SanDisk Corporation (SNDK) recently inked a deal with ASUSTeK Computer Incorporated. Financial terms of the deal were not disclosed.

Popularly known by its brand name ASUS, ASUSTeK Computer manufactures motherboards, laptops, servers and mobile phones. The company also produces components for other manufacturers, including Dell Inc. (DELL), Falcon Northwest, Hewlett-Packard Co. (HPQ) and Apple Inc. (AAPL).

Under the terms of the deal, ASUS will use SanDisk’s recently launched U100 solid state drive (SSD) in its upcoming UX Series ultra-thin notebook.

The newly launched U100 SSD is the advanced iteration of SanDisk’s P4 modular SSD series. The new drive has a SATA III interface and can transfer data to and from the PC at roughly double the speed of P4 drives. The U100 SSD is targeted at ultra-thin laptops and will be available in capacities from 8GB to 256GB.

With the help of the U100, ASUS will be able to deliver next generation notebooks that are thinner, perform faster and have a longer battery life.

Apart from U100 SSD, SanDisk also introduced the integrated SSD (iSSD), targeting tablet PCs. iSSD will be available in capacities ranging from 8GB to 128GB.

Now-a-days, the next best alternative to hard drives is solid-state drives. SSDs are flash memory-based and are smaller, lighter and use less power than hard disks. Moreover, SSDs use microchips that retain data in non-volatile memory chips and contain no moving parts.

We believe that flash memory will remain highly coveted as it provides the most viable data storage on smartphones, tablets and other portable devices. Moreover, SanDisk’s solid state drive design wins into Intel Corp.’s (INTC) Sandy Bridge PC platforms are also encouraging.

However, a high debt balance, customer concentration risk and European weakness are headwinds for the company. Despite these headwinds, we are optimistic about the long-term growth story of SanDisk.

Currently, SanDisk holds a Zacks #3 Rank, implying a short-term Hold rating.

 
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