SanDisk to sell two chip fabs to Toshiba

Struggling US memory manufacturer SanDisk will sell manufacturing equipment and production capacity worth about £575M to its partner Toshiba, the two companies announced on Monday. According to the agreement, the Japanese electronics group will take over the equipment of two fabrication plants for NAND memory chips jointly operated with SanDisk, securing two-thirds of their production capacities. SanDisk stipulates a transaction volume of about $1B including cash funds and reduced leasing costs. The sale is to be completed in the first quarter of 2009.

Demand for Flash memory continues to be strong, in mobile phones, media players, memory cards and USB drives, as well as promising new technologies like Solid State Disks (SSD). Toshiba anticipates further growth in the NAND market and a growing need for manufacturing capacities. While the Japanese secure their access to the memory production of their joint ventures, SanDisk continues to be courted by Samsung. The Korean number one in the NAND memory market wants to take over its American competitor. So far, however, SanDisk has stood firm. Samsung holds a world market share of 42 percent for NAND Flash, Toshiba holds 28 per cent.

The opinions of financial experts differ. While some consider an agreement with Samsung less likely now, other analysts think the agreement paves the road for the takeover. Hard disk manufacturer Seagate was previously also reported to have expressed an interest in SanDisk. In the second quarter of the current year, SanDisk made losses of $68M while turnover has stagnated. The company was set to announce its third-quarter results after the closing of the financial markets on Monday.

(lghp)