In a union between two influential solid-state memory and storage players,
Micron Technology said Feb. 10 that it will acquire Numonyx for $1.27 billion
in an all-stock transaction, based on Micron's current price of about $9 per
share.
Numonyx is a flash memory joint
venture startup created by Intel and STMicroelectronics in March 2008 to
develop PCM (phase-change memory) and stacked (advanced) NOR
flash processors.
Micron is an established DRAM (dynamic RAM)
processor maker that is getting back into the NOR
flash market. It had abandoned the sector in 2006 when the entire flash
industry experienced a major downturn.
The NOR sector has since seen modest
improvement. In December 2009, Micron decided to move into the enterprise NAND
flash drive business and debuted its first
SATA (serial ATA) 3.0 flash drives.
Micron will issue 140 million shares of its common stock to Numonyx shareholders
Intel, STMicroelectronics and venture backer Francisco Partners to facilitate
the deal, the company said.
Intel will be affected on both sides of this transaction, since the world's largest
microprocessor maker also has a close
partnership with Micron to make high-end NAND flash processors.
Both Micron and Numonyx have been making news with cutting-edge solid-state
products—particularly during the past 18 months.
"By acquiring Numonyx, Micron is buying the current leader in the NOR
market, a position Numonyx is believed to have held for the past two
quarters," flash industry analyst Jim Handy of Objective Analysis wrote in a
news brief. "Numonyx should add roughly $1.5 billion to Micron's revenue
stream at today's run rate, increasing the company's share of the semiconductor
memory market. Objective Analysis projects for the [SSD]
memory market to explode in 2010, and this is likely to amplify the impact of
this acquisition."
The continued proliferation of mobile devices, such as cell phones, digital
cameras, portable music players and other handheld devices that use flash
memory, has driven up demand for solid-state memory substantially in recent
years. Demand for embedded flash chips in nonmobile devices is also on the
rise.
"One key difference between Numonyx and both Spansion and Samsung, the
other two competitors in the high-density NOR
market, is that Numonyx has been ardently pursuing the phase-change memory
market, which is expected to take off once NOR
flash hits its scaling limit," Handy said.
Differences between NOR and
NAND flash
NOR, which first came to the market from
Toshiba in 1988, has long erase and write times but provides full address and
data buses, allowing random access to any memory location.
NOR differs from NAND flash—also developed
by Toshiba but introduced in 1989—in that the connections of the individual
memory cells are different, and the interface provided for reading and writing
the memory is different. NOR allows random access
for reading, NAND allows only "page" access.
Phase-change memory is a relatively new type of nonvolatile memory chip that
combines many of the benefits of current memory types, such as NAND flash, NOR
flash and hard disk drives. Thus, it presents a big upside to the industry.
PRAM (phase-change memory) chips work equally well for executing code and
storing large amounts of data, giving it capabilities of both flash memory and DRAM.
This means PCM can execute code with performance, store larger amounts of
memory and sustain millions of read/write cycles.
However, PRAM has problems with heat emissions that are still being resolved,
according to analyst Tom Coughlin, principal of Coughlin Associates.
Coughlin told eWEEK he believes Micron is now in a good position to take
advantage of the expected "up" flash market in 2010 and beyond.
"This unified company now had a very strong position in the NOR
business, and NOR is still an important
element in cell phones and in embedded devices," Coughlin said.
The merger complicates a partnership Numonyx currently has with South Korean
flash maker Hynix to produce its processors. Hynix likely will have to find a
new customer for its fabrication plant.
"It is unclear what this means to the Hynix-Numonyx relationship,"
Handy said. "Numonyx was using Hynix as a NAND and DRAM
foundry under a deal in which Numonyx provided flash technology to Hynix.
Numonyx also has a 21 percent stake in a Hynix wafer fab in Wuxi,
China. We will be
watching this to see what develops."
Following the merger, Micron/Numonyx and STMicroelectronics will continue to
share the R2 facility in Agrate, Italy,
for producing stacked NOR and PCM chips for
wireless and embedded applications.
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