Micron stock climbs on Samsung acquisition reports

By Suzanne Deffree, Managing Editor, News -- Electronic News, 12/6/2007

Rumors of a possible acquisition of Micron Technology Inc.’s CMOS image-sensor (CIS) business by Seoul-based Samsung Electronics Co. sent the Boise, Idaho-based company’s stock up in today’s trading.

Reports that Samsung was considering the acquisition originated in South Korea newspaper, Maeil Business, on Tuesday and have since reached Wall Street, providing the company with a 31 cent lift to a $9.26 value as of market close today.*

An image-sensor unit sale by Micron would not be unexpected. Analysts began projecting Micron would release its image-sensor business in July, suggesting the company could use the cash infusion. Analysts have also called the business a “drain on results” at Micron, which, after reporting a$225 million loss in late June, enacted a restructuring plan that included job cuts and a tighter 2008 capex at $2.5 billion when compared to 2007’s $4 billion capex, in early July. The company also reported a $158 million loss in October, as it continues to struggle in a challenging memory supply chain. Seeming to further distance itself from image sensors, Micron put emphasis on its commitment to its memory business last week when at an event in San Francisco the company announced its entry into the solid-state drive NAND flash market.

Meanwhile, it’s no secret that Samsung, the industry’s top DRAM maker, has been looking to expand further in image sensors. Indeed, the company in October bought TransChip, an Israel-based image sensor startup, as it continued its expansion into the non-memory chip market. However, the company swiftly rebuffed reports of a possible Micron image-sensor segment acquisition this morning on its Web site. “Samsung Electronics denies the report of its plan on acquisition of CIS business at Micron Technology made by Maeil Business Newspaper on December 5, 2007,” Samsung said in the short and to-the-point statement.

Micron would not comment on the report when contacted by Electronic News.

Hot market in spite of cooling prices

Despite a cooling pricing environment, the image-sensor market is not without interest. The chips, used mostly in digital cameras and camera cell phones, have grown in demand but have faced the usual pricing pressure from the likes of consumer electronics makers. As such, the market will record only a 1% gain in revenue this year, according to IC Insights. 

Still, the market is far from low on suitors. Hynix Semiconductor Inc. -- a major Samsung competitor and fellow South Korea-based memory giant  -- has made clear its intention to become a major player in the CIS market and created a CIS division as it announced plans to diversify its business portfolio last July. Last week, the company signed a partnership agreement with SiliconFile Technologies Inc. that will see it manufacture and sell CIS products using SiliconFile’s design, providing foundry services with “favorable conditions” to SiliconFile in exchange. In addition, Hynix said it will acquire a portion of SiliconFile’s equity to further strengthen the relationship. Hynix estimates that SiliconFile holds approximately 8 percent of the CIS market for mobile phones.

*Editor's note: This story was updated at 5:30pm eastern to reflect Micron's stock closing price.