SanDisk builds memories
Flash chips store personalized digital information

by Ann Haver-Allen

Eli Harari *71 *73 said that everything he learned about the fundamental properties of conductors and insulators he learned from Professor Barrie Royce while a graduate student at Princeton.

"The underlying physics that we were studying and trying to understand in 1970, '71, and '72 here at Princeton constituted some of the fundamental technology that went into the devices that today are used for storage and memory," Dr. Harari said. "It is gratifying that this technology is put to good use on a daily basis because this is basically how you store images in your digital camera or music in your MP3 player and so forth."

Dr. Harari, founder, president, and chief executive officer of SanDisk Corp., is a pioneer in nonvolatile memory and semiconductor systems design. He holds numerous patents in the area of nonvolatile memory technology.

SanDisk, which led industry development of flash memory cards for data storage and played a key role in setting many flash industry standards, is located in Sunnyvale, Calif., in the heart of the Silicon Valley.

The Silicon Valley is more like Paradise Lost lately

SanDisk's stock has not been immune to this widely fluctuating market. For example, in March 1999, the company's stock was valued at $13 a share. The following March, the price per share was $145. This March, the price had fallen to $23.

But Wall Street's fickle opinions have impacted SanDisk less directly than other high-tech companies. That's because Dr. Harari runs SanDisk a bit differently: the company has no debt. In fact, revenues for 2000 were up 145 percent from the previous year (see chart at left).

"We are in a very, very strong financial position," Dr. Harari said. "We have over $450 million in cash and no debt. We are very conservatively run. We invest very heavily in R&D in current technology development. The name of the game in our industry is to keep things moving. Our technology pace is to obsolete our previous generation every 18 months or so. The trick is to obsolete yourself before somebody else does it for you."

That process of obsolesce every 18 months is Moore's Law, Dr. Harari said. Gordon Moore, the chairman of Intel, said that every 18 months the semiconductor should double in effectiveness. That means either twice the number of transistors for the same cost or twice the computational power.

When SanDisk was founded in 1988, the company's leading-edge chip was four megabits. Today's flash chip stores 512 megabits. That's a growth of 128 times over 12 years.

"That growth is continuing," Dr. Harari said. "We probably have the next 10 years before we start running into some very difficult physical limitations."

SanDisk's primary product is flash memory, which stores enormous amounts of digital information. Flash memory is used in digital cameras, portable digital music players, cell phones, and a host of other wireless devices that are quickly growing in popularity with consumers around the world.

Go wireless

Dr. Harari said that while personal computers were the main engine for growth in the electronic industry over the past 20 years, wireless communications and the Internet will be the driving force over the next 20 years.

Communication in this increasingly mobile world will become even more mobile. The cell phone is key to that. Within two to three years third generation (3G) cell phones will hit the market, Dr. Harari said. These phones will do much more than allow the user to make a phone call. The 3G-cell phone is going to be a complete, portable, wireless communication device.

"They are basically going to do everything that the PC can do," Dr. Harari said. "The cell phone will become an Internet appliance and allow access to financial information, medical records, everything that is your personal electronic content. SanDisk is working to allow you to take all your intelligent personalized digital information and content away from the desktop and keep it with you on a card that is made by us."

The cell phones of tomorrow will be "smart phones," with a multimedia player for music and movie listening and viewing. Tomorrow's cell phones will be used for data communication. There will be no need to have multiple electronic devices: the 3G will be all things electronic to all people.

The market potential is explosive. The cell phone industry sells about 400 million phones a year. Projections call for that to increase to more than a billion in five years. Add to that formula the fact that five in six people in the world today have never used a phone. Wireless technology is making it possible for anyone, anywhere in the world to own and use a phone.

"The strongest drive is communication," Dr. Harari said. "People want to communicate with one another. And that is the basic function of the cell phone. Once you allow it to also transmit information or become a music player, then you don't need other electronic devices. Phone companies have taken a slew of licenses to frequencies to serve this third generation phone, and you can be sure they will find applications for use to repay all those investments for the frequencies. That use will be the smart phone."

Photo kiosk

SanDisk is also working on improving the print quality of digital images. The company recently entered an agreement with Photo-Me International to produce the world's first silver halide processing digital photo kiosk. This is revolutionary because it means dig ital camera users can finally get affordable, high-quality prints.

"This service will use the most advanced silver halide technologies, basically the same technology used in a mini-lab or a one-hour development lab," Dr. Harari said. "But this is self service. You would plug your flash card in and it would show you all the pictures you have taken and ask you which ones you want printed. It prints within three minutes, using silver halide process and Kodak paper.

"The photos are high-resolution and cost about 30 cents a print," he said. "These kiosks will close the loop on digital photography. Every kiosk will be interconnected to a Website, which means you take your pictures, download them to the kiosk, upload them to your personal Website, and store them indefinitely. Anyone, anywhere in the country can make prints by using your private pass key."

This technology is not in the distant futureþit is happening now, Dr. Harari said. SanDisk hopes to have 15 or so beta sites operating by the end of the year. After that, SanDisk plans to "start rolling them out as fast as we can build them."

Mr. Harari said the infrastructure always lags behind the technology by several years. Technological advances are made, people love the new toys, but getting the necessary infrastructure built takes time. He said that in the case of digital cameras, the drawback has been getting satisfying prints at reasonable prices that don't fade with time. The SanDisk kiosk will eliminate the last perceived drawback of digital cameras.

Mr. Harari said he has given a lot of thought to the future of SanDisk.

"For the next 10 years, I think that we are going to change the world," he said. "In fact, we have established a baseline, and the next challenge is to change the world with our products and our technology. We have put a lot of thought into it."

So if he learned all the fundamental properties of conduction and insulators while in graduate school at Princeton, what advise does he offer to today's graduate students?

"Try not to spend more than four years in graduate school," he said. "There is just so much excitement and so much challenge outside the university, so get your degree as soon as possible."

Above, the DigitalPortalTM kiosk, a self-service digital photographic kiosk that produces professional quality prints quickly from image files stored on flash memory cards, floppy disks, or CDs. Top right, the ImageMate