Sandisk Reviews Plans For Future Flash Memory Capacity Expansions

12/18/2002 - SanDisk Corporation (NASDAQ:SNDK) issued the following statement concerning its plans for future flash memory capacity expansions:

"Currently SanDisk's primary sources of supply for flash memory wafers are through its 50-50 FlashVision Japan joint venture with Toshiba and its Flash Memory foundry supply agreement with Toshiba. SanDisk additionally purchases flash memory from Hitachi and Samsung under preferential long-term supply agreements.

"FlashVision Japan has successfully completed the transition of .16 micron NAND flash production from Toshiba's Dominion semiconductor facility in Manassas Virginia to its Yokkaichi fab in Japan and has also begun the transitioning of Yokkaichi NAND output from .16 micron production to .13 micron production. In parallel, SanDisk is now achieving its goal of shipping 50 per cent of its bit output from NAND MLC (multilevel cell) wafers, which substantially increases SanDisk's effective fab capacity compared to standard NAND flash wafers. These developments combined, have resulted in a substantial increase in the flash memory supply available to SanDisk, and are providing SanDisk with sufficient production capacity to meet its current and near term forecasted customer requirements.

"Assuming that the markets for SanDisk's products continue to grow as forecasted in the next few years, new anticipated demand from customers may outstrip the supply available to SanDisk from all its current sources. In that case SanDisk will need to secure for itself substantial additional NAND flash fab capacity at .09 micron and finer line lithography. Accordingly, SanDisk and Toshiba are discussing various fab capacity expansion plans for Flash Vision Japan. The Yokkaichi fab is a very large and cost effective 200-millimeter (mm.) memory wafer fab. Currently it is making 200 mm. NAND wafers for Toshiba and SanDisk as well as other (non NAND) memory wafers for Toshiba. Toshiba and SanDisk plan to substantially increase Yokkaichi's 200 mm. NAND wafer output in 2003 and 2004 on the existing NAND production line. SanDisk believes that it can meet its share of these required investments out of its existing cash assets.

"Starting in 2005 or 2006, the projected increased market demand for flash storage may outstrip the maximum capacity of 200 mm. NAND wafers available from the Yokkaichi fab after expansion. Accordingly, Toshiba and SanDisk are in discussions to explore the addition, starting in 2006, of a 300-mm. advanced wafer fab to support the NAND flash capacity needs of both companies in the second half of this decade. Such a fab would take several years to plan, build and ramp up to full capacity. Financing of such a fab would require substantial new investments by both Toshiba and SanDisk, which would likely be spread between 2004 and 2008, and which will be driven by the level of business for both companies in that time frame. For these investments, SanDisk would likely have to seek additional sources of financing. SanDisk expects to make the 300-mm. fab decision together with Toshiba sometime in 2003."

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.

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