Flash memory chips produced at two factories in Yokkaichi, Japan, are currently evenly split between Toshiba and SanDisk, which each own a 50 percent stake in the joint ventures that run the plants.
The deal will see Toshiba become owner of 30 percent of the chips made at the factories with the remaining 70 percent still going to the joint venture companies, which will continue to split output between Toshiba and SanDisk.
The result will be that Toshiba will have 65 percent of the chips made at the plant while SanDisk will take the remaining 35 percent.
Financial details for the proposed deal were not announced. Toshiba said it hopes to firm up the memorandum of understanding and sign a definitive deal in the first quarter of 2009.
The deal was reached after a proposal from SanDisk, which is currently the subject of an acquisition interest by Samsung Electronics. SanDisk has already declined a $26-per-share (£15-per-share) offer from Samsung, which is the world's largest maker of flash memory, but the South Korean company doesn't appear to have given up yet.
In a statement SanDisk said the deal would "reduce our capital spending, strengthen our financial position and increase our business flexibility."