Amtech on Sandisk (NASDAQ:SNDK) (Focus List BUY): SSD Adoption is Being Constrained by Cost/Benefit Equation. Based on our checks during the recent AmTech Asia Bus Tour, we believe that SSD demand and adoption rates are being temporarily delayed by price, performance and endurance issues, which could result in push-outs of volume ramps until 2010. The obvious headwind is SSD pricing preventing demand elasticity, including SLC and initial MLC-based solutions. Asia-based ODMs believe that pricing is preventing SSD adoption in their notebook platforms. We also think SSD performance is a significant factor holding back adoption as the throughput performance of SSD-based storage is not improving as expected, especially in high-end server systems. Volume adoption of notebook SSDs based on MLC NAND could be pushed out into 2010 as customer perceptions of high price and low performance needs to be addressed by suppliers. We believe the low endurance of inexpensive MLC SSDs is a new constraint that storage architects must accept and design solutions around and is not a permanent headwind to SSD demand elasticity.

Maintain BUY on SNDK rating and $40 price target.

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