Toshiba and Sandisk Unite to Build Chip Plant

Sept. 16 (Bloomberg) -- Toshiba Corp. and SanDisk Corp. created a joint venture and will spend $2.5 billion to build a semiconductor plant in Japan to meet demand for wireless phones with cameras, music players and other features.

SanDisk, the world's biggest maker of flash-memory cards for consumer electronics, and Toshiba, Japan's second-biggest chipmaker, signed an agreement last week to form Flash Partners Ltd., SanDisk said in a regulatory filing. The plant in Yokkaichi is expected to begin production of 300-millimeter chips by the end of 2005.

Demand for memory cards for consumer electronics is increasing as companies including Sprint Corp. and Verizon Wireless introduce cell phones that do more than make phone calls. Flash memory stores digital photos or music files and retains data when devices are shut off.

Toshiba, based in Tokyo, and Sunnyvale, California-based SanDisk each will get half of the chips made at the plant, said Lori Barker Padon, SanDisk's director of investor relations. SanDisk will use its chips in flash memory cards for multimedia cellular phones, cameras and USB flash disk drives.

The companies jointly opened a 200-millimeter wafer plant in 2002. That plant is running at capacity, and other chips are being purchased from companies including Samsung Electronics Co., Barker Padon said.

Toshiba owns 50.1 percent of the new company, and SanDisk owns 49.9 percent. Toshiba said Tuesday that it will spend about $1.8 billion in a separate agreement with Canon Inc. to make flat- panel screens through a new company named SED Inc.

Shares of SanDisk rose 39 cents to $25.90 at 4 p.m. New York time in Nasdaq Stock Market composite trading. Toshiba shares fell 5 yen to 411 yen Thursday on the Tokyo Stock Exchange.

To contact the reporter on this story:
J. Kyle Foster in Princeton at kfoster2@bloomberg.net.

To contact the editor responsible for this story:
Emma Moody at emoody@bloomberg.net.