SanDisk Preps Secret-Weapon Chip

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SAN FRANCISCO -- It's been two-and-a-half years since SanDisk(SNDK Quote) made a $250 million bet on a novel and unproven memory technology.

Now the company wants its payoff.

In a regulatory filing last month, SanDisk revealed that it was licensing its technology for so-called three-dimensional memory to Japan's Toshiba -- and teaming up with Toshiba to further develop the technology.

The deal marks the first major milestone in SanDisk's behind-the-scenes quest to develop rewriteable 3D memory chips, a technology that could change the rules of the game in the $14 billion market for NAND flash memory.

It's still unclear whether the collaboration with Toshiba represents an admission that SanDisk is having trouble perfecting the technology on its own, or rather, that SanDisk has achieved sufficient advances to justify moving the project to the next stage.

A SanDisk spokesperson acknowledged that the company's 3D memory technology is still not ready for prime time, but said the partnership was intended to "accelerate" development. He declined to provide specific details or timelines, citing the deal's confidentiality and the highly competitive market.

Gregory Wong, a memory analyst at market research and consulting firm Forward Insights, says the deal suggests SanDisk has made progress.

Toshiba is SanDisk's longtime partner for manufacturing -- the two companies own and operate several chip fabrication facilities together. So bringing Toshiba into the fold makes sense if a technology is nearing the point where it can be commercially manufactured.