Lexar Touts Supply Diversification

LAS VEGAS — After enduring several financially bruising years, Lexar will leverage the manufacturing capabilities of its new owner, Micron Technology, to insulate itself from the dizzying price swings in the flash memory market, president/COO Mark Adams told TWICE.

Unlike its arch-rival SanDisk, Lexar did not manufacturer its own NAND flash but relied on a "fab-less" model to source the raw material for memory cards and USB drives from others (principally Samsung). Such an approach left the company vulnerable to supply shortages and price pressures, Adams said.

Thanks to the Micron acquisition, which occurred in June of 2006, Lexar will have access to more stable supplies, Adams said.

"We won't source all our NAND from Micron — we'll have a strong diversification, but we won't be a hostage to the market," he said. As a result, retailers will find Lexar "much easier to deal with," he said.

"We'll have a broader range of product categories including consumer entertainment devices," Adams said. "You'll see a broader portfolio from us in 2007."

There will be a greater emphasis on cards for mobile phones and GPS units with a related effort to push the brand into carrier stores. While the mobile phone OEM market is "super hot," the market for aftermarket cards has lagged behind, Adams said.

"We're stuck between a maturing digital camera market and a building mobile phone market. This year we're expecting more movement" with mobile cards at retail, Adams predicted.

USB flash drives, a staple of the company's offerings, have migrated from a utility to a "fashion accessory" and Lexar will focus its development on products with style, Adams said. Lexar will continue to promote its PowerToGo operating system rather than join the rival U3 platform developed by SanDisk and M-Systems.

"We continue to believe that PowerToGo is very strategic for us and offers a lot of benefits in terms of portability and compatibility" compared with U3, he said.

The company will also remain committed to the professional photography community, which it has cultivated to differentiate itself from a crowded field of flash suppliers, Adams said.

"The professional market will always be key for us."