Press Releases

Toshiba And SanDisk Sign Memorandum Of Understanding To Consolidate Their FlashVision Manufacturing At Toshiba's Yokkaichi, Japan Memory Fab

Dec 18, 2001

More Expected To Realize Significantly More Cost Competitive Manufacturing Of Advanced NAND Flash Memory And Accelerate The Volume Production Of Next Generation .13-Micron NAND Flash Currently Under Joint Development

SUNNYVALE, CA, Dec. 18, 2001 - SanDisk Corporation (NASDAQ:SNDK) and Toshiba Corporation announced today that they have signed a binding Memorandum Of Understanding (MOU) under which the two companies will consolidate their FlashVision advanced NAND flash wafer fab manufacturing operations at Toshiba's memory fab at Yokkaichi, Japan. The two companies believe that they can achieve significantly more cost competitive NAND wafer manufacturing by consolidating all NAND wafer fab operations at Yokkaichi. Toshiba currently manufactures .16-micron NAND flash wafers for the FlashVision joint venture at both Yokkaichi and at the Dominion Semiconductor facility in Manassas, Virginia. Yokkaichi is Toshiba's most advanced memory fab and has approximately twice the wafer fab capacity of the Dominion fab. Through this consolidation, Yokkaichi can provide significantly more cost-competitive NAND flash wafers than is possible at Dominion.

Under the terms of the MOU, Toshiba will equip a portion of the Yokkaichi Fab which is currently not being utilized with the more advanced, FlashVision-owned NAND production tool-set from Dominion. Toshiba has agreed to undertake full responsibility for the NAND production transition from Dominion to Yokkaichi which is expected to be completed in 2002. The companies expect to be able to meet 100% of their customers' NAND requirements during the transition through increasing the current NAND manufacturing output at Yokkaichi. Once the consolidation is completed, Yokkaichi's total NAND wafer output will match the combined current NAND capacity of Yokkaichi and Dominion. The parties contemplate that the FlashVision operation at Yokkaichi will continue in essentially the same 50-50 joint venture form as it has done at the Dominion facility in Virginia.

Yokkaichi is the site of Toshiba's advanced NAND development pilot line, and currently all new NAND products first enter volume production at Yokkaichi. This consolidation will streamline the transfer of new technology and thereby accelerate the volume transition in 2002 from .16-micron NAND to the more cost competitive NAND/MLC (multi-level cell), as well as the .13-micron NAND.

Takeshi Nakagawa, President of Toshiba Semiconductor Company, said, "The centralization of flash memory production at Yokkaichi from Dominion will reinforce cost competitiveness and support smooth mass production at the initial stage of new products. We position NAND flash memory as the most important pillar of our memory business and we will try our best to expand its business. In line with this move, Toshiba will solidify relations with SanDisk, including product development with multi-level cell technology and advanced process technology. Under this alliance, we are very confident that we are leading and enjoy an advantageous position over our competitors."

Eli Harari, SanDisk President and CEO, said, "Our NAND flash partnership with Toshiba is coming out stronger as a result of this consolidation. Toshiba's senior management shares our vision that the NAND flash partnership between our two companies has a great future and Toshiba has agreed to forego any NAND participation from a third partner. Although we are pleased with Dominion's performance, we feel that the consolidation opportunity with Toshiba at Yokkaichi affords us a unique opportunity to accelerate our access to one of the world's lowest cost sources for our NAND wafers. We believe the combination of the highly cost-efficient Yokkaichi facility and the FlashVision advanced equipment tool-set from Dominion will provide us with materially lower wafer costs over the long-term while preserving our near-term access to wafer supply. We plan to negotiate with our current lenders for the leasing of the FlashVision tool-set that will permit the transfer of these tools by FlashVision to the Yokkaichi facility. Assuming that the consolidation proceeds as planned, we do not expect to see any adverse financial impact in 2002, nor do we expect any reduction to our NAND supply relative to the current FlashVision plan at Dominion. We expect to begin to see a substantial positive impact to our NAND memory cost structure starting in the second half of 2002 and improving further in 2003 and beyond."

SanDisk will hold an investor conference call at 5:30 a.m. (Pacific time) today to discuss the matters covered by this press release. If you wish to listen to the call, dial 973-872-3100 at approximately 5:20 a.m. A webcast of the conference call will be available on and on Both webcasts will be available until Friday, Dec. 21, 2001, at 8 a.m. Pacific Time. The call will also be available for 48 hours via replay by dialing 973-341-3080 and using the PIN number 3026321.

SanDisk, the world's largest supplier of flash data storage products, designs, manufactures and markets industry-standard, solid-state data, digital imaging and audio storage products using its patented, high density flash memory and controller technology. SanDisk is based in Sunnyvale, CA.

The matters discussed in this news release contain forward looking statements that are subject to risks and uncertainties including but not limited to statements relating to more competitive manufacturing costs, meeting customer product demands, accelerated transition of future technologies, margin improvements and successful re-negotiation of our lease commitments. Our actual results could differ materially from the statements made in such forward looking statements due to numerous risks and uncertainties. Specific factors which could cause the forward looking statements herein not to be achieved include, but are not limited to, the ability of the company to manufacture its products in volume, further decline of actual selling prices of our products, delay or failure by the parties to timely complete new definitive agreements incorporating the terms and concepts of the MOU, a delay in the discussed transfer of tools and technology to the Yokkaichi facility, other delays in the consolidation process, risks associated with having a single source of supply of NAND wafers, delay or failure to timely transfer future technologies from Toshiba's new technology pilot line, failure to meet customer requirements if customer demand increases significantly prior to completion of transfer and consolidation of manufacturing or failure of the parties to secure bank approval in connection with the transfer of equipment which could result in higher financing costs or require the company to undertake other means of financing, including self financing of the portion of the FlashVision tool-set SanDisk is responsible for. Other risks for SanDisk include those items described under the caption, "Factors That May Affect Future Results" in the company's annual report on Form 10-K and quarterly reports on Form 10-Q, filed with the Securities and Exchange Commission. The company assumes no obligation to update the information in this release.

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