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Micron, Intel Join on Flash Memory

Posted on: Thursday, 1 December 2005, 06:00 CST

By JEFFREY KELLEY; Any ideas? Staff writer Jeffrey Kelley can be reached at (804) 649-6348 or jkelley@timesdispatch.com

Micron Technology Inc. and Intel Corp. will form a new company to make a popular kind of computer memory found in many consumer electronics, and Apple Computer Inc. is already knocking at their door.

The joint venture, called IM Flash Technologies LLC, will make flash memory at Micron's Manassas plant as well as at facilities in Idaho and Utah.

Unlike DRAM chips, the basic memory component of personal computers, flash memory can retain data after power is turned off, which makes it the choice chip for gadgets such as digital music players and cameras. Micron and Intel said Apple will pay them each $250 million to supply flash for its popular iPod music players.

Intel makes a different kind of flash memory that can't hold as much data as the type Micron makes, called NAND.

For Intel, the venture plops the company into the NAND market and positions it to use flash in mobile devices and possibly in motherboards of notebook computers as soon as 2007, said Doug Freedman, senior analyst at American Technology Research Inc. For Micron, the deal means extra capital to intensify its push into the market for NAND flash, which it began producing late last year.

Intel and Micron initially will contribute about $1.2 billion each to IM Flash Technologies in cash, notes and assets, the two companies said.

The plan also calls for the chip makers to give an additional $1.4 billion each over the next three years to the venture, in which Micron holds a 51 percent stake. Intel will have the rest.

Production at the plant is expected to begin early next year.

In addition to agreements with IM Flash Technologies, Apple yesterday announced supplier agreements with flash manufacturers Hynix Semiconductor Inc., Samsung Electronics Co. Ltd. and Toshiba to supply chips for iPods through 2010. Apple will pay the five companies a total of $1.25 billion for the iPod chips over the next three months.

Demand for flash has propelled sales for Micron, which earned $43 million on revenue of $1.26 billion in the quarter ending Sept. 1. Flash sales were five times higher than in the prior quarter.

The NAND market is expected to hit $10.8 billion this year and could grow more than 142 percent by 2009, according to industry research firm iSuppli Corp.

Samsung is the world's largest supplier of NAND, while Micron has become the fifth-largest, iSuppli said. Infineon Technologies AG, which employs 2,250 in Henrico County at its only U.S. factory, was No. 6.

Micron is the 15th-largest computer-chip maker in the world, while Intel remains No. 1. Samsung was second, with Toshiba fourth and Hynix 14th, according to IC Insights Inc. Infineon was No. 6.

Source: Richmond Times - Dispatch

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