Eli Harari, Chairman and Chief Executive Officer of SanDisk Corporation, outlined plans currently being worked out with its long-standing manufacturing partner Toshiba for the construction and ramp of a new 300mm facility, dubbed Fab 5, for NAND flash production. 

Harari noted in a conference call with financial analysts last week that Fab 3, its first 300mm facility, had recently reached full capacity at approximately 150,000 wafer starts per month (wspm). The ramp of Fab 4, its latest 300mm facility, would be ramped as fast as possible (flash) while tapping into other NAND suppliers including Hynix, as its internal capacity is not expected to meet demand. Fab 4 started ramping in September, 2007.

 “In 2009, we expect to continue ramping Fab 4 to its maximum capacity,” noted Harari in the conference call. “However, beyond 2009, we believe that we will need substantial new captive capacity if we are to retain our market leadership.”

Fab 4 is the largest 300mm fab currently being ramped with capacity put at over 210,000wspm when fully utilized.

“Given that a new captive fab takes 18 to 24 months to plan, to build, equip, qualify, and begin to ramp, we have commenced discussions with Toshiba for a potential joint Fab 5 for late 2009 or 2010 production starts. The timing for such a fab would be such that it would not require significant new CapEx outlays before the second half of 2009 at the earliest,” Harari said.

To continue increasing bit growth at Fab 3 the company said that it would continue to shift production to its 56nm process for both 8-gigabit and 16-gigabit devices with the expectation that in excess of 75 percent for production would be at the 56nm node. The next technology migration will be the 43nm node in the Q2 2008 timeframe. However, bit growth will be boosted by the ramp of 3X cell transition for a portion of Fab 3 ramp.

SanDisk invested $324 million in Fabs 3 and 4 and $82 million in property and equipment in the last quarter and is planning $200 million in investment in Fab 4 in the fourth quarter.  Executives at SanDisk believe that the overcapacity issues may have less impact in 2008 as 200mm fabs, especially those owned by Hynix and Samsung, become uncompetitive and retired from NAND and DRAM production.