Intel, Micron Team for $2.4B NAND Flash Venture

Online staff -- Electronic News, 11/21/2005

Industry powerhouses Intel Corp. and Micron Technology Inc. announced today they would form a new company to manufacture NAND flash memory exclusively for the companies, to be used in consumer electronics, removable storage and handheld communications devices.

Formation of the company is subject to customary closing conditions and is expected to be finalized around the end of the year, the companies said.

Bringing together the manufacturing technology, assets, experience and scale necessary for Intel and Micron to successfully compete in the NAND flash memory business, the joint venture to be called IM Flash Technologies LLC, combines Micron’s expertise in developing NAND technology and operating highly efficient manufacturing facilities with Intel’s multi-level cell technology and history of innovation in the flash memory business, the two explained.

Intel and Micron have also each entered into separate long-term agreements to supply Apple with a significant portion of each of their share of IM Flash Technologies’ NAND flash memory output. As part of these agreements, Apple would prepay $250 million each to Intel and Micron.

“This strategic relationship positions both Intel and Micron to build on each other’s strengths to become leaders in the fast-growing NAND market segment,” said Steve Appleton, chairman, president and CEO of Boise, Idaho-based Micron, in a statement.

“This enhances Micron’s competitive position as a leading supplier of advanced semiconductor solutions by ensuring we better serve our customers in the mobile communication and consumer electronics market segments,” he added.

Paul Otellini, Intel president and CEO said, “The creation of this new company supports Intel’s intent to maintain its industry-leading position in nonvolatile memory and enables us to rapidly enter a fast-growing portion of the flash market segment.”

Intel and Micron said they have initially agreed to contribute approximately $1.2 billion each in cash, notes and assets to IM Flash Technologies, in addition to an additional approximately $1.4 billion each over the next three years. Additional investments will be made as appropriate to support the growth of the operation, the companies noted.

The company will be 51 percent owned by Micron and 49 percent owned by Intel. Production will initially take place in manufacturing facilities located in Boise, Idaho, Manassas, Va. and Lehi, Utah, benefiting from Micron’s and Intel’s process technology expertise to aggressively convert to advanced 72nm and 50nm technology.

Initial production from the company is expected in early 2006.

The new company will be led by Intel’s Dave Baglee, who previously served as manager of Intel’s Fab 11 in New Mexico, and Micron’s Rod Morgan, who most recently served as manager of Micron’s fabrication facility in Manassas.

Intel also announced today that Brian Harrison has been named VP and general manager of the company’s newly formed Flash memory group, overseeing all flash memory businesses for the company, including its interest in IM Flash Memory Technologies, as well as Intel’s long-standing NOR flash memory businesses.

He will report to Otellini.

Prior to his current assignment, Harrison served as VP and general manager of Intel Europe, Middle East and Africa, based in Swindon, England, and was responsible for Intel’s regional product sales and marketing, the company said.

From 2000 to 2004, Harrison was general manager of Fab/Sort Manufacturing, where he was responsible for managing Intel’s wafer production facilities worldwide, with more than 16,000 employees at seven manufacturing sites. His previous positions include serving as co-manager of Intel’s assembly/test organization, Fab 6 manufacturing manager and Fab 11 plant manager.