SanDisk 2006 Annual Report Download - page 53

Panasonic brand, and a subsidiary of Toshiba Corporation, or Toshiba. The SD card is currently the most popular
form factor of flash storage cards used predominantly in digital cameras. We followed that effort by working with
mobile network operators and handset manufacturers to develop the miniSD
TM
card and microSD
TM
card that are
even smaller form factor memory cards. The microSD card has become the leading card format for mobile phones.
We also co-own the Memory Stick PRO
TM
format with Sony Corporation, or Sony, and we worked with Canon, Inc.
to co-found the CompactFlash», or CF, standard. We plan to continue to work with leading companies in mobile
communications and digital consumer devices to find additional ways for flash storage products to enable
proliferation of those technologies and markets.
Our team has a deep understanding of flash memory technology and we develop and own leading-edge
technology and patents for the design, manufacture and operation of flash memory and data storage cards. One of
the key technologies that we have patented and successfully commercialized 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. We have an extensive patent portfolio that has been
licensed by several leading semiconductor companies. Our cumulative license and royalty revenues over the last
three years were more than $744.7 million.
We continue to invest 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% 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 primarily from Samsung Electronics Co., Ltd., or
Samsung, and Toshiba. Additionally, we design in-house and fabricate at third-party foundries the controllers that
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 and we are
developing an in-house assembly and test facility in Shanghai, China.
We sell our products globally to retail and OEM customers. We continue to expand our retail customer base to
new geographic regions as well as to new outlets such as mobile storefronts, supermarkets and drug stores. In North
America, we sell our products principally through retailers, such as Best Buy Co., 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 200,000 worldwide retail storefronts where consumers may purchase SanDisk products. We also sell directly
and through distributors, to OEM customers, which include mobile phone manufacturers, and digital camera
manufacturers, who include our products with their products when sold to end users. This strategy allows us to
leverage the market position, geographic footprint and brand strength of our customers to achieve wide market
penetration for our products.
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 and 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 100 F Street, N.E., Washington, D.C. 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
[phone]. 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 601 McCarthy Blvd,
Milpitas, CA 95035 and our telephone number is [phone]. SanDisk is a trademark of SanDisk Corporation,
and is registered in the U.S. and other countries. Other brand names mentioned herein are for identification purposes
only and may be the trademarks of their respective holder(s).
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