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SanDisk (SNDK - Analyst Report) has introduced an enhanced version of iNAND Extreme flash drive, which is compatible with Intel’s (INTC - Analyst Report) new Atom Z3000 processors, also known as ‘Bay Trail’ for tablets. The new iNAND Extreme’s 128GB storage space and high read/write speed will complement Atom Z3000’s performance.

The iNAND device enables faster application loading, speedy data synchronization in the cloud and higher streaming capabilities for an enhanced user experience. Apart from the tablets, it can also be used for smartphones and other mobile computing devices.    

Moreover, Intel’s Atom processors have received positive response from tablet makers. Reportedly, companies like Asus, Dell , Hewlett-Packard (HPQ - Analyst Report), Lenovo, LG and Toshiba are developing devices based on the Atom Z3000 architecture.

Thus, it is a prudent decision for SanDisk to produce ‘Bay Trail’-compatible storage devices and gain from the current surge in demand for tablets. According to Gartner, tablet shipments are expected to grow 67.9% in 2013 to 202 million. Another research firm, Strategy Analytics, expects tablet shipments to be 180 million in 2013.

We believe that the synergies with Intel’s Atom processors and its greater adoption rate will provide greater stability to SanDisk’s revenue stream. We are also positive about SanDisk’s focus on mobile-embedded products (as several new smartphones and tablets, Ultrabooks and other end-client PCs running on SSDs are slated for launch).

SanDisk expects its SSD segment to grow to around 35% of its sales by 2016. The company also expects total SSD contribution to be 25.0% of total revenue in 2014.

However, lackluster PC sales, European issues, stiff competition from Western Digital Corp. and Seagate Technology plc (in the SSD segment) and currency fluctuations are concerns in the near term.

Currently, SanDisk carries a Zacks Rank #3 (Hold).

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