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SanDisk Buys 10 Percent Share In Digital Video, Imaging Firm

SUNNYVALE, CALIF. -SanDisk Corp. has made a strategic investment in Divio Inc., trading $7.2 million for an approximate 10 percent stake in the company and a seat on its board.

With this investment in Divio, a privately held manufacturer of digital imaging compression technology products, SanDisk said it has solidified a partnership between the two companies that focuses on the definition and development of flash memory-based products that will be used in a wide range of consumer video applications. SanDisk makes flash data storage products.

Divio currently designs and sells custom ASICs and related software to major OEMs that produce digital still cameras, PC cameras and digital video solutions. Divio has also developed MPEG4 compression technologies aimed at emerging consumer video markets.

“We expect the combination of Divio’s know-how in MPEG4 compression and SanDisk’s expertise in advanced flash memory to allow us to achieve highly desirable cost-effective flash storage of digital video,” said SanDisk president/CEO Eli Harari.

“This will greatly stimulate demand for digital consumer video [movie] products in the next few years,” he said, “much like MPEG1 compression is doing today for the new digital MP3 audio [music] markets.”

Market researcher International Data Corp. has projected that the markets for digital video products will exceed $10 billion by 2004, up from about $4 billion this year.