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

AMD will own a 60 per cent share of the new company and Fujitsu is to own 40 per cent with the accounts to appear on AMD's books.

The company is to be headed by AMD's Bertrand Cambou, AMD senior vice president, Memory Group and the chairman will be Fujitsu's Masamichi Ogura

As part of the deal AMD is to contribute its Flash memory group, Fab 25 in Texas, its R&D facilities and assembly plants in Thailand, Malaysia, and China. For its part Fujitsu is throwing in its Flash memory business division and

The Flash memory business has long been dominated by Intel and AMD. In 2001, AMD had a 13.3 per cent market share in the high-density flash memory business. Rival Intel, had a market share of 24.5 per cent. Flash memory, however, has been in the doldrums for the past couple of years as orders - particularly from the telephone handset business have dried up.

However, AMD has recently introduced its 'Mirrorbit' technology which doubles the storage capacity of flash memory. AMD hopes that this will enable it to leapfrog Intel into a leadership position as the world's appetite for Flash memory devices for communications and other wireless devices recovers.

A crucial part of the deal from AMD's point of view is that the new company will sell Flash memory products through both the AMD and sales forces. According to figures produced last year by industry analysts Instat, Asia Pacific - and particularly Japan - will absorb most of the world's Flash production over the next few years. Asia Pacific will average over a 35 per cent consumption market share, while Japan will account for over a 25 per cent consumption market share, through 2006. Fujitsu's dominance in this region will be a crucial factor in the battle for market share.