Samsung, SanDisk Renew Flash-Supply Agreement

by John Laposky -- TWICE, 5/28/2009

Milpitas, Calif. — SanDisk and Samsung Electronics have re-upped their current flash-memory supply agreement under which Samsung makes available to SanDisk a guaranteed portion of its flash-memory production output.

The new agreement becomes effective when the current supply agreement expires on Aug. 14, and will run for seven years from that date.

The agreement also renews the cross-license of the companies’ semiconductor patent portfolios.

The new patent cross-license agreement includes rights to each party’s patents broadly covering multi-level cell flash-memory and flash-storage systems, but does not license either party’s patent claims specific to 3-D memory technology.

Financial terms of the agreements were not disclosed but according to a forward-looking statement issued by SanDisk the estimated effective rate of the fixed payments and royalties over the life of the new license is expected to be approximately half of the effective rate under the current license.

"We are very pleased with the agreements announced today, said Dr. Eli Harari, chairman and CEO of SanDisk. "We are excited about our opportunities in mobile, computing and consumer flash-storage markets. Furthermore, continued access to Samsung’s flash capacity under competitive terms gives us greater flexibility in managing our future capital expenditures for captive capacity."

"The renewal agreements enable Samsung and SanDisk to each focus their energies on restoring flash market growth," said Dr. Oh-Hyun Kwon, president of Samsung Electronics’ semiconductor business unit. "It is clear that these renewal agreements are aimed at strengthening the ongoing business relationship between Samsung and SanDisk, and we are pleased that the two companies have worked hard to achieve a significantly improved balance on the patent license."