Feeds

Toshiba plays sugar daddy to SanDisk

Fab financial footwork for flash

Top 5 reasons to deploy VMware with Tegile

SanDisk is getting almost $300m cash and freeing itself from over half a bilion dollars of equipment lease obligations courtesy of sugar daddy Toshiba.

The two have signed a definitive agreement concerning their flash fabrication joint-venture, following on from a non-binding memorandum of understanding signed in October last year. They each have a half share in this JV, which manufactures flash chips in three fabrication plants. The MoU talked about 30 per cent of the JV transferring to Toshiba via a cash payment to SanDisk and Toshiba taking on equipment lease obligations for plants known as Fab 3 and Fab 4.

The total value at that point for SanDisk was about $1bn. It was fighting off a hostile takeover bid from Samsung at that time, and it was supposed SanDisk needed to strengthen its balance sheet.

The definitive agreement still applies to the restructuring of the Fab 3 and Fab 4 area of the JV but reduces the transferred lease obligation percentage to 'more than 20 per cent', meaning less than 30 per cent. The total worth to SanDisk is 80bn yen ($890m) of which about a third is a cash payment and the rest the reduced lease obligations.

SanDisk and Toshiba will remain equal partners for the JV's remaining capacity and SanDisk has the option to buy back part of the transferred capacity on a foundry basis. It also retains an option to keep investing up to 50 per cent in future Fab 4 expansions and in Fabs 3 and 4 technology transitions. Finally both SanDisk and Toshiba will continue joint technology development in future NAND products and 3D read/write memory.

So, if SanDisk starts to make money again, it can hopefully pay back Toshiba and return to a more equal footing. For now, like a house-owner desperate for cash, it's released some equity in return for cash and reduced mortgage payments. It's nice of Toshiba to oblige, considering that it is facing a world of financial hurt after a tremendously bad final quarter of 2008. It is forecasting a net loss for its current financial year, ending March 31, of 280 billion yen ($3.1bn). In September last year it thought it would make 70 billion yen (c$780m) profit, showing the damage the last quarter inflicted.

It is laying off up to 4,500 temporary workers, cutting spending, reducing output from existing factories and putting off the building of new ones. Reuters is reporting Toshiba is talking to NEC about the merger of some of their chip operations too. Then there is the small matter (not) of buying Fujitsu's hard disk drive operations. In the circumstances, acting as an 80 billion yen bailer-outer to SanDisk seems positively heroic. ®

Secure remote control for conventional and virtual desktops

More from The Register

next story
Ex-US Navy fighter pilot MIT prof: Drones beat humans - I should know
'Missy' Cummings on UAVs, smartcars and dying from boredom
Facebook, Apple: LADIES! Why not FREEZE your EGGS? It's on the company!
No biological clockwatching when you work in Silicon Valley
The 'fun-nification' of computer education – good idea?
Compulsory code schools, luvvies love it, but what about Maths and Physics?
Doctor Who's Flatline: Cool monsters, yes, but utterly limp subplots
We know what the Doctor does, stop going on about it already
'Cowardly, venomous trolls' threatened with TWO-YEAR sentences for menacing posts
UK government: 'Taking a stand against a baying cyber-mob'
Happiness economics is bollocks. Oh, UK.gov just adopted it? Er ...
Opportunity doesn't knock; it costs us instead
Sysadmin with EBOLA? Gartner's issued advice to debug your biz
Start hoarding cleaning supplies, analyst firm says, and assume your team will scatter
prev story

Whitepapers

Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
Cloud and hybrid-cloud data protection for VMware
Learn how quick and easy it is to configure backups and perform restores for VMware environments.
Three 1TB solid state scorchers up for grabs
Big SSDs can be expensive but think big and think free because you could be the lucky winner of one of three 1TB Samsung SSD 840 EVO drives that we’re giving away worth over £300 apiece.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.