SanDisk 2004 Annual Report Download - page 7

Table of Contents
we have patented and successfully commercialized to date is multi−level cell technology, or MLC, which allows a flash memory cell
to be programmed to store two or more bits of data in approximately the same area of silicon that is typically required to store one bit
of data. This technology is a very important factor in our ability to reduce the cost of our flash memory. Our patent portfolio consists
of over 279 issued patents and has been licensed by four of the five largest semiconductor companies. Our license and royalty
revenues over the last three years cumulatively were over $320 million.
We have partnerships with key participants in the markets for feature phones, such as camera phones and MP3 phones, as well as
other digital consumer devices. We are founders or co−founders of most major form factors of flash storage cards in the market today.
We co−own the Memory Stick PROtm format with Sony Corporation, or Sony, worked with Canon, Inc., or Canon, to co−found
CompactFlash®, worked with Matsushita and a subsidiary of Toshiba to co−found the SD card, and with Nokia Corporation, or
Nokia, and Siemens A.G., or Siemens, to co−found MultiMediaCardtm, or MMC. We co−developed miniSD with NTT DoCoMo,
Inc., Toshiba and Matsushita and pioneered TransFlash in collaboration with Motorola, Inc., or Motorola. We plan to continue to work
with leading companies in mobile communications and digital consumer devices to find additional ways for flash storage card
products to enable proliferation of those technologies.
We are investing with Toshiba in high volume state−of−the−art flash manufacturing facilities in Japan. Our commitment takes the
form of capital investments and loans to the ventures, credit enhancements of the ventures’ leases of semiconductor manufacturing
equipment, commitments, on a take−or−pay basis, to purchase 50 percent of the output of the ventures at manufacturing cost and
sharing in the cost of SanDisk−Toshiba joint research and development activities related to flash memory. We supplement our
sourcing of flash memory from the Toshiba ventures with purchases of memory on favorable terms from Renesas Technology
Corporation, or Renesas, Samsung Electronics Corporation, or Samsung, and Toshiba. Additionally, we design in−house and fabricate
at third−party foundries the controllers which interface between the flash memory and digital consumer devices. Our team manages a
network of contract manufacturers that assemble and test our flash memory and cards according to our specifications. Our finished
goods are fulfilled either by direct shipment to OEMs, like Sony Ericsson Mobile Communications Japan, Inc., or Sony Ericsson, or
through regional fulfillment centers that ship to our retail customers.
We sell our product globally to retail and OEM customers. We intend to continue to expand our retail customer base to additional
new geographic regions as well as to new outlets such as supermarkets and drug stores. We also seek to strengthen our current retailer
relationships and establish exclusive arrangements where practical. In North America, we sell our products principally through
retailers, such as Best Buy Company, Inc., Circuit City Stores, Inc. and Costco Wholesale Corporation. In North America and the rest
of the world, we manage a network of distributors who cover other retailers. We also are growing our separate network of distributors
specifically focused on the cellular phone market. The combined effect of these channels is over 100,000 retail storefronts where
consumers may purchase SanDisk products. We have long standing relationships with manufacturers representatives and with
industrial distributors like Arrow Electronics, Inc. and Bell Microproducts, Inc. who focus on OEM opportunities. Our direct sales
force calls on key OEM accounts whether in the mobile communications field, like Motorola and NEC Corporation, or NEC, or
manufacturers of other digital consumer products, like Canon and Nikon, Inc.
Additional Information. We were incorporated in Delaware in June 1988 under the name SunDisk Corporation and changed our
name to SanDisk Corporation in August 1995. We file reports and other information with the Securities and Exchange Commission,
or SEC, including annual reports on Form 10−K, quarterly reports on Form 10−Q, current reports on Form 8−K and proxy or
information statements. Those reports and statements as well as all amendments to those documents filed or furnished pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act (1) may be read and copied at the SEC’s public reference room at 450 Fifth
Street, N.W., Washington, DC 20549, (2) are available at the SEC’s internet site (http://www.sec.gov) which contains reports, proxy
and information statements and other information regarding issuers that file electronically with the SEC and (3) are available free of
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