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Intel sells its stake in two NAND fabs back to Micron

Prefers commitment to buy chips
Wed Feb 29 2012, 14:04

CHIPMAKER Intel is selling its stake in two NAND wafer fabs for $600m as it signs a new supply agreement with Micron.

Intel and Micron have been working together to churn out NAND memory chips for some time with considerable success but it seems Intel wants to take a step back from the partnership, as Micron revealed that its partner will sell its stake in two fabs for $600m. The deal will see $300m taken by Intel in cash while the remaining $300m will be deposited with Micron.

Micron also announced it has signed an extended NAND chip supply deal with Intel, which Intel explained will help it meet demand. Robert Crooke, corporate VP and GM of Intel's Non-Volatile Memory Solutions Group said, "The new NAND Flash supply agreement with Micron gives Intel better flexibility to meet growing demand for SSDs and other products."

Intel's decision to ease off on its NAND production deal with Micron is an interesting one as the firm's traditional business is making chips, not flogging consumer-facing solid state drives. However it could be that NAND production will go the way of DRAM and see its margins evaporate, and Intel is known for its desire to keep profit margins north of 40 per cent.

Micron on the other hand should be happy that it is getting a larger stake of what is a lucrative and growing business. Not only has it got $300m in the bank from Intel, it has the promise of orders ensuring that its bottom line won't fall away in the near term.

Micron said that its deal with Intel should close in the first half of 2012. µ

 

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