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Toshiba Corporation and SanDisk today announced that they have signed a non-binding memorandum of understanding to form a new production joint venture and construct a new 300 millimeter (mm) wafer fab in Japan to build on and further their industry-leading positions and meet the anticipated future demand for NAND flash memory. The two companies will now select the plant site, targeting a production start-up date in 2010. This latest announcement underscores the commitment of Toshiba and SanDisk to the rapidly expanding market for NAND flash memory, which has become the storage technology of choice for a growing number of consumer and computing devices, including memory cards.

Fifty percent of the new fab’s production capacity will be allocated to the new joint venture. Within the joint venture the parties will equally share wafer output and funding for the equipment. The remaining 50% of the Fab’s production capacity will be managed by Toshiba and half of the output will be provided to SanDisk on a committed foundry basis. The agreement provides SanDisk an option to convert its committed foundry capacity into the joint venture or to convert to a non-committed foundry arrangement. Construction of the new facility is expected to start in calendar year 2009.

Commenting on the new facility, Mr. Shozo Saito, Corporate Senior Vice President of Toshiba Corporation and President & CEO of Toshiba’s Semiconductor Company, said, “NAND flash memory is enjoying rapid growth and is expected to expand with new applications in coming years. Toshiba is committed to support such growth of NAND flash memory through continued proactive capital investments in production capacity and advanced process technology. The new fab will build on the strong record of success we have achieved with SanDisk in flash memory product development and production, and further strengthen our partnership.”

Dr. Eli Harari, Chairman and Chief Executive Officer of SanDisk, said, “We are very pleased with the financing structure in the new agreement which maintains our guaranteed 50% of the capacity output while reducing substantially our capital expenditure commitments for funding the new fab NAND manufacturing equipment. We believe this will allow us to meet our forecasted customer needs in 2010 and beyond, while freeing up cash flow for investments in new products and in growth markets. This substantial undertaking by Toshiba and SanDisk demonstrates our confidence in the continued future success of the strong partnership between our two companies.”

Toshiba and SanDisk expect to sign a definitive agreement later in 2008.

Source: SanDisk press release

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