AMD and Fujitsu have agreed to merge their Flash memory operations in a bid to mount a direct challenge to Intel's dominance of the market.

The two companies' Memorandum of Understanding - which will presumably require shareholder and regulatory authority approval before becoming a done deal - calls for the merger of Flash operations into a separate entity called FASL (Fujitsu AMD Semiconductor Limited), to be based in the US and Japan. FASL already exists as a 50:50 JV between the two companies. FASL was launched in 1993.

After difficult times a few years back, AMD's Flash operation has been perking up of late. During the company's last completed financial quarter, Q4 2002, AMD sold $217 million worth of Flash parts, up 15 per cent from Q3 2002's $189 million.

For the year as a whole, AMD sold $727 million worth of Flash chips, putting it in fourth place behind Toshiba ($842 million), Samsung ($1.2 billion) and Intel ($2.1 billion), according to iSuppli figures cited here. Fifth-place Fujitsu sold $657 million worth of Flash products last year, so FASL has the potential to become the second largest Flash seller by sales. ®