Sandisk Secures Freedom to Operate in AI Race with Major Patent Deal

SANTA CLARA, CA – January 19, 2026 – Sandisk Corporation, a newly independent titan in the flash memory market, has secured a crucial worldwide patent license from IPValue Management's affiliate, Longitude Flash Memory Solutions (LFMS). The agreement, which centers on a significant portfolio of patents originating from innovator Cypress Semiconductor, simultaneously resolves all outstanding legal disputes between the companies, clearing the path for Sandisk to focus on the booming AI-driven storage market without the threat of litigation.

The deal underscores a critical dynamic in the high-stakes technology sector: the strategic use of intellectual property licensing to broker peace and foster innovation. For Sandisk, which recently spun off from Western Digital, this resolution provides essential "freedom to operate" at a pivotal moment in its history.

A Strategic End to a Brewing Legal Storm

The amicable resolution announced by IPValue puts an end to a legal conflict that was escalating just last year. The dispute began in January 2025 when IPValue and LFMS filed a patent infringement complaint against Western Digital in the Central District of California. The lawsuit targeted a wide array of products containing 3D NAND flash memory, including solid-state drives (SSDs), USB flash drives, and memory cards.

The situation became more complex when Sandisk, which was spun out of Western Digital on February 24, 2025, identified the targeted products as its own. In response, Sandisk took preemptive action, filing a Declaratory Judgment complaint against IPValue and LFMS in the Northern District of California in March 2025, seeking to invalidate the patent claims against its technology.

This licensing agreement effectively nullifies both legal actions, allowing the companies to avoid a protracted and costly court battle. Such disputes can drain millions of dollars and divert critical engineering and executive resources away from product development and market strategy. By opting for a license, Sandisk neutralizes a significant business risk and can now fully dedicate its resources to competition and innovation.

"We are pleased to have had productive negotiations with Sandisk, leading to a suitable and amicable resolution," said Amit Garg, Vice President of IPValue and general manager of the LFMS program, in a statement. He emphasized IPValue's mission of generating fair value from patents to allow "prominent product companies like Sandisk to operate freely under license."

The Enduring Value of Cypress Semiconductor's Legacy

At the heart of the agreement is a portfolio of over 500 patents that IPValue acquired from Cypress Semiconductor in 2016. While Cypress was acquired by Infineon Technologies in 2020, its legacy of innovation continues to shape the industry. The patents are not relics of a bygone era; they cover foundational technologies that remain fundamental to the design and manufacture of modern memory devices.

The portfolio includes intellectual property related to various types of NAND flash memory—the bedrock of modern storage—including 2D, 3D, MLC, TLC, and QLC variants. Crucially, it also covers specific, highly relevant technologies such as SONOS (Silicon-Oxide-Nitride-Oxide-Silicon) and Charge Trap structures, which are key concepts in the architecture of 3D NAND. Furthermore, patents related to Error-Correcting Code (ECC) are included, a vital technology for ensuring data integrity and reliability in high-density flash memory.

The continued relevance of this portfolio demonstrates the long lifecycle of foundational IP. It highlights how innovations from decades past can remain commercially and technologically significant, forming a valuable asset class that can be monetized long after its creation. For companies like Sandisk, licensing such portfolios is often more efficient than attempting to design around them or challenge their validity in court.

IPValue and the Business of Patent Monetization

The deal also shines a spotlight on the business model of IPValue Management. Founded in 2001 and backed by Vector Capital since 2014, IPValue operates as a sophisticated Patent Licensing Company (PLC). These firms, sometimes labeled Non-Practicing Entities (NPEs) by critics, specialize in acquiring patent portfolios from operating companies and then generating revenue by licensing them to other players in the industry.

IPValue's strategy is to acquire high-value portfolios from major technology innovators like Xerox, Intel, Micron, and, in this case, Cypress. With over 12,000 patents under management, the firm has generated nearly $3 billion in cash from licenses, delivering a significant portion back to its partners.

The company actively positions itself as a constructive force in the ecosystem, different from the more aggressive "patent trolls" that focus primarily on litigation. IPValue emphasizes a "litigate last" philosophy, preferring fact-based negotiations that result in fair value for the original innovator and freedom to operate for the licensee. This agreement with Sandisk serves as a prime example of that model in action: a potentially contentious legal fight is transformed into a business deal that benefits both sides.

Fueling Sandisk's Ambitions in the AI Era

For Sandisk, the timing of this agreement could not be more critical. As a newly independent, pure-play flash memory company, it is strategically positioned at the epicenter of the "AI Data Cycle." The global shift in artificial intelligence from model training to large-scale inference is creating unprecedented demand for low-latency, high-capacity flash storage—Sandisk's core business.

With a 12% share of the global NAND market, Sandisk is a major player, and analysts project its revenue could grow by over 75% in the next two years. This growth is expected to be driven by AI-related demand and the adoption of its next-generation BiCS8 technology in enterprise SSDs. The company is also pioneering new technologies like High-Bandwidth Flash (HBF) as a potential alternative to costly High-Bandwidth Memory (HBM) used with GPUs.

Resolving the patent dispute with IPValue allows Sandisk to pursue these ambitious goals without distraction. The company has a history of vigorously defending its own intellectual property, indicating a deep understanding of the strategic importance of a clear IP landscape. This licensing deal is not just a legal settlement; it is a strategic investment in its own future, ensuring it can innovate and compete on the merits of its technology in one of the fastest-growing sectors of the economy. The semiconductor industry's complex web of overlapping patents, often called "patent thickets," makes such licensing agreements an essential tool for navigating the market and maintaining momentum.