Toshiba and SanDisk have agreed to a shift in NAND flash equipment ownership at Fab 3 and Fab 4 at Toshiba’s Yokkaichi manufacturing complex in Japan. The JV partners have historically shared the equal production capacity and tool ownership at these fabs, however, Toshiba will now be the sole owner of approximately 30 percent of the total production capacity at the two 300m fabs with the Flash Partners and Flash Alliance JV subsidiaries retaining a 70 percent share. Both JV subsidiaries are equally owned by SanDisk and Toshiba.
The partners pointed out that the production ownership shift would enable Toshiba to expand NAND flash sales as well as lower manufacturing costs, and allow a shorter ramp-up time than by purchasing new equipment for capacity expansions.
However, Samsung has recently made a hostile bid for SanDisk, which would potentially disrupt the JV production operations of the NAND flash partners, should the take-over occur. The move to reduce SanDisk’s stake in the two 300mm fabs could be interpreted as a move to limit Toshiba’s exposure to potential disruptions.
Toshiba has publicly said that it would not bid for SanDisk after Samsung made its hostile bid.
The shuffling of production ownership also indicates that SanDisk is cutting its own captive production of NAND flash in light of continuing ASP declines and weakening demand for flash memory during a period of extended over-capacity in the sector.
Toshiba gains significant new production capacity without spending on new equipment, preserving cash, after posting recent losses.
Update: According to Caris & Company, SanDisk is expected to receive cash as well as a reduction in lease obligations in relation to Fabs 3 & 4 by approximately $1 billion, with respect to the 30 percent production acquisition at the 300mm JV fabs by Toshiba.
Caris & Company expects SanDisk to continue to invest as before in future Fab 4 capacity expansions as well as the technology node migrations required for both facilities.