AMD, Fujitsu combine flash memory operations

SAN FRANCISCO -- - Creating what it hopes will be a formidable force in the worldwide flash memory chip market, Advanced Micro Devices (AMD) announced on Monday that it has agreed to form a new company with Fujitsu that will include both companies' entire flash memory operations.

Called FASL, the new company will help AMD and Fujitsu "achieve leadership in the flash memory market," pledged Hector Ruiz, AMD's chief executive officer, at a news conference here. AMD will hold a 60 percent stake in the new joint venture, with Fujitsu taking 40 percent.

"We expect to be a strong number 2 player" in the market, Ruiz said. Intel, in Santa Clara, California, is the market leader in flash memory production, analysts here said.

The partnership will allow the companies to support their development of flash memory chips with joint sales and marketing efforts, Ruiz said. FASL will have dedicated resources to develop, manufacture and market its flash memory products for use in mobile phones, handheld computers, set-top boxes and other products, he said.

The new company will have 7,000 employees and will be headed by AMD Senior Vice President Bertrand Cambou. It will have its worldwide headquarters in Sunnyvale, California, where AMD is based, and a separate Japanese headquarters inTokyo, which is home to Fujitsu.

FASL plans to begin operating in the third fiscal quarter of 2003 once it has obtained regulatory approvals, Ruiz said, adding that there are "no plans to spin off the company."

AMD and Fujitsu will be the sole distributors of the flash memory chips produced by FASL. AMD will distribute the products in the U.S. and Europe while Fujitsu will distribute the chips in Japan. Distribution in the rest of Asia being split between the two companies, Ruiz said.

The companies will contribute assets with a net book value of $2.5 billion to the new venture, he said. AMD will contribute its entire flash memory group, its fab in Austin, Texas, its Submicron Development Center in Sunnyvale and its flash memory and test operations in Thailand, Malaysia and China. Fujitsu brings its entire flash memory division and an assembly and test facility in Malaysia. An existing joint venture between the two companies, Fujitsu-AMD Semiconductor Ltd., will also be transferred to FASL.