The Apple-SanDisk relationship continues to be interesting nonevent.
One of these days- or years, suspect we’ll officially hear more. Until then it looks like it’s going to be a connecting-the-dots game.
In this latest non-chapter, Apple acquired Anobit, an Israeli controller company with SanDisk/ M-Systems connections, and named SanDisk one of its 156 major suppliers.
For those interested in conspiracy theories, a good argument can be made that SanDisk is building capacity dedicated to Apple.
Anobit billed itself as a NAND-based solutions provider, but basically it was a specialized controller company providing the signal processing technology required for NAND chips.
The company was smart, private and Israeli.
They were on my shortlist as a SanDisk acquisition target. SanDisk acquired Pliant instead.
An Israeli friend has told me, that he was told by a SanDisk guy, that SanDisk passed on Anobit because Anobit didn’t have anything to contribute.
Anobit’s expertise is in signal processing algorithms to improve the performance of flash-memory chips. Which at the end of the day is what SanDisk is all about as well.
Purportedly Anobit has more than 60 patent applications. Apple will be happy to have those in their IP vault. Most likely to be used for defensive purposes if required.
One of the more interesting Anobit subplots is Samsung. Samsung liked Anobit too. Enough to send big business its way. Anobit had a big contract with Samsung.
Samsung had turned to Anobit to deliver performance for its TLC, or 3-bit NAND.
From all I’ve been able to gather, even with Anobit’s help, Samsung wasn’t been able to deliver viable commercial TLC in volume. The problem apparently was the lack of integration of chip level expertise with signal processing.
To the best of my knowledge, SanDisk is the only player to have pulled that one off.
Anobit’s CTO was Avraham Meir. Prior to joining Anobit, Mr. Meir was VP Corporate Engineering at SanDisk, and prior to that CTO at M-Systems- acquired by SanDisk in 2006.
One has to wonder how many SanDisk company secrets moved from SanDisk to Anobit with Mr. Meir, an internationally recognized authority in NAND Flash technology.
Does Apple now own the secret ingredients behind SanDisk’s TLC success?
Personally, I don’t think so. That special sauce ingredient can likely be traced back through M-Systems’ X4 to the original Stratosphere technology. This is the same technology that Samsung tried to get ahold of in 2008.
First through outright acquisition of SanDisk. And when that failed, through claims of license rights through prior agreements with M-Systems. No luck there either.
In the arbitration hearings, Samsung put a value on X4- “billions of dollars.”
It appears that Samsung’s backup plan was to use Anobit.
If Anobit was particularly special, there should have been a bidding war including Samsung. If anything, Anobit’s price slipped.
Initial reports in early December, estimated Apple’s purchase price of Anobit at around $500 million. By late December it was down to $300 – $400 million. An Israeli friend was told by local VCs that the final price was under $300 million.
So why did Apple buy Anobit?
It looks like it was all about preserving the status quo. Apparently Apple has been using Anobit controllers for a while now for X2 MLC NAND and liked what they had.
One of the beauties of Anobit was that their controllers work nicely with NAND chips from all the major Apple suppliers: Samsung, Toshiba, SanDisk, Micron, Intel and Hynix.
Yep, as of 13 January 2012, SanDisk is now officially a major Apple supplier.
SanDisk showed up on Apple’s official 156 company list which “represent 97% of its materials and manufacturing spending.”
This is a bit curious, given that the only teardown of an Apple product which revealed a SanDisk chip that I am aware of, was an iPod Nano.
The likely explanation is that SanDisk chips have found their way into other Apple product lines along the way and these SanDisk chips have been missed along the way by the teardown shops.
After all, SanDisk NAND and Toshiba NAND are interchangeable and Toshiba NAND has been uncovered in many teardowns.
Given the current tension between Apple and Samsung, it’s not particularly surprising that Apple and SanDisk would be working together.
Moving forward, Anobit’s SanDisk connections could prove more complementary than competitive.
Anobit’s familiarity with SanDisk’s approach just might make SanDisk NAND all the more strategically desirable to Apple.
Along these lines, two items from September 2011 bear watching.
First Baird analyst Tristan Gerra reported that “SanDisk is building capacity dedicated to Apple”
Then a Confidential Treatment order was filed by SanDisk with the SEC.
Such a CT order allows a company, in this case SanDisk, to meet SEC filing requirements while keeping the relevant info secret.
If a material agreement had been reached between SanDisk and Apple, a CT order wouldn’t be unexpected, given Apple’s obsession with secrecy.