AMD and Fujitsu merging their flash operations

The companies today announced they have executed a memorandum of understanding (MOU) to establish FASL LLC. A Japan headquarters will be located in Tokyo.

The new company will be based on the integration of AMD and Fujitsu's flash memory businesses, including their existing joint manufacturing venture, Fujitsu AMD Semiconductor Ltd. The new company is expected to begin operations in the third quarter of this year.

Though hesitant to make a revenue forecast, AMD president and chief executive Hector Ruiz said the venture will immediately become a top global brand in the flash-memory market.

"We expect the new company to be a strong number 2 player in flash," Ruiz contended today at a press conference in San Francisco.

Ruiz added that there are "no plans to effect any kind of spinoff" of FASL as an independent entity.

In 2002, AMD ranked third in the flash market with revenue of $735 million, while Fujitsu held the fourth position with $717 million in flash revenue. Combined, the companies would unseat No. 2 Samsung Electronics, which posted just over $1 billion in 2002 flash revenue, according to Web-Feet Research Inc., Monterey, Calif. Intel holds the lead in flash sales.

AMD will own a 60% interest in the new company and Fujitsu a 40% interest; the financial results will be consolidated in AMD's financial statements.

The company will have a net book value in excess of $2.5 billion. AMD will appoint the chief executive of the company, Bertrand Cambou, who is currently AMD senior vice president, Memory Group.

Fujitsu will appoint the first chairman, Masamichi Ogura, Fujitsu corporate senior vice president & group president, Electronic Devices Business Group.

A board of directors will consist of ten members, six appointed by AMD and four appointed by Fujitsu.

A marketing arrangement will be set up whereby the new company will sell flash memory products through AMD and Fujitsu and their respective sales forces, under a product brand name to be announced by the start of operations of the new company.

The initial global workforce will be approximately 7,000.

AMD expects to contribute its flash memory group; Fab 25 in Austin, Texas; research and development center known as the Submicron Development Center (SDC) in Sunnyvale; and the final flash memory assembly and test operations in Thailand, Malaysia, and China.

Fujitsu plans to contribute its flash memory business division and the Fujitsu Microelectronics (Malaysia) (FMM) final assembly and test operations.

Fujitsu and AMD plan to jointly contribute the ongoing 50-50 manufacturing joint venture Fujitsu AMD Semiconductor Limited (FASL) located in Aizu-Wakamatsu, Japan.