Intel Spins Off Its NOR Flash Business

Intel is officially spinning off its NOR flash business.

The chip maker and STMicroelectronics wrapped up work on creating the new company, Numonyx, March 31. Intel contributed all of the assets of its NOR flash division to the new venture, while STMicroelectronics will add part of its NAND flash business to the new company.

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Numonyx will work on creating both NAND- and NOR-based products.
The deal to create Numonyx has been brewing for months and comes as Intel is looking to fix its sagging memory business. In a meeting with analysts earlier this month, CEO Paul Otellini said he was committed to fixing Intel’s own NAND business after it reported that it would miss its gross margins earnings due to less-than-expected prices for these memory chips.

The price of memory chips, especially NAND flash, has taken a hit due to the sluggish U.S. economy and an oversupplied market. Although Otellini was unclear about how he planned to rescue Intel’s NAND business, he did say the company planned to invest in more cutting-edge technology, such as SSDs (solid state drives).

While NAND flash technology has been used as the main memory component for devices such as Apple’s iPod music player, NOR technology has been used more in devices such as cell phones.

Intel is betting that NAND flash memory will stabilize in the coming months as more vendors begin using SSDs with their PCs and other devices. Lenovo recently announced that its new ThinkPad x300 will only use an SSD, and it plans to include more of these flash-based drives within its laptops.

The creation of the new company also means that Intel will trim another 2,500 people from its payroll as they go to work for Numonyx, according to a filing with the U.S. Securities and Exchange Commission. The chip maker has been trying to reduce its head count since 2006. The company now has about 86,500 employees, down from a high of more than 100,000, and its executives hope to reduce that number to 80,000 by the end of 2008.

Intel will retain about a 45 percent ownership in Numonyx, while STMicroelectronics will control about 48 percent of the new company. Another investor, Francisco Partners, will control about 6 percent.