If the matrices are sparse, why store them as int8? Why not store them as sparse doubles? If you pre-convert A and B to type sparse, then blkdiag will assemble them without creating non-sparse type matrices, e.g.,
>> A=sprand( 5000,329176,.0001 );
>> B=sprand( 5000,328658,.0001 );
>> C=blkdiag(A,B);
>> Whos C
Name Size Kilobytes Class Attributes
C 10000x657834 10279 double sparse
and sparse(zeros(100000,650000)) because of execution order needs the same amount !
You would never create a sparse matrix this way. You always use one of the following syntaxes, which avoid allocating a full sized matrix,
S=sparse(m,n);
S=sparse(I,J,S);
