SanDisk 2013 Annual Report Download - page 115

ability to react to fluctuations in supply and demand makes us particularly susceptible to variations from
our forecasts and expectations, and even in times of excess demand, our operating results may be harmed.
The future growth of our business depends on the development and performance of new and existing
markets for flash memory, including the SSD markets, and on our ability to maintain or improve our position in
these markets. Historically, removable flash memory imaging cards and USB drives, both sold primarily
through the retail channel, provided the majority of our revenue. As growth in these retail products
slowed, we increased sales of embedded NAND flash memory and cards for devices such as mobile
phones, tablets, and other mobile devices, which now represent the largest percentage of our revenue.
More recently, SSD products have generated the largest portion of our revenue growth. Our future growth
is dependent on the development of new markets, new applications and new products for NAND flash
memory, and on the continued use of NAND flash memory in existing markets and on our ability to
maintain or improve our position in such markets. There can be no assurance that the use of NAND flash
memory in existing markets and products will continue or grow fast enough, or at all, that we will be able to
maintain or improve our position in existing markets, or that new markets will adopt NAND flash
technologies in general or our products in particular, to enable us to grow.
Over the next several years, we believe that the largest growth areas for NAND flash will be SSD
solutions in client computing and enterprise data center applications, whereas the mobile market for
NAND flash is expected to grow at a slower rate than in the past, and the retail market for NAND flash is
expected to be approximately constant or declining. We will continue to make significant investments in
the development of hardware and software solutions for SSD markets in order to successfully penetrate
and gain market share in SSD solutions. Our ability to succeed in the SSD solutions market is subject to
various risks and uncertainties, including, among other things:
• we may be unable to successfully develop or qualify SSD solutions that meet our customers’
requirements, and even if we do, we cannot guarantee that customers will adopt our SSD solutions;
• designing and qualifying products in the SSD solutions market will require greater investments and
customization than our traditional products, which results in longer development cycles and higher
costs;
• the complexity and longer development cycles required for SSD solutions increase the risk of
development delays that can result in missing customer qualification cycles and other market
opportunities;
• due to longer customer product cycles and end-of-life product support requirements in SSD
solutions, we may be unable to transition customers to our leading edge products, which would
prevent us from achieving the full cost advantage of new technology transitions;
• products that contain our leading-edge technologies, whether based on 2D NAND or our
alternative 3D NAND or 3D ReRAM technologies, may be unable to meet the performance
requirements of SSDs or to compete effectively with products from our competitors, which would
inhibit our ability to succeed in these markets and could impair our growth and profitability
prospects;
• we may be unable to reap the expected benefits of our recently completed and pending acquisitions,
many of which relate to the SSD solutions space;
• SSD solutions require more software than our traditional products, therefore we must continue to
develop software expertise;
• SSD solutions require more complex controllers than our traditional products, and we may be
unable to develop or source controllers that meet the performance requirements of SSDs;
• SSD solutions incorporate unique non-flash memory parts, and if there is lower than expected
demand, we may be unable to incorporate these unique parts in other non-SSD products;
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Annual Report