Question-and-Answer Session
Operator
(Operator Instructions) We will go first to Daniel Amir with Lazard.
Daniel Amir - Lazard Capital Markets
Thanks a lot and congratulations on the good quarter. A couple of questions here -- first on the retail and OEM strategy, it seems like that the OEM has now become a bigger part of your business, which historically you’ve been predominantly a retail company. How do you think that impacts in the long-term the strategy of the company and the gross margins outlook, considering that the -- that OEM does have higher gross margins than retail?
Judy Bruner
Let me start out with that and then turn it over to Sanjay. What I would tell you is that the gross margin that we experienced between OEM and retail are actually quite comparable. OEM sales tend to have a lower ASP per gigabyte but they also tend to have a lower cost per gigabyte, as you think about the costs associated with selling in the retail channels, such as packaging and channel costs and so on. So the gross margins are actually fairly comparable between the two channels for us.
Sanjay Mehrotra
And we like the balance between retail and OEM, and as Eli pointed out in his script, it really uniquely advantages us and we want to ride the business on both fronts, and we believe we are very well-positioned to continue to do so in the future.
Daniel Amir - Lazard Capital Markets
Okay, and the follow-up question is just on your cost basis, it looks like more than 50% is now three bit or four bit. How should we look at exiting the year in both three bit and four bit and your 30X productions?
Sanjay Mehrotra
So with respect to three bit and four bit, in the fourth quarter the production of three bit, four bit -- bit production will be somewhat higher than the third quarter of 50%. All in all for the year, we will be achieving approximately 50% of three bit and four bit, and with respect to 32-nanometer, we are ramping and satisfied with the ramp. 32-nanometer in terms of total bit production will contribute approximately 10%, slightly above 10% of the fourth quarter, and most of that will be in three bit per cell technology.
Daniel Amir - Lazard Capital Markets
Okay, thanks a lot.
Operator
Your next question comes from the line of Vijay Rakesh with ThinkEquity.
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