SanDisk (SNDK) and OmniVision Technologies (OVTI) are two chipmakers that are growing at a good pace. Both companies recently reported solid results and look set to scale new heights in the future. Let us take a closer look at both of them and check why they can be good investments for the long run.
The partnership of SanDisk with China-based mobile device manufacturers is proceeding very well, and the former is witnessing solid revenue growth in this part of the market. SanDisk launched iNAND Standard, which is X3-based embedded offering, and expanded its mobile offerings for mid- and entry-level smartphones and tablets.
SanDisk delivered record second quarter revenue in retail with a mix of high-performance, ultra and extreme products, contributing approximately half of the retail revenue. There’s a greater need for high-performance, high-capacity removable storage solutions driven by key market trends such as ultra-high definition video and high resolution imaging features in various consumer devices that illustrates its retail strength, including its valuable brand, excellent performance-based product segmentation and broad global reach. SanDisk is believed to be well-positioned for strong performance in retail for the upcoming quarter.
SanDisk is expected to have solid demand from its OEM customers for the 19-nanometer technology nodes, and it’s committed to support the demand for products based on this technology. SanDisk expects approximately 5% wafer capacity growth in 2014 and its supply bit growth to be at the lower end of its previously stated range of 25% to 35%, given the robust OEM and enterprise demand for 19-nanometer supply.
SanDisk expects a strong industry demand supply environment for the rest of the year. The company also expects to manage its revenue mix with keen focus on its strategic priorities and customer relationships. SanDisk continues to make healthy progress with its 15-nanometer technology development and expects to start the production ramp toward the end of this year. The 3D NAND technology development of SanDisk also continues to make excellent progress with pilot production expected to start in the second half of 2015 and target production in 2016.
SanDisk has started benefiting from a shift in its sales toward solid-state drives for servers and personal computers. SSDs have started replacing mechanical hard-disk drives for data storage.
Rajvindra Gill of Needham & Co. quotes a Buy rating for SanDisk due to its improving mix to enterprise SSDs and embedded, which is a good model for the long-term.
Richard Whittington and Drexel Hamilton reiterate a Buy rating for SanDisk considering the fact that the company can look forward to solid demand for its products and healthy pricing despite short-term supply problems with flash.
A look at OmniVision
OmniVision has a strong technical team that is consistently engaged in enhancing and developing robust imaging solution technologies with high dynamic range and global shutter that will certainly increase its competitiveness in the future and benefit from the vast product and application opportunities that are available for OmniVision in the global market.
OmniVision has also observed strong growth in its security business, supported by the proliferation of self-installed low-cost IP cameras and geographic diversification into countries such as China. Also, the company has witnessed an inflection in its security business a couple of quarters ago due to the strong trend in the IP cameras that was building up momentum and should drive its security business going forward.
Above all, the company is also working aggressively on its cost-structure optimization that should help the company achieve a more sustainable growth given the scale of its business. The primary driver behind the implementation of this goal is successfully pursuing diversification across all elements of the supply chain.
Both OmniVision and SanDisk are focused on innovation. As a result, both companies should continue performing well going forward. Hence, investors should definitely consider both OmniVision and SanDisk for their portfolios for impressive returns in the long run.