prior expectations of 39-42 percent, hurt by lower prices for its chips.

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