How Did SanDisk’s Product Mix Drive Revenue Growth?

How Did SanDisk’s Product Mix Drive Revenue Growth?




Seasonalities affected SanDisk’s sequential growth

In the earlier part of the series, we saw that SanDisk (SNDK) reported growth on a YoY (year-over-year) basis but posted declines on a sequential basis. The sequential declines reflect the impact of seasonalities. Let’s look now at the segments that led to a YoY growth.

How Did SanDisk’s Product Mix Drive Revenue Growth?

SanDisk’s product mix 

SanDisk earns revenue from five segments: removable, embedded, enterprise, client SSD (solid state drive), and other. The above graph shows that the company continues to earn most of its revenue from removable. However, the shares of the enterprise segment and the other segment were the highest in the past two years at 16% each in fiscal 1Q16. Both segments reported strong double-digit growth.

However, the weak link was the embedded segment, with its revenue share falling to the lowest level in the past two years at 16% in fiscal 1Q16. There were more growth drivers than growth stoppers, causing overall revenue of the company to grow.

Now let’s look at each segment separately.

Embedded

SanDisk’s embedded business comprises storage products that attach to a host system board and are used in smartphones and other embedded devices. The segment’s revenue fell 33% YoY in fiscal 1Q16, driven by the slowdown in the smartphone market. This slowdown has impacted big names such as Qualcomm (QCOM) and Apple (AAPL), which reported revenue declines in the March 2016 quarter. However, Samsung (SSNLF) posted revenue growth driven by strong sales of its flagship product, the Galaxy S7.

SanDisk is looking to incorporate the use of NAND (negative-AND) in the removable and embedded space. It has launched its X3 eMMC (embedded multimedia controller) solutions. The solution is currently in the early stages of design wins. Meanwhile, its X3-based iNAND 7232 has secured new design wins, and the company plans to ramp up production throughout fiscal 2016.

The company has also enhanced the features of its automotive grade SD card and Industrial XT SD card. These cards now feature an improved power failure protection and a memory health status monitor.

In the next part of the series, we’ll look at the other segments’ performances. The iShares Russell 1000 Value ETF (IWD) has investments in large-cap US equities across various sectors, including technology. It has 0.64% exposure in QCOM and 0.15% in SNDK.






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