SAN FRANCISCO—South Korea's Samsung Electronics Co. Ltd. will pay $275 million to Micron Technology Inc. under the terms of a 10-year patent cross-licensing agreement between the two companies, Micron said Thursday (Oct. 7). Micron also reported lower than expected sales for the quarter ended Sept. 2.
Micron (Boise, Idaho) said the deal calls for Samsung (Seoul, South Korea) to pay $200 million by Oct. 12, with the remaining $75 million to be paid in two separate payments next year.
In a conference call following its quarterly report, Micron executives acknowledged that they have seen some softening of demand in what had been a red-hot memory segment.
"We did see softening toward the end of our fourth quarter in our notebook, desktop, commodity DRAM businesses," said Steve Appleton, Micron's chairman and CEO. Appleton said forecasts from Micron's PC customers have down for the last part of 2010.
Appleton did not elaborate much on the Samsung deal. Asked if there was a compelling technology reason why the firms signed the pact now, Appleton suggested it was simply a matter of negotiating parties reaching an agreement.
Micron reported a net income of $342 million on sales of $2.5 billion for the quarter, the fourth quarter of its fiscal year 2010. Sales improved by 9 percent compared with the previous quarter and by 92 percent compared with the same period of 2009. Net income was down 64 percent from the previous quarter, but up from a loss of $100 million in the year-ago quarter.
Consensus analyst expectations had called for Micron to report sales of $2.66 billion for the quarter, according to Yahoo Finance.
For its fiscal year 2010, also closed on Sept. 2, Micron posted a net income of $1.9 billion on sales of $8.5 billion. In fiscal 2009, Micron reported a net loss of $1.9 billion on sales of $4.8 billion in fiscal 2009.
Micron said DRAM sales declined 14 percent in the quarter compared to the previous quarter primarily because of a 12 percent decrease in unit sales volume and a slight decrease in average selling prices (ASPs). NAND sales declined 9 percent quarter-to-quarter due to a 12 percent decrease in unit sales volume and a slight decrease in ASPs, Micron said.
The gross margin for Micron's Memory segment—which excludes recently acquired Numonyx and other non-reportable segments—declined to 37 percent in the fiscal fourth quarter from 40 percent in the previous quarter due to the decreases in ASPs, Micron said.
275million is hardly a negligibleamount with a met income of 1.9billion for 2009. The bigger question is what Micron gave to Samsung along with the IP. Processing and fabrication know how? or is it strictly cross licensing..