Intel, Micron team up on NAND memory manufacture

Intel and Micron Technology are forming a new company to manufacture NAND flash memory chips, the two companies announced Monday.

By combining their manufacturing technologies and expertise, Intel and Micron hope to be able to compete in the vibrant and profitable NAND business and they already have their first major customer, Apple Computer. NAND flash memory continues to be a very hot product area since the memory chips are used in a wide range of consumer electronics device including digital cameras and Apple’s iPod music players.

To be called IM Flash Technologies, the new firm will exclusively produce flash memory for Intel and Micron targeting the consumer electronics, removable storage and handheld communication device markets, according to a joint release from the companies. Intel and Micron will each contribute around $1.2 billion to the new joint venture, with each likely to invest an additional $1.4 billion over the next three years.

Intel and Micron hope to finalize the formation of IM Flash by year-end, subject to unspecified closing conditions. The two companies also announced that subject to the closing of the new company, they have each entered into separate long-term agreements to provide Apple with a “significant portion” of IM Flash’s NAND flash memory, according to the release. Apple is to prepay $250 million each to Intel and Micron, the release stated.

IM Flash will be 51 percent owned by Micron and 49 percent owned by Intel, according to the release. Initial production of IM Flash’s NAND flash memory will occur in manufacturing operations in Boise, Idaho; Manassas, Virginia; and Lehi, Utah. The first products from IM Flash are likely to appear in early 2006.

The new company will be headed up by Dave Baglee, previously manager of Intel’s Fab 11 in New Mexico and Rod Morgan, formerly manager of Micron’s fabrication plant in Manassas.

In a recent report from market researcher iSuppli, Samsung Electronics had a 50.2 percent share of the NAND flash memory market at the end of the third quarter of 2005. Although Micron was ranked in fifth position with only a 3.4 percent of the NAND market, the revenue the company derived from the flash memory chips increased four-fold over the second quarter, according to iSuppli.