Intel closes deal to create new flash memory vendor

Intel, STMicroelectronics and investment firm Francisco Partners LP Monday closed a deal to create an independent flash memory chip business.

Called Numonyx B.V., the new Switzerland-based company will design, develop and manufacture non-volatile NOR and NAND flash memory chips used for storing data in portable consumer devices including cell phones, ultra mobile PCs, digital cameras and MP3 music players, said Intel officials.

As part of the deal, Intel will transfer its NOR flash memory business and certain assets associated with the chip maker's phase change memory technology for a 45.1 per cent stake in the new firm. Additionally, about 2,500 Intel employees will join.

STMicroelectronics contributed its NOR and NAND flash memory assets, as well as its Phase Change Memory resources to gain a 48.6 per cent share of the new firm. Francisco Partners invested US$150 million in cash for the remaining 6.3 per cent stake, Intel said.

Intel described phase change memory as a new technology for creating chips with fast data read and write speeds that use less power consumption than conventional flash technology. Last month, Intel and STMicroelectronics began shipping prototype samples of a 128MB memory device, codenamed "Alverstone," which features phase change memory technology.

Numonyx CEO Brian Harrison said today that the new company begins operations with annual revenues of approximately US$3 billion. "It is rare when a company starts in such a strong position," he said in statement.

The three partners announced plans last May to create the new firm. The effort was slowed about three months later when the US Federal Trade Commission sought additional information for its review into the deal's antitrust implications.

The Numonyx deal marks the latest effort by Intel to aggressively develop faster and improved flash memory technology to support increased demand for embedded storage devices. The company had earlier launched a joint effort with Micron Technology to develop new high-speed NAND flash memory technology.