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SanDisk Buys M-Systems

7/31/2006 09:01:00 AM Eastern

Milipitas, Calif. — Seeking a larger slice of the rapidly expanding market for flash memory in mobile phone handsets, SanDisk announced today that it would acquire Israel-based flash-memory OEM M-Systems.

The all stock deal, reportedly worth about $1.3 billion, was “all about growth” said president Eli Harari, SanDisk CEO, during a conference call this morning. Specifically, the move positions SanDisk in the short term to capitalize on the growing market for flash memory in mobile phone handsets — both embedded solutions, which M-Systems offers, and removable cards, which SanDisk sells through thousands of retail outlets, Harari said.

In the long term, the purchase will “enhance standards and accelerate the penetration of flash memory into existing markets and catalyze new technology developments,” Harari added. Mobile computing, in the form of the U3 USB flash drive jointly developed by the two firms and future “disc-less mobile computers” will be another area of focus for the newly combined entities.

Harari said that SanDisk will continue to supply M-System’s OEM customers, some of whom compete with SanDisk at retail.

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