Feb. 19, 2008 – Toshiba and SanDisk have signed a nonbinding memorandum of understanding to form a new production JV and a new 300mm wafer fab for NAND flash memory, with a definitive agreement expected later this year. In a separate statement, Toshiba indicated it will build another chip plant in Japan to boost in-house semiconductor capacity.

Construction on the Toshiba/SanDisk JV fab, presumably Fab 5 of their prearranged partnership, would start sometime in 2009, targeting production by 2010. Half of the production will go to the JV, within which both parties will equally share wafer output and funding for equipment. The other 50% of the plant’s capacity will be managed by Toshiba, with half reserved to SanDisk on a foundry basis.

SanDisk chairman/CEO Eli Harari addressed the latter aspect of the deal in a statement, noting that the financing structure “maintains our guaranteed 50% of the capacity output while reducing substantially our capital expenditure commitments for funding the new fab NAND manufacturing equipment.”

Toshiba said in a separate statement that it will build two new fabs, one for NAND flash and the other for in-house semiconductor capacity, confirming locations in Yokkaichi (Mie Prefecture) and Kitakami (Iwate Prefecture), but not specifying what each site would focus on. Whichever one is used for in-house use, Toshiba indicated in a statement it hopes to convince partner SanDisk to participate at some point in the future.

Local media reports last week indicated the Kitakami fab would be for NAND flash, with investments topping ¥700B (US ~$6.58B), after efforts to secure a site in Yokkaichi adjoining the JV’s other flash fabs proved too difficult.

Toshiba’s other main NAND flash facilities are at its Yokkaichi site, where four plants together have total output capacity of about 410,000 wafers/month (300mm), and the new fab is expected to add another 200,000+ WPM, according to the report by the Asahi Shimbun. Toshiba’s Fab 4 began operations last year and is expected to reach full production in 2009, the paper noted. The company has already said it is currently migrating Fab 4’s manufacturing to 43nm process technologies, with shipments expected in 2Q08.