SUNNYVALE, Calif.--Flash memory supplier SanDisk Corp. here today cut its revenue forecast for the third quarter due to severe pricing pressures on products resulting from weak market conditions and too much competition. SanDisk said it now expects third-quarter revenues to sequentially fall 35% from $88 million in the prior quarter instead of being flat with Q2.
"SanDisk continues to focus on product cost reductions through the transition of all production to the 0.16-micron NAND Flash at Dominion in Virginia and Yokkaichi, Japan," said Eli Harari, president and CEO of SanDisk. The Sunnyvale company has formed a joint venture with its manufacturing partner, Toshiba Corp., which is producing flash memories at its Dominion Semiconductor facility in Manassas, Va. (see June 6 story). Toshiba is also producing NAND flash chips for SanDisk in Japan.
"We expect to complete winding down the production of our NOR Flash products in the fourth quarter, which includes shutting down product manufacturing operations in Sunnyvale," Harari said. The company did not say how many jobs will be lost at the facility.
"These actions are expected to give us a lower product cost structure in the first quarter of 2002," said the chief executive. SanDisk also has invested in a new 8-inch wafer fab being built by Tower Semiconductor Ltd. in Israel. This week, Tower announced its partners in the new fab have agreed to take stock in the foundry company instead of credits for processed wafers (see Set. 17 story).
"Despite the very challenging current conditions, we continue to believe that the drastic price declines will translate into an elastic increase in demand for our products once market conditions improve," Harari said.
SanDisk said its product gross margins will substantially lower than previously projected due to the erosion of memory prices and lower unit volumes. The Sunnyvale company now expects to post a third-quarter net loss of $0.60 per share from ongoing operations compared to its previous guidance of a loss of in the $0.10-to-$0.15 range.