Intel Invests $450 Million in Micron

Intel Corp. today announced that it had invested $450 million in DRAM maker Micron Technology Inc., in a bid to boost the production of next-generation double data rate memory modules.

"The availability of high-performance memory is critical as we continue to develop advanced microprocessors and communications components," said Intel CEO Craig Barrett, in a statement. "Intel is making this investment in Micron to help enable such high-end memory capabilities as DDR-2 to meet the requirements of our future-generation products."

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The companies also announced plans to collaborate on the design for future memory technologies.

Intel plans to manufacture chipsets supporting the DDR-2 memory next year, and needs an ample supply of DDR-2 memory modules. However, virtually all of the DRAM manufacturers have said that they plan to ramp DDR-2 memory in 2004.

Intels investment follows a pattern for the microprocessor giant: invest in a DRAM company to assist development of a new product or technology, then sell off the proceeds over the years.

For example, Intel in 1998 invested $500 million in Micron to assist it with the production of RDRAM, then Intels favored memory architecture. Since then, Intel has slowly sold off the Micron stock before Wednesdays investment, Mulloy said.

In a twist, Intel also invested a total of $123 million in Micron rival Elpida Memory Inc. this year. Intel also invested $100 million in Samsung Electronics in 1999 to assist the chip maker in manufacturing RDRAM.

In return for todays investment, Intel will receive common stock, approximately 5.3 percent of Microns total outstanding shares.

The cash infusion will be welcome to Micron, which announced today that it lost $123.2 million on sales of $888.5 million for the companys fourth fiscal quarter. For the entire fiscal year, Micron lost a record $1.27 billion on sales of just under $3.1 billion. Micron said it had instituted a series of cost-cutting measures to return the company to profitability.

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