Hynix to cut NAND production

Digitimes claims Hynix is going to terminate 5% of the world's supply of NAND over the next 2 months by cutting production. Three days ago they were dismissing rumors Hynix was seeing increased buying from Apple. I think Samsung is the only one seeing any pulls from Apple right now and it's because they've got the 3G iPhone design where production is ramping. That can change... Apple hasn't bought any iPod NAND in a while. They'll probably need some soon.

This reduces overall NAND supply so people will think this is good for Sandisk. It's not really. You've got a weak retail environment. What this is more likely to do is increase the cost of raw NAND near-term, which hurts product gross margins for Sandisk (they buy raw NAND and package it into cards). Sandisk needs a strong retail environment and a loose supply market to really outperform. This won't get them there any time soon.

Stock might be a short here at $24.7... I don't think the quarter is going to be pretty.