Intel invests US$450M in memory maker Micron

Intel Corp. invested US$450 million in Micron Technology Inc. and said it would team with the memory chip maker to develop next-generation chips that work with future Intel products.

The investment by Intel’s strategic investment program Intel Capital gives the Santa Clara, Calif., chip giant a 5.3 per cent share in Micron, of Boise, Idaho, the companies said in a joint statement Wednesday.

“As we continue to develop high speed, high performance microprocessor and communications products, we feel it is very important for us that memory suppliers have the products in place to complement our products,” Intel spokesman Chuck Mulloy said.

Micron plans to use the money to invest in 300 millimeter manufacturing technology and increase its production of DDR2 products, according to the statement. DDR2 is the next generation of DDR (double data rate) SDRAM (synchronous DRAM) products that promises increased capability, speed and data throughput.

DDR2 and 300 millimeter manufacturing are both key for memory makers, said Shane Rau, senior PC semiconductor research analyst at IDC in Mountain View, Calif.

Intel is expected to introduce a new chipset in the middle of next year that will support DDR2 memory, while a 300 millimeter process allows a chip maker to reduce its costs for each chip and be more competitive, Rau said.

Wednesday’s investment in Micron follows investments by Intel totaling US$123 million earlier this year in Japanese DRAM (dynamic RAM) manufacturer Elpida Memory Inc. Intel has also invested in Germany’s Infineon Technologies AG.

In 1998 Intel invested US$500 million in Micron, but later sold the equity it had bought, Mulloy said.

Memory chip makers have been hit hard by the economic downturn and have even been forced to sell products below production cost. Intel’s investments give the memory makers a boost and at the same time keep competition in the memory arena alive, analysts said.

“The investment will allow Micron to advance technology it will need to compete over the next couple of years,” said Nathan Brookwood, a principal analyst at Insight 64 in Saratoga, Calif.

Without Intel’s help some of the chip makers may have struggled to invest in their own businesses and eventually may have been unable to compete and gone out of business, Brookwood said.

“You would be left with only a small number of suppliers, and that might lead to DRAM prices going up. Since Intel is pretty sensitive about prices, it is in Intel’s interest to have DRAM makers competing so prices stay low,” he said.

Micron on Wednesday also reported results for its fourth quarter and fiscal year, which ended Aug. 28. For the fourth quarter, the company had a net loss of US$123 million, or US$0.20 per share, on sales of US$889 million. For the year, the loss amounted to US$1.3 billion, or US$2.11 per share, on sales of US$3.1 billion, the company said.

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