SanDisk, Toshiba Redo Flash Deal

MILPITAS, Calif. -- SanDisk (NASDAQ:SNDK) announced today that it has signed a definitive agreement with Toshiba to restructure their Flash manufacturing joint ventures operating at the 300-mm Fab 3 and Fab 4. As part of the agreement, more than 20 percent of the joint ventures capacity will be transferred to Toshiba. The restructuring will result in the transfer of equipment lease obligations from SanDisk to Toshiba and a cash payment to SanDisk for the transfer of certain equipment currently owned by the joint ventures. The total value to SanDisk is approximately 80 billion yen, or approximately $890 million based on current exchange rates. Approximately two-thirds of the total amount will reduce SanDisk’s current equipment lease obligations by about 28% and approximately one-third will be received by SanDisk in cash. The lease transfers and cash payment are expected to be completed by the end of the first calendar quarter of 2009.

SanDisk and Toshiba will remain equal partners for the capacity remaining in the joint ventures. SanDisk will have the option to purchase a part of the transferred capacity from Toshiba on a foundry basis and retains the option to continue to invest up to 50 percent in future Fab 4 expansions and technology transitions in Fab 3 and Fab 4. In addition, the parties will continue their existing joint technology development in advanced NAND and 3D read/write memory.

“We are pleased to sign this definitive agreement with Toshiba which reflects the long-term commitment of both companies to our partnership. This agreement will reduce our capital spending, strengthen our financial position and increase our business flexibility by allowing us to return more rapidly to our desired captive/non-captive supply model. Importantly, this maintains the economies of scale of Fab 3 and Fab 4 for SanDisk and the deep technology and manufacturing cooperation between SanDisk and Toshiba,” said Dr. Eli Harari, Chairman and Chief Executive Officer, SanDisk.

SanDisk Corp. (Nasdaq: SNDK)

Toshiba Corp.