Micron to Pay Intel $1.3B to $1.5B for IM Flash Stake
by Anton Shilov on May 8, 2019 2:00 PM EST
Earlier this year, Micron announced their intention to buy out Intel's stake of their memory technology joint venture, IM Flash Technologies. Now, as the process gets underway, Micron is disclosing more concrete details about the transaction. According to the company's latest filing, Micron will pay Intel approximately $1.3 billion to $1.5 billion for their stake and associated debt, with the expectation of closing the deal by the end of October.
Under the terms of the joint venture deal between Intel and Micron signed in 2005, Micron controls 51% of firm and has a right to buy the remaining share under certain conditions. Intel previously sold Micron its stakes in IM Flash's fabs in Singapore and Virginia back in 2012, which left the IM Flash joint venture itself with only a single fab in Lehi, Utah. Nowadays the production facility is used exclusively to make 3D XPoint memory, which in turn is currently only used by Intel. Micron itself plans to use the fab to make 2nd Generation 3D XPoint memory that it will use for products set to be launched by late calendar 2019. Eventually, the facility will be used to manufacture post-3D XPoint memory.
Financially, most of the $1.3 billion plus price tag for Intel's stake is not for the business itself, but is for the IMFT member debt owed to Intel ($1 billion as of February 28, 2019), which means the business is only being valued at around $300 million to $500 million. Meanwhile, along with acquiring complete ownership of IMFT once the deal closes, Micron reports that the company will also recognize a financial gain of about $100 million.
The money that Intel will receive from Micron will enable it to invest in upgrading production facilities and/or building up capacity to make 3D XPoint and similar classes of memory in the future. Meanwhile, Intel will retain right to buy 3D XPoint from Micron until at least mid-2020.
Related Reading:
- Micron Exercises Option to Buyout Intel's Share of IMFT
- What Next for 3D XPoint? Micron to Buy Intel's Share in 3D XPoint Fab
- Intel and Micron To Dissolve 3D XPoint Partnership After 2019
- Intel And Micron To Discontinue Flash Memory Partnership
- Micron Starts Construction of Its Third NAND Fab in Singapore
- Micron Discontinues Lexar Business, Plans to Focus on Higher-Margin Products
Source: Micron/SEC (via Tom’s Hardware)
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drothgery - Wednesday, May 8, 2019 - link
Weak demand in the desktop market is good for Intel. That's where AMD is the strongest and Intel is the weakest. Weak demand for laptops and servers would be bad for Intel.DanNeely - Wednesday, May 8, 2019 - link
This was entirely in Micron's hand. Micron could buy Intel out any time Micron decided it wanted the fab more than a pile of cash. Intel has no say in the timing.Reflex - Wednesday, May 8, 2019 - link
Yes, this.Reflex - Wednesday, May 8, 2019 - link
As pointed out in the article, this was initiated by Micron, not Intel, and was part of the joint venture agreement from the beginning.Arsenica - Wednesday, May 8, 2019 - link
Intel's flash production is apparently moving to their New Mexico fab according to job postings.Skeptical123 - Saturday, May 11, 2019 - link
Intel is not really getting rid of that much, the 5G modem situation is a complex issues involving at least 3 future 100 companies and regards IP and some presumable related back room deals. Do this and we won't sue you type thing not crazy conspiracy level as far as I know. The ML sticks are getting going in a new direction in regards to some key factors in the new version but they are far from simply dropping it. Xeon Phi is presumable getting replaces with intel Xe. IoT as we know it can die and is too diversified to be a real money maker compared to their cpu business imo. And 3d Xpoint seems to be doing ok too well. I've read something about a second gen on the works and they don't have to make the silicone themself.Though regardless if they dropped all these projects it's still probably in the mid to low signal digits of the total company expanses.