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M-Systems and Toshiba Sign Collaboration Agreement Pertaining to Development, Marketing and Supply of New DiskOnChip(R) Products

29 August, 2002


Companies announce availability of jointly developed product -- The DiskOnChip Millennium Plus 16 Megabyte

M-Systems
Toshiba Corporation

TOKYO, Aug. 29, 2002 -- M-Systems (Nasdaq: FLSH) and Toshiba Corporation (OTC: TOSBF) (JP: 6502) today announced that they have extended their collaboration in the development, marketing and supply of new products based on Toshiba's latest NAND technologies and M-Systems' DiskOnChip technology. The agreement also provides M-Systems with guaranteed fab capacity.

Also today, the two companies unveiled the advance achieved through their collaboration, the DiskOnChip Millennium Plus 16MB. Both M-Systems and Toshiba will market this jointly developed DiskOnChip.

"Our long lasting relationship with Toshiba and the combination of our technologies has resulted in great success for our companies," said Dov Moran, president and CEO of M-Systems. "Our latest collaboration will satisfy the new market needs that we have identified in mobile, set-top box and other markets. We are very happy to deepen our relationship with Toshiba, the leader and original inventor of NAND Flash."

"M-Systems' DiskOnChip technology enables the effective utilization of Toshiba's NAND flash technology and offers an innovative solution for local storage in set-top boxes, PDAs and smart phones," said Kiyoshi Kobayashi, senior manager of Flash Business Strategy Development of Toshiba. "The unique features of DiskOnChip contributed to strengthen our NAND flash memory offering, and will create the new market arena. Toshiba is very excited to offer its customers DiskOnChip as the solution of choice."

The 16MB DiskOnChip Millennium Plus is the latest flash disk jointly developed by M-Systems and Toshiba. It provides the functionality of a hard drive in a small, solid-state chip and is a complete, monolithic, high-performance local storage solution that offers a better cost structure and ease of integration for devices such as set-top boxes and mobile designs that typically use NOR flash. It also offers additional features such as boot capability, a unique ID, customized protected partitions and a one-time programming (OTP) area for license storage.

M-Systems' TrueFFS(R) technology, supported by leading operating systems such as Microsoft Windows and Symbian OS, contributes to the exceptional performance and reliability of the DiskOnChip Millennium Plus 16MB flash disk.

"M-Systems has combined its experience in system and software with Toshiba, a leading semiconductor memory supplier, to bring a new flash system architecture to market," said Alan Niebel, Web-Feet Research. "This collaboration yields a flash disk with many desirable features and pushes the boundaries in the flash memory industry again."

Availability

Mass production of the DiskOnChip Millennium Plus 16MB flash disk is slated for the fourth quarter of 2002. Please contact your M-Systems or Toshiba representative for more information

About Toshiba Corporation

Toshiba Corporation is a leader in information and communications systems, electronic components, consumer products, and power systems. The company's integration of these wide-ranging capabilities assures its position as a leading company in semiconductors, LCDs and other electronic devices. Toshiba has 176,000 employees worldwide and annual sales of over US$40 billion. Visit Toshiba's website at www.toshiba.co.jp/index.htm.

About M-Systems

M-Systems (Nasdaq: FLSH) is a leader and innovator of flash-based data storage products known as flash disks. M-Systems' flash disks provide the functionality of a mechanical hard drive in a silicon chip. M-Systems' products are based on its patented TrueFFSR technology and target applications in a vast array of markets, including connected devices, mobile and telecom. M-Systems' products include the DiskOnChipR, DiskOnKeyR and Fast Flash Disk (FFDTM) product families. For more information, please contact M-Systems at www.m-sys.com.


All company and product names mentioned may be trademarks or registered trademarks of their respective holders and are used for identification purposes only.

The matters discussed in this news release include forward-looking statements that are subject to risks and uncertainties that may cause actual results to vary significantly. These risks include market and competitive factors, and other risks described in the Company's most recent annual report and/or in any of its other filings with the Securities and Exchange Commission. The Company assumes no obligation to update the information in this release. Reference to the Company's website above does not constitute incorporation of any of the information thereon into this press release.


Information in the press releases, including product prices and specifications, content of services and contact information, is current on the date of the press announcement,but is subject to change without prior notice.

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