Intel Corp. and Micron Technology Inc. are forming a company that will manufacture NAND flash memory, a rapidly growing segment of the flash memory market that is used in such devices as some of Apple Computer Inc.s popular iPod music players.
In announcing the plan last week, Intel and Micron also said Apple will buy a "significant share" of the flash memory manufactured by the new company, which will be called IM Flash Technologies LLC. Apple will prepay Intel and Micron $250 million each as part of the deal.
Intel and Micron are contributing $1.2 billion each to form the company and an additional $1.4 billion each over the next three years to support the operations. The companies hope to get IM Flash—which will build NAND flash memory products for Intel and Micron—up and running early next year.
Both companies see this as a way of gaining share in the highly competitive NAND flash market, which is growing faster than other types of flash memory. According to the Semiconductor Industry Association, in San Jose, Calif., the NAND flash market will grow 23.5 percent next year, while the market for NOR flash will rise 6.1 percent.
NAND chips are cheaper than NOR chips to manufacture, and they are faster at processing music and picture files.
Roger Kay, an analyst with Endpoint Technologies Associates Inc., in Wayland, Mass., said the new company will enable Intel, of Santa Clara, Calif., and Micron, of Boise, Idaho, to better compete in a market dominated by the likes of Samsung Electronics Co. Ltd. and Toshiba Corp.
"Its really a great piece of hardware, and a lot of companies are trying to get in on it," Kay said. "You can now have very, very small devices with lots and lots of storage on them."
Fifty-one percent of the new company will be owned by Micron and the other 49 percent by Intel. IM Flash will be led by Dave Baglee, who had been manager of Intels Fab 11 in New Mexico, and Rod Morgan, who was manager of Microns facility in Manassas, Va. Products initially will be made in plants in Boise, Manassas and Lehi, Utah.
Apples deal with IM Flash is one of a number of supply agreements—for a total of $1.25 billion—the company has with NAND flash memory makers to ensure Apple can keep up with the demand for iPods. Other suppliers include Samsung, Toshiba and Hynix Semiconductor Inc.
Intel and Micron flash forward
What each company brings to the table:
* Intel $1.2 billion, a history of innovation in flash memory, multilevel cell technology
* Micron $1.2 billion, expertise in NAND flash technologies, efficient manufacturing facilities
Check out eWEEK.coms for the latest news, reviews and analysis on enterprise and small business storage hardware and software.