Key questions and answers from the fourth quarter fiscal 2007 earnings call conducted by SanDisk Corporation on January 28, 2008.

Vijay Rakesh (Oppenheimer): You had said that eight companies have signed up for the cross-license agreements. Can you comment on how that’s going and who they are?

Dr. Eli Harari: We have eight companies so far signing multiyear agreements. We are in serious negotiations with a number of other of the companies that have been cited by us. We made a press announcement concerning the cross-license that we signed with PNY. We have not made separate announcements for the other cross-licenses that were signed.

Vijay Rakesh (Oppenheimer): Do you think 43-nanometer could get to 10% of your output by Q3, since you are starting it in late Q2?

Sanjay Mehrotra: The 40-nanometer production output will start in the Q2 timeframe and in terms of the ramp up of bit production output, it will follow a similar ramp as 56-nanometer technology did in 2007. In the Q3 timeframe, it will be more than 10% and will continue to increase in Q4 as well.

Vijay Rakesh (Oppenheimer): Can you comment on the X3 and how should we be looking at that?

Sanjay Mehrotra: The majority of our bit production in 2008 will be two bit per cell technology. With respect to three bit per cell, we have that product in 56-nanometer. We will start that production output in the March/April timeframe. Since 43-nanometer two bit per cell technology is lower cost than 56-nanometer three bit per cell, the vast majority of our output in 2008 will remain two bit per cell. Three bit per cell will constitute a relatively small percentage of our output in 2008. But in 2009 timeframe, we’ll be applying three bit per cell technology to 43-nanometer and that’s when we expect to significantly increase three bit per cell contribution to our total bit output.

Paul Coster (J.P. Morgan): Do you think that NAND based memory has run out of steam or is this truly something to do with people’s pocketbooks? Can you help us understand what’s behind this?

Judy Bruner: We think there is some caution right now in terms of consumer buying habits in the marketplace and that has contributed to our guidance for the first quarter. But again, the overall decline from Q4 to Q1 in our guidance is similar to the decline Q4 to Q1 last year.

Dr. Eli Harari: The average price of our products now is well within the discretionary spending abilities of the U.S. and EMEA consumers. Now, if people don’t show up to the store to buy the big screen television, that will impact the purchases of memory cards. But there is uncertainty in the US market. We have not seen any signs so far of leakage into EMEA or Asia-Pacific. Overall, we think that there are healthy markets out there. The cell-phone market is a global market and the demand there continues strong. We think that we have a tremendous upside in international markets as far as market share. The OEM business is very healthy. The price elasticity eventually kicks in. Pricing now is extremely attractive and people are going to start moving to the 2- and 4-gigabyte capacity. In fact phone applications, video applications, as well as music driving the capacity requirements to the 4-, 8-, and 16-gigabyte.

Paul Coster (J.P. Morgan): Are you still supply constrained going into this first quarter?

Sanjay Mehrotra: At this point, we are not supply constrained in the first quarter. During the first half of Q4, we had certain supply constraints. We resolved those in the second half and we are for Q1 in reasonable balance with respect to our demand requirements, and the supply that we have to supply to that demand.

Harlan Sur (Morgan Stanley): On the retail side, card capacity grew about 60% in 2007. How much you expect that to increase in 2008?

Sanjay Mehrotra: The card capacities in general continue to increase nicely and we would expect in our mobile market the card capacities on the retail side to get in somewhat in excess of 2-gigabyte. The OEM capacity as well on the mobile front will continue to increase nicely, and on the imaging side, particularly with video continuing to increase, will also continue to drive elasticity and drive the demand, resulting in average capacity increases. All in all, the average capacities increases in the range of 80% to 100% year over year.

Harlan Sur (Morgan Stanley): You’re focused on this year on Eastern Europe and Latin America. What are you doing in those markets to increase penetration rate and market share?

Dr. Eli Harari: To increase our penetration rate and market share in these markets, we are protecting it from multiple fronts. We have expanded our distribution network. We have more feet on the ground, more sales people. Of course, in certain cases, having products that are tailored toward the local needs of the regions, as well as doing some targeted advertising and marketing to grow our share. As the output from our captive factories increases, it gives us increasing capability to supply the needs for the demand for our products on a global basis.

Krishna Shankar (JMP Securities): Can you comment on how you see the adoption of SSDs rolling out through 2008?

Sanjay Mehrotra: We are very excited about the opportunities that SSD presents to us. We expect our business in 2008 in SSDs to increase substantially compared to 2007 and we plan to supply most of this business in 2008 with the SLC memory and as we look ahead at 2009, we plan to supply the product with MLC memory. We are excited about the opportunities and excited about the product lineup that we have for SSD products.

Krishna Shankar (JMP Securities): By 2009, would you anticipate that the SSD market could overtake the MP3 player market in terms of unit bit consumption?

Dr. Eli Harari: The dynamics of the two markets are very different. The potential of SSD in computing is very large. By 2009, we’ll be into our third year, the industry will be into the third year of the adoption cycle and once we hit the right price point with MLC and with performance, this market could take off at a very steep trajectory.