Micron reveals details on new flash venture with Intel

Micron Technology, one of the world’s largest computer memory chip makers, said its main contribution to a new flash memory joint venture with Intel will be assets, while Intel will put up cash.

The company said it will contribute assets valued at $995 million to the joint venture, dubbed IM Flash Technologies (IMFT), in addition to $250 million in cash. Intel will contribute $1.2 billion in cash and notes, according to statements in Micron’s first-quarter financial statement, which came out Wednesday.

Flash memory has gained popularity over the past few years as the storage of choice for a range of consumer electronics products because it can store massive amounts of data without a constant supply of electricity. That makes it perfect for MP3 music players, digital cameras, UBS storage devices, and other gadgets.

Chips used for memory in a PCs or servers, such as dynamic RAM (DRAM), can only store data when the power is on, and hard drives with moving parts are needed to store data after the device is shut down. Hard drives can also be used in smaller devices, but they require more power than NAND. NAND flash memory is named for the logic gate used to build that type of flash memory.

Micron also said its spending on new production line equipment and factories for IMFT in its fiscal year 2006, which has already started, will likely be around $500 million. The memory chip maker said its own capital spending will likely reach $1.5 billion in 2006, not including the portion going to IMFT. Micron spent $331 million in its first quarter, which ended Dec. 1.

Intel and Micron announced they would combine their production technology and expertise to enter the NAND flash memory market via the new joint venture company, and snagged their first major customer, Apple, which requires a major portion of the global supply of the chips for its popular iPod music players.

IMFT will be 51% owned by Micron, with 49% going to Intel, though both companies plan to contribute evenly to start up the company, around $1.2 billion, and add $1.4 billion in additional investments over the next three years.

Research and development costs associated with NAND flash products, as well as output from IMFT, will be shared by Intel and Micron in proportion to their investment, Micron said Wednesday.