Sometimes a good product announcement can overshadow even the direst political news.

Concerns over Israeli Prime Minister Ariel Sharon's hospitalization hurt many of that country's stocks on Thursday. But one Israeli company, flash-memory maker

M-Systems

( FLSH), bucked the trend by setting a 52-week high Thursday and possibly bettering that mark on Friday (its shares were recently up 23 cents to $35.44).

The recent stock gain has capped a six-month period that has seen M-Systems' stock price rise 85%. The company earned $13.9 million in net income in its third quarter, with quarterly sales up more than 50% year over year at $133 million.

Based in Kfar Saba, Israel, the company is subject to many of the same uncertainties as other businesses in the country. M-Systems' headquarters and research and development facilities, along with most of its staff, are in Israel. But investors seemed less concerned about how the latest developments in Israel might affect the company than they did about the news coming out of Las Vegas.

The company has unleashed a blizzard of announcements from the Consumer Electronics Show over the past three days. Key among them is the news that

XM Satellite Radio

( XMSR) chose M-Systems' embedded flash drive for use in a new line of handheld satellite radios produced by

Samsung

and

Pioneer

(PIO) - Get Report

.

The significance of the announcement is less about the immediate impact it will have on the company's revenue and more about the potential market it creates for M-Systems' flash drives beyond cell phone handsets, says Daniel Gelbtuch, an analyst at CIBC World Markets, who rates the company a sector outperformer.

"This is a product that can stretch across a lot of platforms," says Gelbtuch. "It's opening up people's eyes." CIBC has had an investment banking relationship with M-Systems in the past 12 months.

Indeed, along with the XM deal, M-Systems announced that its embedded flash drives will be used in a new line of automotive audio products being developed by

Texas Instruments

(TXN) - Get Report

. And

PortalPlayer

(PLAY) - Get Report

has chosen the M-Systems drive in the reference platform for its personal media development platform.

M-Systems' DiskOnChip H-Series embedded drive takes a different approach to a flash market traditionally split into two camps: NOR flash and NAND flash. The former is a very reliable form of memory and is used to store the critical code that runs cell phones and other gadgets. NAND flash, on the other hand, can store a lot more information, but can be less stable. Thus, it's typically used to store the large data files that people generate with their gadgets, such as photographs and music.

M-Systems' drive, however, uses NAND flash the way NOR is typically used: to store programming instructions for a new generation of multimedia devices that have larger code storage requirements.

Historically, the bulk of the company's sales have come from its USB flash drives. But with its embedded flash drives gaining traction in new devices, this product mix may begin to shift, says Doug Jordan, an analyst at Greenville Capital Management, which owns shares in M-Systems.

"I get the sense that this is the tip of the iceberg," says Jordan.

Of course, with companies like

Intel

(INTC) - Get Report

and

Micron

(MU) - Get Report

redoubling their commitment to the flash memory market through their new IM Flash joint venture, and

Spansion

( SPSN) working on a new type of flash memory designed to combine the best of NAND and NOR flash, M-Systems may face a tougher competitive environment going forward.

Right now however, the company appears to be profiting from a favorable business environment -- no matter where its headquarters are located.