Toshiba, SanDisk Plan $5B Flash Fab

Toshiba and SanDisk  today said they have begun building a $5.2 billion Flash memory  chip plant in Japan.

Toshiba and SanDisk will build the 300-millimeter (mm) wafer fabrication plant for NAND Flash memory , the preferred format for storing larger quantities of data on devices such as USB Flash drives, digital cameras and MP3 players.

Experts in the storage space expect an explosion of NAND Flash growth, thanks to the proliferation of digital electronic applications.

Korea’s Samsung currently holds the lead in NAND at 49 percent; Toshiba and SanDisk hope to grab 40 percent of this market by 2008.

The vendors are investing 300 billion yen, or about U.S. $2.6 billion, over the next two years to construct Fab 4 in Yokkaichi, Japan.

The companies will eventually double that to 600 billion yen, or U.S. $5.2 billion, when the fab is finished.

Toshiba will fund construction of the building and Flash Alliance, Ltd., a new joint venture between Toshiba and SanDisk for Fab 4, will pay for the fab’s manufacturing equipment.

Fab 4 is expected to begin producing chips in fall 2007 and will employ 56-nanometer (nm) process technology, with a mind to migrate to smaller fab processes in the future.

The production output from Fab 4, initially expected to be 2,500 wafers per month, will grow to as many as 67,500 chips monthly by 2008.

Output will be equally shared between Toshiba and SanDisk.

Toshiba and SanDisk are no strangers to such partnerships. Fab 4 comes a year after Toshiba and SanDisk started operation of 300-mm wafer fab, Fab 3, at Yokkaichi Operations.

Hunger for more Flash market share is also spurring consolidation in the market.

The Toshiba-SanDisk groundbreaking comes fewer than two weeks after SanDisk bid to purchase Flash memory provider m-systems for $1.55 billion.

Micron  is attempting purchase Flash memory specialist Lexar Media , but has met with resistance from investors concerned that Lexar is undervalued.