Bloomberg News

Micron Buys Intel Plant Stakes, Expands Flash Memory Venture

February 28, 2012

Micron Technology Inc. (MU) is buying Intel Corp. (INTC)’s stake in two factories for about $600 million, gaining more ownership and control over their joint venture in chips used to store data in mobile phones and tablets.

Micron will pay $300 million in cash for Intel’s share of the facilities -- one in Singapore and the other in Manassas, Virginia, according to a statement today. Intel will deposit $300 million with Boise, Idaho-based Micron to help pay for so- called Nand flash chips supplied by its partner.

The shares of Micron, the largest U.S. maker of computer- memory chips, rose the most two months in yesterday after Japanese rival Elpida Memory Inc. (6665) filed for bankruptcy. Analysts, including Kevin Cassidy at Stifel Nicolaus & Co., have said Micron may acquire some of Elpida’s facilities and convert them to produce Nand flash chips.

“This is $300 million in cash coming out of Micron, so it’s $300 million they won’t use for something else,” Cassidy said in a telephone interview. The conversion of Elpida’s facilities to produce Nand flash memory “could cost several hundred million dollars and take a year,” the Washington-based analyst said.

Micron said in December it had about $1.9 billion in cash at the end of the most recent quarter.

The company will continue to supply Intel with Nand flash memory chips from the factories. Those chips are used to store media and other files in devices such as Apple Inc.’s iPhone and iPad and are increasingly being used in computer storage to replace hard disk drives.

Shares of Micron increased 3.7 percent to $8.88 at the close of trading. Micron has fallen 20 percent in the past 12 months. Intel, based in Santa Clara, California, rose 1.3 percent to $27.24, extending its gain to 27 percent in the last year.

The two chipmakers will also extend their Nand flash development program, expanding it to include emerging technologies. The jointly owned plant in Lehi, Utah, will continue to operate “with minimal changes to its existing operations,” the companies said in the statement.

The transaction is scheduled to close in the first half.

To contact the reporter on this story: Alexander Yablon in New York at ayablon@bloomberg.net

To contact the editor responsible for this story: Cecile Daurat in Wilmington at cdaurat@bloomberg.net


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