Intel, Micron to form flash memory venture, sign Apple
SAN JOSE, Calif. – Intel Corp. and Micron Technology Inc. agreed Monday to form a joint venture to produce flash memory for consumer electronics and said the new company has a $500 million contract to supply chips to iPod-maker Apple Computer Inc.IM Flash Technologies LLC will focus on a form of memory known as NAND flash, which is used in consumer electronic devices such as the iPod, digital cameras, keychain storage gadgets and handheld computers.”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, Micron’s chairman and chief executive.Apple said it will pay $250 million each to Intel and Micron to supply the memory for iPods. The company also reached long-term supply agreements with Hynix, Samsung Electronics and Toshiba.In total, the flash deals are worth $1.25 billion.”We want to be able to produce as many of our wildly popular iPods as the market demands,” said Steve Jobs, Apple’s CEO, in a statement.Unlike dynamic random access memory chips found in personal computers and other devices, flash memory holds data even after a device is turned off. Prior to the latest deal, Intel’s flash focus has been on a type of the nonvolatile memory found in cell phones.”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,” said Paul Otellini, Intel president and CEO.Under the Intel and Micron deal, each company will contribute $1.2 billion in cash, notes and assets to the new venture. Over the next three years, they will invest at least additional $1.2 billion each, subject to certain conditions.Starting in early 2006, production will take place at factories in Boise, Idaho; Manassas, Va.; and Lehi, Utah. Micron will hold 51 percent of the venture, with Intel holding the remainder.The new company will be led by Intel’s Dave Baglee, who previously managed the company’s Fab 11 factory in New Mexico, and Micron’s Rod Morgan, who ran that company’s plant in Manassas.Shares of Santa Clara, Calif.-based Intel rose 8 cents, to $25.38, in Monday morning trading on the Nasdaq Stock Market, while Boise-based Micron’s stock rose 13 cents, to $14.31, on the New York Stock Exchange. Shares of Apple fell 57 cents, to $63.99, on the Nasdaq.