SanDisk Corp. and Toshiba said on Friday that are partnering to build a new flash memory plant in Japan, helping them serve increasing demand and positioning them to compete against larger rivals.

Toshiba, the world's fourth-largest microchip maker, and California-based SanDisk, the world's largest flash memory data storage cards, will first spend about $5.2 billion to build the new NAND-flash memory plant, the companies said .

No other microchip seems to be growing as fast as NAND. We have decided to build a new plant to meet this rapid market growth, Toshiba Corporate Vice President Shozo Saito said at a joint news conference.

Representatives said the new plant will be built in western Japan, with a capacity of 150,000 wafers per month. Production is should begin in the winter of 2007 with an initial monthly capacity of 2,500 units of 300-mm wafers, but should be boosted to 67,500 wafers by 2008.

NAND flash memory has the ability to retain data even when a device is turned-off or disconnected from its power source. They work much like hard-disk-drives, but have the added advantage of using no moving parts - perfect for many of today's consumer electronic devices such as cell-phone's and portable media players.

The venture faces competition from other industry leaders such as Samsung, who currently produces the most NAND-memory, in terms of volume. Intel Corp., has recently agreed to form a NAND flash joint venture with Micron Technology Inc. last year as well.