Intel forges semiconductor alliances for new flash firm

By Simon Aughton

Posted on 23 May 2007 at 10:45

Intel has joined forces with a semiconductor specialist, STMicroelectronics, and a private equity firm to create a new flash memory business.

The company will focus on supplying flash memory for a variety of consumer and industrial devices, including cellular phones, MP3 players, digital cameras and computers. It will be formed from a merge of assets the generated $3.6 billion in revenue last year for the businesses involved.

According to Intel, the as yet unnamed company will combine research and development, manufacturing and marketing assets from both companies.

STMicroelectronics will sell its NAND and NOR flash memory assets to the new company while Intel will sell its NOR business with both companies taking a share in the new business. Intel's flash business has been losing hundreds of million of dollars each year.

The combined assets will include a portfolio of approximately 2,500 patents, plus another 1,000 pending, and the integration of STMicroelectronics' and Intel's parallel programmes on phase-change memory is expected to accelerate the introduction of a technology that promises a number of advantages over existing flash technologies, particularly greater lifespan.

'The new memory company will have the people, scale and technology leadership to meet the needs of customers requiring leading-edge products in this highly competitive marketplace,' said Paul Otellini, Intel president and CEO.

Brian Harrison, the general manager of Intel's Flash Memory Group is set to be named as CEO of the new company.

'From the outset, the company will be a leading supplier of flash memory solutions for wireless communications,' Harrison said. 'We will be able to offer customers complete solutions with NOR- and NAND-based technologies, which we believe will provide significant opportunities for growth and the potential to develop products for many new application areas and geographic regions.'

American Technology Research analyst Doug Freedman said that the deal will benefit both companies.

'It's good news for ST; it's good news for Intel - they're finally getting out from under it,' he said. 'And it's probably good news for the industry.'