Intel Sells Some of Its IMFT Stake to Micron

Intel and Micron today announced that they have done some modifications to their agreements on their IMFT joint venture. In short, Intel is selling its stake in two fabs to Micron for approximately $600 million, of which half will be paid in cash while the rest will be deposited with Micron. (Basically, Micron will be paying the rest in NAND.) IMFT owns a total of three fabs: one each in Lehi, Utah; Manassas, Virginia; and Singapore. The Utah plant will remain unchanged but the Virginia and Singapore fabs will be controlled by Micron from now on.

In simple English, all outcome from the Virginia and Singapore fabs will be Micron's, although they can sell NAND to for example Spectek (a subsidiary of Micron) who rebrands it, so this doesn't mean that all NAND will be Micron branded. The Utah fab will keep manufacturing Intel NAND in 49/51 proportion (49% of the NAND goes to Intel, 51% to Micron).

Intel claims that the new agreement will allow more flexibility and productivity. I can see their reasoning. The Utah fab is the baby of IMFT—it's always the first fab to move to a new process node. Virginia and Singapore plants are "secondary", meaning that they are behind Utah in terms of process nodes. This change in the agreement allows Intel to concentrate on the Utah plant and be on the edge of developing new process nodes and technologies.

Also, it's possible that Intel wasn't benefiting much from the Virginia and Singapore plants. Micron is more or less solely a storage company: they make DRAM, NAND and NOR memory. Intel, on the other hand, is more known for their processors, although they also have a wide range of SSDs. Micron makes some SSDs as well but consumers are probably more familiar with their subsidiary Crucial. It makes sense for Micron to expand their NAND coverage as that is a big source of revenue for them, whereas Intel seems to be more interested in the actual SSD market than just mass producing NAND for other companies. Moreover, the Utah fab is more competitive because it's the first one to get new process nodes; by the time the Virginia and Singapore plants move to that new node, other manufacturers have moved too which adds competition and lowers profits. Simply put, Intel probably considered that Singapore and Virginia plants are not profitable enough; they want to concentrate on the Utah plant and collect bigger profits.

Note that the IMFT joint venture is not dead; Intel and Micron are simply reorganizing the proportions. Micron has owned 51% of the company ever since it was founded. Most likely this reorganization won't change anything in the eyes of a consumer. It's possible that we will see less Intel branded NAND used in products but then again, Intel can always buy NAND from Micron and rebrand it, kind of like what Spectek is doing.

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