Toshiba, SanDisk Chase Samsung in NAND Flash Memory

Includes: TOSBF, WDC
by: Steven Towns

In today's Wall Street Journal, Sayaka Yakushiji provides an update on Toshiba Corp. (OTCPK:TOSBF) and SanDisk Corp.'s (SNDK) latest joint NAND investment in: Toshiba, Sandisk Allot $5 Billion For Japan Plant.

Toshiba and SanDisk will each invest 300 billion yen ($2.6b) through March 2008 to build a fourth fabrication plant in Yokkaichi, Japan. Jointly they are aiming to control 40% of the global NAND flash-memory market, which Toshiba reportedly believes will expand to 2.6 trillion yen ($22.6b). Both sides cite the importance of capacity and have began talks of a investing in a fifth plant, which could possibly be located outside of Japan.

Comment/Resources: Toshiba trades very thinly on the pink sheets. Its ordinary shares are listed on the Tokyo Stock Exchange (code: 6502). Shlomi Cohen has excellent coverage of SanDisk's acquisition of M-Systems (click here for list of related articles.) Rob Black comments on SanDisk, M-Systems in his Tech Stock Report. See SanDisk's Q2 earnings conference call transcript. Also see Shlomi Cohen's, "Flash Dance: Samsung's Impact on M-Systems, SanDisk and Saifun."

By the way, Japan Strategist Jonathan Allum told Barron's (see interview summary here) that he actually recommends Hitachi (HIT) over Toshiba albeit this point is unrelated to the NAND topic. His reasoning is that analysts love Toshiba but there's not a single buy rating on Hitachi. Allum likes value plays and sees opportunity in Hitachi which has historically traded higher than Toshiba but isn't now for the first time in 10 years and it is also trading below book value. Note that Hitachi could face compensation claims related to its turbines used in two power plants that were forced to close.