SANDISK and SAMSUNG renew patent cross license and flash supply agreements

MILPITAS, CALIFORNIA and SEOUL, KOREA. - SanDisk® (NASDAQ: SNDK) and Samsung Electronics Co., Ltd. announced today that they signed a definitive agreement to renew the cross license of their semiconductor patent portfolios. In addition, the companies signed a flash memory supply agreement under which Samsung will continue to make available to SanDisk a guaranteed portion of its flash memory production output. The new agreements become effective when the current cross license and supply agreements expire on August 14, 2009, and will run for seven years from that date.

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. Over the life of the new license, the estimated effective rate of the fixed payments and royalties is expected to be approximately half of the effective rate in recent years under the current license. Financial terms of the agreements were not disclosed.

“We are very pleased with the agreements announced today. We believe that they represent good value for our stockholders and enable both parties to focus on the growth markets at hand. 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. We look forward to a constructive relationship with Samsung in the years ahead.” said Dr. Eli Harari, chairman and chief executive officer, SanDisk.

“The renewal agreements enable Samsung and SanDisk to each focus their energies on restoring flash market growth. It is clear that these renewal agreements are aimed at strengthening the on-going 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.” said Dr. Oh-Hyun Kwon, president of the Semiconductor Business, Samsung Electronics.