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.