SanDisk: New Evidence Of Coming NAND Supply Shortage

The key factor in Apple’s (AAPL) big quarter Wednesday was the dramatic jump in gross margins - and that was due in large part to a huge drop in component prices, in particular NAND Flash memory chips.

But Apple also noted that the June quarter margins would shrink - this time because of an anticipated increase in NAND pricing.

Citigroup’s Craig Ellis was all over that news yesterday morning, as well he should have been given that on Tuesday he raised his rating on SanDisk (SNDK) to a Buy, based on anticipation of firming NAND fundamentals.

In addition to noting Apple’s comments, Ellis also pointed to comments from Hynix, which yesterday said it expects NAND pricing to be up 20% sequentially in the second quarter.

Ellis says he would be a buyer of SanDisk shares on weakness.

SanDisk yesterday was up 99 cents at $44.92.