Toshiba, SanDisk restructure flash ventures

Chipmakers to rework ownership and funding of two NAND flash memory-producing joint ventures. Toshiba gets a larger stake, while SanDisk reduces costs.

Brooke Crothers Former CNET contributor
Brooke Crothers writes about mobile computer systems, including laptops, tablets, smartphones: how they define the computing experience and the hardware that makes them tick. He has served as an editor at large at CNET News and a contributing reporter to The New York Times' Bits and Technology sections. His interest in things small began when living in Tokyo in a very small apartment for a very long time.
Brooke Crothers
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Toshiba and SanDisk announced Monday that their joint flash memory-manufacturing ventures are being restructured. As a result, Toshiba will gain a larger ownership stake, while SanDisk will reduce costs.

SanDisk said it has entered a nonbinding memorandum of understanding with Toshiba to sell approximately 30 percent of the current manufacturing capacity of the parties' joint ventures to Toshiba. "The move will significantly reduce SanDisk's capital spending, further strengthen its balance sheet, and reduce NAND flash memory production commitments," the company said.

SanDisk said it expects to receive cash and reduce equipment lease obligations by approximately $1 billion through the transaction.

Two flash memory fabrication facilities--referred to as Fab 3 and Fab 4--are currently operated by Flash Partners and Flash Alliance, the production joint ventures between Toshiba and SanDisk. Investment in the manufacturing equipment installed at the two fabs is equally shared by Toshiba and SanDisk through the joint ventures, with the same capacity allocated to each company, according to Toshiba.

The "revised allocation" will make Toshiba the sole owner of some 30 percent of the total capacity of the two ventures, Toshiba said. The remaining 70 percent will still be owned by the joint ventures, and the production capacity allocated to them will be divided equally between Toshiba and SanDisk. As a result, Toshiba's overall allocation of capacity in the two fabs will increase by about 30 percent, according to Toshiba.

Toshiba believes that the NAND flash memory market will continue to grow in the medium to long term, with average annual bit growth rate of more than 200 percent, Toshiba said Monday. The company cited cellular phones, digital camcorders, and emerging applications such as solid-state drives (SSDs) for notebook computers and servers as growth drivers.

SanDisk will have the option to purchase a part of the transferred capacity from Toshiba on a foundry basis and will continue to invest up to 50 percent in future Fab 4 expansions, as well as in technology transitions in Fabs 3 and 4.

"The parties will continue their existing joint technology development in advanced NAND and 3D read/write memory," SanDisk said.

SanDisk expects the transaction to be completed in the first quarter of 2009.

A recent Japan-based report had said Toshiba was in talks to acquire SanDisk's stake in the joint ventures because of Samsung's buyout bid for SanDisk.