SanDisk 2003 Annual Report Download - page 9

Continue to Expand Our Intellectual Property Portfolio and Lead Technological Innovation. We
intend to enhance our market position by continuing to invest aggressively in research and development,
advanced process technology and intellectual property, focusing on leading-edge NAND Öash, MLC
NAND Öash and high-performance, low-cost microcontrollers for our Öash storage card products.
In the Ñscal years ended December 28, 2003, December 29, 2002 and December 30, 2001, product sales
to our top 10 customers accounted for approximately 50%, 48% and 49% of our product revenues, respectively.
In 2003, 2002 and 2001, no single customer accounted for greater than 10% of our total revenues. However,
seven of the top ten customers for 2003 were also part of our top ten customers in 2002 and 2001. We expect
that sales of our products to a limited number of customers will continue to account for a substantial portion of
our revenues for the foreseeable future. We have also experienced changes in the composition of our major
customer base from year to year and expect this pattern to continue as certain customers increase or decrease
their purchases of our products as a result of Öuctuations in market demand for their products and the
development of new product categories. Sales to our customers are generally made pursuant to standard
purchase orders rather than long-term contracts. The loss of, or signiÑcant reduction in, purchases by any of
our major customers, could harm our business, Ñnancial condition and results of operations.
Our products oÅer the following features:
Small Form Factor. Our CF card products weigh about half an ounce and are approximately the
size of a matchbook. Our MultiMediaCard and SD card products are approximately the size of a postage
stamp and weigh less than two grams. Pioneered for multimedia phones, the miniSD card is about the
size of a thumbnail. Our USB FlashDrives are approximately the size of a small pack of gum.
Non-volatility. Our products store information in non-volatile memory cells that do not require
power to retain information.
High Degree of Ruggedness. Our devices have an operating shock rating of up to 2,000 Gs for the
Extreme line of products. This is equivalent to being able to withstand eight-foot to ten-foot drops onto
concrete. Our products are also designed to tolerate extensive Öuctuations in temperature and humidity.
Low Power Consumption. During read and write operations, our products use less power than the
rotating disk drives found in many portable computers. At all other times during system operation, our
products require virtually no power. Depending upon the end product making use of our Öash data
storage, this can translate into longer battery life.
High Reliability. Our products utilize sophisticated error detection and correction algorithms and
dynamic defect management techniques to provide high data reliability and endurance.
High Performance. We believe that the read and write data rates of our products meet or exceed
the read and write data rates required today by the majority of consumer and industrial/communications
applications.
The Öash process and Öash memory chip designs developed by us in cooperation with our partners make
our products scaleable over several generations of semiconductor fabrication processes. This feature has
allowed us to signiÑcantly reduce our cost per megabyte of capacity with each new generation of our products.
By maintaining the same basic design parameters, each generation of our Öash memory products maintains
full compatibility with prior generations. This chip architecture has allowed us to signiÑcantly reduce cell size
and thereby chip size. This has allowed us to increase storage capacity and lower the cost of our Öash memory
products.
SanDisk's Products
Our storage products are high capacity, solid-state, non-volatile Öash memory devices that comply with
industry standards, including the PC Card ATA and/or IDE, MultiMediaCard, SD cards, miniSD cards, and
Memory Stick standards. We oÅer a broad line of Öash data storage products in terms of capacities, form
factors, operating voltage and temperature ranges. Our current product families include removable Compact-
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