SanDisk 2005 Annual Report Download - page 79

communications and digital consumer devices to find additional ways for flash storage card products to enable
proliferation of those technologies and markets.
We develop and own leading-edge technology and patents for flash memory and data storage cards. Our
research and development spending was approximately $195 million in 2005. Our team has a deep understanding of
flash memory. We own or control many patents, know-how and other intellectual property covering the design,
manufacture and operation of flash memory and flash memory cards. One of the key technologies that 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 an important factor in our ability to reduce the cost of
our flash memory. We have an extensive patent portfolio that has been licensed by three of the four largest
semiconductor companies based on revenues. Our license and royalty revenues over the last three years cumu-
latively were over $511 million.
We are investing with Toshiba in joint ventures, that are 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% of the output of the ventures at manufacturing cost plus a mark-up 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.
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., or Best Buy, Circuit
City Stores, Inc., Wal-Mart Stores, Inc. and Costco Wholesale Corporation. In North America and the rest of the
world, we manage a network of distributors who sell to other retailers and dealers. We also are expanding a separate
network of distributors and retail locations specifically focused on the mobile phone market. There are now more
than 150,000 worldwide retail storefronts where consumers may purchase SanDisk products. We also sell directly
and through distributors, to key OEM accounts, including mobile phone manufacturers and digital camera
manufacturers who include our products with their products when sold to end users.
Additional Information. We were incorporated in Delaware in June 1988 under the name SunDisk Corpo-
ration 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 charge through our website as soon as reasonably practicable after electronic filing with, or
furnishing to, the SEC. Information regarding the operation of the SEC’s public reference room may be obtained by
calling the SEC at 1-800-SEC-0330. Our website address is www.sandisk.com. Information on our website is not
incorporated by reference nor otherwise included in this report. Our principal executive offices are located at 140
Caspian Court, Sunnyvale, California 94089 and our telephone number is [phone]. “SanDisk” is a registered
trademark of SanDisk Corporation. All other trade names used in this report are trademarks of their respective
holders.
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