Intel and ST Micro along with investment firm Francisco Partners, announced plans for a new independent flash company that will see key assets from the companies.

Under the terms of the agreement, ST will sell its flash memory assets, including its NAND joint venture interest and other NOR resources, to the new company while Intel will sell its NOR assets and resources. In exchange, Intel will receive a 45.1 percent equity ownership stake and a $432 million cash payment at close. ST will receive a 48.6 percent equity ownership stake and a $468 million cash payment at close.

Assets and resources from both companies include a patent portfolio of some 2,500 patents and 1,000 patents pending, giving the new company significant scale.

“The formation of the new company is likely to help STMicro and Intel curtail costs in the loss-making NOR business and help compete more effectively with Spansion and Samsung,” Tim Luke, an analysts with the Lehman Brothers, said in a research note. “This may result in a more rational pricing and competitive environment, which we believe is good for the competition, namely Spansion, as well as the new company.”

Luke estimated that the new company will have roughly 37 percent NOR market share, followed by Spansion with 33 percent and Samsung with 11 percent. From a NAND perspective, Luke said the new company will remain a small player, as Intel's NAND  business will remain in the joint venture (JV) established with Micron, IM Flash Technologies.

By: DocMemory
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