Oct. 20 (Bloomberg) -- Toshiba Corp., the world's second- largest flash-memory maker, plans to buy 30 percent of production capacity at its semiconductor venture with SanDisk Corp. to increase its own output.

The companies, which jointly own two factories in Yokkaichi, western Japan, will split the remaining 70 percent of the output equally, Toshiba said in a statement distributed through Business Wire today. Keisuke Ohmori, a spokesman at Tokyo-based Toshiba, said SanDisk proposed the sale, while declining to give financial details.

SanDisk expects to receive cash and cut equipment leasing obligations by about $1 billion should the transaction with Toshiba be completed, probably in the quarter ending March 31, 2009, the Milpitas, California-based company said in a separate release. Toshiba said a purchase may help Toshiba expand flash- memory output at a lower cost than through buying new equipment.

The agreement comes a month after SanDisk, the world's largest maker of memory cards used in cameras, said it rejected a $5.85 billion bid last month from Suwon, South Korea-based Samsung Electronics Co., the leader in the $15 billion market for flash memory.

``It's really difficult to say how this affects Toshiba's situation relative to Samsung's bid,'' said Yoshiharu Izumi, a Tokyo-based analyst at JPMorgan Chase & Co. ``Toshiba may be looking to secure production capacity before SanDisk is a unit of Samsung and such a purchase becomes costlier.''

Toshiba will buy 100 billion yen ($979 million) worth of equipment from SanDisk, the Nikkei newspaper reported on Oct. 18, without saying where it got the information.

Poison Pill?

``The asset purchase appears to be a poison pill,'' Ikuo Matsuhashi, an analyst at Goldman Sachs Group Inc. in Tokyo, wrote today, commenting on the Nikkei report.

If SanDisk's management rights in the venture are transferred to Toshiba, the U.S. company ``could be obligated in perpetuity to buy half of the joint factory output at cost, with a breach invoking a substantial penalty,'' Matsuhashi wrote in a note to clients before the companies' announcements.

Toshiba gained 1.7 percent to close at 365 yen in Tokyo trading before the announcement.

To contact the reporter on this story: Pavel Alpeyev in Tokyo at palpeyev@bloomberg.net.

Last Updated: October 20, 2008 05:21 EDT