2010.02.26 SNDK Investor Day- Dan Inbar

02.26.2010 SanDisk Investor Day- Dan Inbar
Senior Vice President & General Manager OEM Mobile & Imaging

[This transcription is not complete. I transcribed the portions that seemed most interesting.]

[Slide 97 Dan Inbar]

Hi, my name is Dan Inbar. I’m heading the mobile handset vendor and imaging group within SanDisk’s OEM group under Yoram.

[Slide 98 Storage for Mobile]

When we look at the mobile handsets there are really two memory devices within the handset. You have the cards that we have been talking a lot about. Yoram has shown us a lot of the innovation that goes on in the card world- a lot of the standards that we have been driving.

And there is also the embedded side. What I will try and focus on is this morning is on the embedded side of this component [device] even though I don’t want to underwrite [belittle] the card side. This is a significant business for us. In the OEM, Shuki will afterwards show you a lot of the retail volumes that we have and our market shares and it is a very significant, but what we would like to focus on today is on the embedded side.

[Slide 99 Storage for Mobile]

A lot of synergy. By having us play in both markets we can actually get a lot of synergies between the two components.  What we see, for example we are talking a lot about X3.

X3 is very complex. The whole architecture is complex. The ecosystem. Getting it mature. Getting the controller right. Getting all the issues out.

What we do is we introduce these new technologies first in the cards. We get it mature. We get a better understanding and then we move these technologies into the embedded world which is more demanding- more higher requirements.

So this is something that we are constantly leveraging- the fact that we have very large volumes in the removable world, and taking that and moving it into the embedded. And that is how we can continuously be ahead of the game by utilizing new technologies in the embedded world as well.

In addition there are a lot of innovative features. Sanjay mentioned SDC and we will some of those capabilities afterwards in Elliot’s presentation. But these kinds of capabilities are represented in the cards- can be brought back into the embedded world as well.

The other way around as well. When you talk about the AFM, that was mentioned earlier and I will go into it a bit later in a bit more depth, the AFM was basically developed in the embedded world initially because it is a closed ecosystem.

You can work with the processor, it is more open to flexibility, capabilities, and I will show you some of those things that we can do. But then as we standardize them, we can move them back into the cards and sell it into many more market segments.

So this is constantly being balanced between these two worlds. We are constantly leveraging each one of them.

But again as I said, I want to be focussing today’s presentation on our activity in the embedded because I think most of you are very familiar with what we have been doing on the card side.

[Slide 100 Embedded Managed NAND]

Going back to prehistoric cell phone days. That’s when the cell phone started. Basically all the memory was NOR. There was only a small amount of NOR memory within the device and basically Yoram was telling us before about the evolution [innovation??] of the microSD and how we brought NAND into the microSD world through innovating this new card format.

This was the approach that SanDisk at the time had for how to bring NAND into the cell phone because we identified that this was a great opportunity. At the same time, I by the way come from the msystems side of the family.

At msystems what we were developing was the MDOC. The MDOC was basically the same kind of concept- a system approach. We said that we want to bring NAND into the mobile world, but the cell phones had a NOR interface. So basically what we did, we took and we developed a device that had a NOR interface [missing recording] into the embedded world.

The market then followed. Some started by developing a similar NOR interface. And slowly slowly  chipsets understood, and we were constantly promoting the value of NAND, and they added NAND interfaces. So the market moved into supporting NAND and continued.

[Slide 101 Embedded Managed NAND]

But by that stage, we already understood the value of MLC. So we developed the same components based on MLC NAND. And that’s where we moved primarily to booting from MLC. This brought already the values of the combined SanDisk and msystems with the great flash understanding- system approach, embedded understanding.

[Slide 102 Embedded Managed NAND]

Combining all that together allowed us to bring an MLC booting device. The market then followed as well. As Eli mentioned before, initially, many of our competitors were saying MLC was not good for embedded. Not good at all, then it’s not good for embedded. Then you can use MLC as a mass storage device, but don’t use it for code. It’s not reliable enough.

[Slide 103 Embedded Managed NAND]

So we went straight to MLC booting device. Mass storage as well and we continued to push this market- and obviously the market caught up with us [agreed with us] and understood that MLC is- Yes its a very good technology and it can be used for booting as well.

[Slide 104 Embedded Managed NAND]

But what we are doing now is we’re actually moving to the next step which is X3. Basically what we are saying is that X3 is a technology that we feel very comfortable in promoting it and making it the main mass storage device in the handset. This basically can remove a lot of other memory- because you don’t need the NOR, you don’t need the SLC NAND, you don’t need anything. You just need one mass storage device that can replace all the nonvolatile memory.

As the capacity is getting bigger and bigger, the fact that we are utilizing X3 becomes more and more valuable for the solution in the handset.

So this is something that we have been pioneering. And I think you can see that we have constantly been driving the market to utilize the latest and greatest flash technology utilizing our system approach.

And this has been close work with the whole ecosystem. The chip-set manufacturers that we are constantly in dialogue with them. It takes the OS vendors. Its combining of features that are constantly there in order to develop and utilize this technology.

Because as you saw in Yoram’s slide, and I will try to show it in a bit more detail now. The requirements are getting more and more difficult.

[Slide 105 SanDisk Advanced Technology]

Obviously someone who is buying a memory component, he wants to pay- hopefully nothing- but he wants it as cheap as possible- whatever he is paying for the memory.

He wants to make sure that the data that he has is going to stay there. He wants to make sure that you can write multiple times on the device. As many times as the life of the handset.

[Slide 106 SanDisk Advanced Technology]

You want to make sure that the sequential read/write and the random read/write, which are two different approaches, are as fast as needed. So if you kind of present what is the market expectation and we overlap that with what is happening with the technology, you will see that as the technology migrates we are getting better and better cost structure and that is the cost reduction that we were seeing before in Sanjay’s presentation, but we are paying the price that the raw flash is constantly being degraded. It constantly has less and less capabilities in the raw flash.

And that is something that’s physics at the end of the day- and constantly happening and constantly migrating.

[Slide 107 SanDisk Advanced Technology]

So what we are doing with our system approach is identifying what the flash can do and taking the capabilities and trying to expand them. And I will give you a few examples just so you can understand what I am talking about.

[Slide 109 SanDisk Advanced Technology]

This is basically the AFM that you have been hearing throughout today. An example in order to create the endurance, what we have developed is what we coined as smart caching.

[Slide 110 SanDisk Advanced Technology]

Which is basically creating within the flash an area which is like a sketch pad for the user. The user meaning the handset- the OS, the chip set. Being able to use that as an area that is constantly using [being used for] small quantities of data, fast moving data that you constantly need to use.

So you create a special area, within the flash that is utilized in a certain way. We call that smart caching. That allows you to use the flash, if configured in the right way, to get a lot more out of it.

[Slide 111 SanDisk Advanced Technology]

The same thing when you go to data retention. The code, many of our competitors will tell you that you can’t put it on an X3 device. Some of them were saying until recently MLC, that you can’t put on an X3 device- code.

Its not reliable enough. Its very risky. They’re right. It is- if you are using it in the raw data, it is very risky.

But if you consider the flash and you take a small portion for the code- which at the end of the day, out of the whole capacity is a very small part- if you take that capacity and allocate to it a small quantity and you consider it to work as similar to an SLC mode, then you’ve got the reliability that you need. There is no issue. There is no reason to add another component, which would be the SLC or even NOR- if you go even further back. You save the cost of that component. Therefore you have a much more competitive solution.

[Slide 112 SanDisk Advanced Technology]

Another example is the sequential write. Working with the system. Understanding the environment that we are in. Not being just a dumb memory device. Understanding the environment that we are in and having a dialog with the chip set or with the OS or the application. Having that dialog allows us to do a lot of things that before we could not.

For example, when you connect your hand set to your PC in most cases the USB device, you want to do cycles [sideloading?]. but also try charging the device at that time.

So what happens is that you also can actually change the mode that you use in the memory- utilize more power- because power is unlimited when I am connected to the PC really. And change the mode of working with the flash and therefore do significantly faster sideloading that you can’t do if you are working in the regular mode. But that requires understanding of what you are actually doing now in the memory and what is the handset environment.

These things are the kinds of things that we are developing and working together with the chip sets and OSs and driving these innovative solutions.

Initially we work with a partner- it can be various hand set manufacturers; it can be chip set manufacturers- and then we drive it into the standard. Because by driving it into the standard we get the economies of scale that we are constantly looking for. And this I think is where SanDisk is so good at creating these innovative ideas and then helping them become standards in the market.

[Slide 113 SanDisk Advanced Technology]

To summarize this, adaptive flash management is really- if you remember the slide that Sanjay was showing where there was a huge gap between what the customers were asking [for] and where is the flash technology is going.

We believe that using adaptive flash management we can close this gap.

In fact this is what also would allow us to bring the X3 to be a key player within the embedded world. This is the work that we are constantly working with and we are seeing already some designs in this market that are utilizing the X3 moving forward.

So getting the X3 to work, it is not a walk in the park. It is a big challenge. It requires a huge effort. Very sophisticated system integration. And advanced system understanding and working with the full ecosystem. But I think this is where SanDisk actually shines and this is where we know what we need to do.

[Slide 117 Smart Memory for Smart Phones]

If I try and summarize, basically what we are doing is we have on the one die we have different areas which are managed differently and can – very dynamically based on what is happening in the handset, in the OS and the chip set, by having a dialog with them- we can adapt the way we work in real time and make sure that we are making the most out of a given technology. Because the technology is a technology, but you have to make it be smarter.

As Eli said before, flash is bigger than you think. I would add to that, flash is also way smarter than you think. And in order to succeed moving forward, flash really has to be smart. It has to be smart, otherwise it just won’t work.

[Slide 118 Mobile Embedded Market Growth]

Why are we doing all this. You saw before in Yoram’s slide the growth in the embedded in the units.  Also if you think about it, its not only the units that are growing very fast, its also the average capacity.

The embedded average capacity in a handset is growing significantly and some of the users, such as the iPhone of course which are helping this grow rapidly, are bringing significantly higher capacity into the handset.

So we have a market which is actually a win-win. What with the units are growing very fast and average capacity is growing very fast. So the petabytes of course are becoming very very significant in this market. So this for us is a very good opportunity and as the capacity is higher and higher, we are actually playing into SanDisk’s strength.

The high capacity where we can utilize the X3 and the new technologies, for us it’s a great market to be in. This is a market that we like to be in. So this market is actually moving from a lower capacity market into high capacity where X3 can be utilized very widely and for us this has now become a very attractive market segment.

And in fact we are seeing in fact you are seeing this huge growth that analysts are predicting we’re seeing if we look at 2008 to 2009 and what we are seeing from 2009 to 2010, we actually are growing even faster than what the market is showing.

So this is for us a very promising market segment.

[Slide 119 Other Embedded Opportunities]
I’ve been only talking about the mobile- mobile embedded in fact. But we have a lot of activity beyond that and there are a lot of market segments out there. And if we go through the different market segments, we talk about the GPS, the gaming devices, the DVCs, the portable media players, netbooks, smartbooks, ereaders. We have today design wins in each one of these market segments already today.

So this is a market that is growing very fast and the utilization of flash as was presented by Eli earlier, we are seeing it proliferating through many many markets. Yes the mobile is the main growth engine and we are very focussed on that one, but we are seeing that we can proliferate this very quickly into other segments and the reason why we are successful in taking this flash into various segments is exactly that adaptive flash management that I was referring to.

Because the way we do it is for each segment the user profile of the device is different. But if we have the adaptive flash management we can adapt to the specific needs of each of these segments and use the flash in the specific way that is most appropriate for that market segment.

[Slide 120 Summary]

If I summarize what we are seeing. I hope you have seen in my short presentation that the embedded is a very significant opportunity. It is a huge market both in units and in petabytes. It requires smart and adaptive memory in order to succeed in this market. And I believe this is exactly what plays to SanDisk’s strengths. This is exactly the areas and the markets that we like and we can succeed in.

Thank you very much.

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