SanDisk 2006 Annual Report Download - page 56

Download and view the complete annual report

Please find page 56 of the 2006 SanDisk annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 160

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160

Technology. Since our inception, we have focused our research, development and standardization efforts on
developing highly reliable, high-performance, small form factor and cost-effective flash memory storage products
to address a variety of emerging markets. We have been actively involved in all aspects of this development,
including flash memory process development, module integration, chip design, controller development and system-
level integration to ensure the creation of fully-integrated, broadly interoperable products that are compatible with
both existing and newly developed system platforms. We are investing to extend our 2-bits/cell memory storage
technology to 3-bits/cell, or X3, and 4-bits/cell, or X4, storage technologies. In addition, we are also investing in
three-dimensional memory architecture with re-write capabilities. We believe our core technical competencies are
in:
• high-density flash memory process, module integration, device design and reliability;
• securing data on a flash memory device;
• controller design;
• system-level integration;
• compact packaging; and
• low-cost system testing.
We have also initiated, defined and developed standards to meet new market needs and to promote wide
acceptance of the standards through interoperability and ease-of-use.
To achieve compatibility with various electronic platforms regardless of the host processors or operating
systems used, we developed new capabilities in flash memory chip design and created intelligent controllers. We
also developed an architecture that can leverage advances in process technology designed for scaleable, high-
yielding, cost-effective and highly reliable manufacturing processes. We design our products to be compatible with
industry-standard interfaces used in standard operating systems for personal computers, mobile phones, gaming
devices, music players and other consumer and industrial products.
Our patented intelligent controller technology with its advanced defect management system permits our flash
storage card products to achieve a high level of reliability and longevity. Each one of our flash devices contains
many millions of flash memory cells. For example, our 4 gigabyte cards may contain as many as 35 billion storage
cells. A failure in any one of these cells or in a group or block of cells can result in loss of data such as picture files,
and this can occur several years into the life of a flash storage card. The controller chip inside our cards is designed
to detect such defects and recover data under most standard conditions.
Patents and Licenses. We rely on a combination of patents, trademarks, copyright and trade secret laws,
confidentiality procedures and licensing arrangements to protect our intellectual property rights. See Item 1A,
“Risk Factors.”
In 1988, we developed the concept of emulation of a hard disk drive with flash solid-state memory. The first
related patents were filed by our chief executive officer, Dr. Eli Harari and exclusively licensed to us. As of the end
of fiscal year 2006, we owned or had rights to more than 600 United States patents and more than 300 foreign
patents, have more than 1,100 patent applications pending in the United States, and have foreign counterparts
pending on many of the applications in multiple jurisdictions. We continually seek additional international and
United States patents on our technology.
Through our acquisitions of Matrix Semiconductor, Inc., or Matrix, in early fiscal year 2006 and msystems in
late fiscal year 2006, we have acquired access to fundamental patents on three-dimensional, or 3-D, memory
architecture and X4 data storage technologies, respectively. Patents transferred to us upon completion of the Matrix
acquisition included 124 United States patents, approximately 14 foreign patents, and approximately 141 patent
applications pending in the United States. Patents transferred to us upon completion of the msystems acquisition
included 54 United States patents, approximately 66 foreign patents, and approximately 201 patent applications
pending in the United States. In addition, through these acquisitions, we have foreign counterparts pending on many
of the applications in multiple jurisdictions.
7
Annual Report