SanDisk 2014 Annual Report Download - page 80

manufacturing equipment owned or leased by each of the Flash Venture entities. We hold a 49.9%
ownership position in each of the Flash Venture entities. Each Flash Venture entity purchases wafers from
Toshiba at cost and then resells those wafers to us and Toshiba at cost plus a mark-up. We are committed to
purchase half of Flash Ventures’ NAND wafer supply or pay for half of Flash Ventures’ fixed costs
regardless of the output we choose to purchase. We are also committed to fund 49.9% to 50% of other
Flash Ventures’ costs to the extent that Flash Ventures’ revenue from wafer sales to us and Toshiba are
insufficient to cover these costs. We and Toshiba also collaborate on joint R&D activities.
Competition
We face competition from NAND flash memory manufacturers and from companies that buy NAND
flash memory and incorporate it into their end products.
We believe that our ability to compete successfully depends on a number of factors, including:
• product performance, reliability and differentiation;
• price, quality and availability of products;
• success in developing new products, applications and markets;
• timing of new product announcements and successful introductions;
• sufficient availability of cost-efficient supply;
• creation and monetization of IP and the development of industry standards and formats;
• the number and nature of competitors in a given market; and
• general market and economic conditions.
We believe our key competitive advantages are:
• our strong history of technological innovation and standards creation, which enables us to grow the
overall market for flash storage solutions;
• our vertically integrated business model, including our investment in Flash Ventures, which provides
us with leading-edge, low-cost NAND flash;
• we are the only pure play NAND flash storage solutions provider, which strengthens our focus on
NAND technology and solutions;
• our IP ownership, in particular our patents, and multi-level cell, or MLC, manufacturing know-how,
which provides us with license and royalty revenue as well as cost advantages;
• our system expertise in controller and firmware development;
• that we market and sell a broad range of flash storage products, which gives us an advantage in
attracting and retaining retail and commercial customers;
• that we have global retail distribution for our products and worldwide leading market share in
removable flash cards and USB flash drives;
• that we have a well-recognized and trusted brand; and
• our strong financial position.
Our competitors include:
•NAND Manufacturers. We compete with NAND flash memory manufacturers, including Hynix,
Intel, Micron Technology, Inc., or Micron, Samsung and Toshiba. These companies compete with us
in selling a range of flash-based products and form factors, including embedded, SSD, removable
and other form factors. We compete with these NAND flash memory manufacturers based upon
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