Feeds

Toshiba plays sugar daddy to SanDisk

Fab financial footwork for flash

Protecting users from Firesheep and other Sidejacking attacks with SSL

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. ®

Choosing a cloud hosting partner with confidence

More from The Register

next story
Phones 4u slips into administration after EE cuts ties with Brit mobe retailer
More than 5,500 jobs could be axed if rescue mission fails
JINGS! Microsoft Bing called Scots indyref RIGHT!
Redmond sporran metrics get one in the ten ring
Driving with an Apple Watch could land you with a £100 FINE
Bad news for tech-addicted fanbois behind the wheel
Murdoch to Europe: Inflict MORE PAIN on Google, please
'Platform for piracy' must be punished, or it'll kill us in FIVE YEARS
Phones 4u website DIES as wounded mobe retailer struggles to stay above water
Founder blames 'ruthless network partners' for implosion
Found inside ISIS terror chap's laptop: CELINE DION tunes
REPORT: Stash of terrorist material found in Syria Dell box
Sony says year's losses will be FOUR TIMES DEEPER than thought
Losses of more than $2 BILLION loom over troubled Japanese corp
Show us your Five-Eyes SECRETS says Privacy International
Refusal to disclose GCHQ canteen menus and prices triggers Euro Human Rights Court action
prev story

Whitepapers

Providing a secure and efficient Helpdesk
A single remote control platform for user support is be key to providing an efficient helpdesk. Retain full control over the way in which screen and keystroke data is transmitted.
WIN a very cool portable ZX Spectrum
Win a one-off portable Spectrum built by legendary hardware hacker Ben Heck
Storage capacity and performance optimization at Mizuno USA
Mizuno USA turn to Tegile storage technology to solve both their SAN and backup issues.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Security and trust: The backbone of doing business over the internet
Explores the current state of website security and the contributions Symantec is making to help organizations protect critical data and build trust with customers.