The intrigue continues. As expected SanDisk won’t talk about its stealth venture, Solid State Storage Solutions LLC (SSSS LLC.) A friend recently tried to get Lori to talk. No go.
My guess though, is that news will be coming sooner rather than later. Maybe as soon this upcoming 2008 analyst day. If SSSS LLC is about SSD IP and I suspect it is, 2008 will be the year to stake claims and line up licensees.
Just as SanDisk is now intent on establishing a licensing and royalty program for cards, I suspect we will see a similar strategy for SSDs with SSSS LLC front and center. Whether this strategy is form-factor specific remains to be seen.
In any case, new and interesting info on SSSS LLC was revealed in SanDisk’s 12.04.07 Nasdaq 20th Investor Program presentation. In discussing SanDisk IP, Eli said:
“We have formed a partnership with another major owner of system level flash IP, [the partnership is] called Solid State Storage Solutions.”
The slide Eli was referring to is included below. Note the language:
Re-reading the paragraph on SSSS LLC in SanDisk’s Q2 2007 10Q SEC filing shown below in light of Eli’s comments and the slide’s specifics is quite revealing:
“Solid State Storage Solutions LLC . During the second quarter of fiscal 2007, the Company formed a venture with third parties that will license intellectual property. This venture qualifies as a variable interest entity under FIN 46R. The Company is considered the primary beneficiary of this venture, and in accordance with FIN 46R, the Company consolidates this venture in its financial statements. The venture was financed with $10.2 million of initial aggregate capital contributions from the partners. In July 2007, Solid State Storage Solutions LLC invested $42.5 million for the acquisition of intellectual property, with an initial payment of $10.0 million and a liability of $32.5 million which is secured by the intellectual property.”
It seems I didn’t quite have it right on first reading.
It now appears that SanDisk formed SSSS LLC with only one partner. This partner itself is a major owner of system level flash IP. SSSS LLC is a venture for licensing system level flash IP to others, and not SanDisk licensing IP to its SSSS LLC partner(s).
Also the IP that is to be licensed is likely a combination of SanDisk IP, the SSSS LLC partner’s IP and IP recently acquired from another company (at a cost of $42.5M.)
SanDisk’s IP is likely the most important since SanDisk is considered the beneficiary accounting-wise, which probably means SanDisk will take a larger slice of any L&R revenues than its partner.
So who is SanDisk’s partner in SSSS LLC?
I still think the front runner is Toshiba for the reasons noted in earlier posts: SanDisk’s most important partnership is already with Toshiba. The two companies have built an excellent relationship since 1997 developing and manufacturing NAND chips. They have already successfully worked together establishing the SD card standard, along with Matsushita (Panasonic.)
I don’t have any idea of whether Toshiba is a major owner of system level flash IP, but the possibility seems probable as Toshiba invented NAND in the 1980s and has been on the cutting edge of the technology ever since.
Am inclined to drop Hynix from the list of candidates as Hynix is a relative newcomer and seems more focused on the chip side of the business.
Intel would seem to still be a possibility. Plenty of IP and probably trustworthy as a potential partner in SanDisk’s eyes.
In a recent post on MLC controllers, I included a curious slide on “Flash Competitors & Alliances” from Eli’s 8 August presentation at the Flash Memory Summit. In the slide the Intel bubble overlaps onto the Toshiba/ Sandisk bubble implying relationship between the two different from, say, the relationship between Samsung and SanDisk.
A persistent friend finally got an explanation of the slide from SanDisk:
“There is nothing of interest in the overlapping circles other then somebody appears to have done a poor job of laying out the powerpoint slide.”
Obfuscation or confession. Take your pick.
Suppose SanDisk’s SSSS LLC partner could be a company which has the needed/complimentary IP and is not a NAND player itself. Don’t know where to start on that one.
In the long run though, I believe only those who have in-house NAND supply are going to be in a position to be serious SSD players. It is going to take guaranteed NAND supply at lowest cost to secure the high volume contracts.
Lowest cost is going to mean MLC SSDs. To deliver MLC SSDs, a company is going to have to have solved the MLC controller for its specific NAND and have the required IP.
My guess is that SanDisk has seen this coming for some time and has decided to leverage its IP strengths and to minimize the competition’s chances in court. Maybe SanDisk itself didn’t have all the IP required to make sure life would be really really difficult for the competition.
The solution: Fill in the missing complimentary IP with a partner and IP acquisition. Hence SSSS LLC.