SAN JOSE, Calif. - Micron Technology Inc. has begun producing limited NAND wafers at its new 300-mm fab in Singapore, but the company is missing an important piece of the puzzle: Intel Corp. The chip giant is not investing in the Singapore fab, as previously thought.
For years, Intel and Micron have had a successful NAND manufacturing venture called IM Flash Technologies LLC. The venture has one 300-mm fab in Lehi, Utah, which is producing 25-nm NAND devices. Both Intel and Micron share the output.
For some time, IM Flash has been readying a new fab in Singapore, dubbed IM Flash Singapore (IMFS). The fab is producing some wafers, with mass production due in mid-2011.
Intel was expected to be a capital spending and production partner in the Singapore fab. However, Intel ''is not participating'' in terms of capital spending in the Singapore fab, said said Steve Appleton, chairman, president and chief executive of Micron, during a conference call with analysts to discuss the company's results.
In other words, Micron will own the entire output of the fab. Intel and Micron are still partners in a U.S. NAND fab; the companies are jointly doing production and R&D in that plant, Appleton insisted.
''Micron will become a true foundry for Intel,'' said Alan Niebel, president of Web-Feet Research. ''Intel seems to be contributing less and less to their ownership of their SSDs and NAND products. So, Intel is bailing out on the manufacturing and development side and ‘sub-contracting’ for the parts for their SSDs. Kind of a shame when the industry needs all the big boys to step up and help with fab funding at a minimum.''
Intel currently has a ''29 percent (stake in) IMFS and will get wafers from IMFS. However, I expect future capital investments to be made primarily by Micron, which means the percentage obtained by Intel will decline,'' said Gregory Wong, an analyst with Forward Insights.
''The reason for their investment in NAND capacity is to support their SSD business. At the moment, they are not maxing out on the use of their capacity for SSDs, so it is reasonable for them not to invest. If they need to expand their capacity to support the business, they will invest,'' Wong said.
Others have a different viewpoint. ''The deal is that (Intel has) a different opinion about how to time their capital spending than Micron does, and their contract is written to accomodate that,'' said Jim Handy, an analyst with Objective Analysis.
''Rumors indicate that Micron's current high ownership of IMFS is irreversable, but Intel tells me that this is wrong; Intel could get back to 49 percent if they so desired simply by speeding up their investment,'' Handy said. So, in other words, the events revolving around the Singapore fab is ''much ado about nothing,'' Handy added.
Right now, meanwhile, Intel and Micron are ''happy'' with their partnership with IM Flash, Micron's Appleton insisted. But the two companies have a different focus and priorities in NAND. Micron is interested in ''all markets'' in NAND, while Intel is interested in ''some markets,'' he said.
Intel is mainly interested in the SSD market and may not need to invest in the new fab, he implied. Appleton downplayed the event, saying that Micron ''could use the (entire) output'' of the Singapore fab to meet demand from customers.
Meanwhile, as reported, Micron missed Wall Street's estimates for the quarter amid a DRAM downturn. For the first quarter, the company had net income attributable to Micron shareholders of $155 million, or $0.15 per diluted share, on net sales of $2.3 billion. The memory company was supposed to earn $0.29 a share on sales of $2.38 billion in the quarter, according to Yahoo.
For some time, there has been a downturn in DRAM. During the conference call, Appleton said the current DRAM downturn is a ''demand-driven'' slump. The climate is not as bad as the DRAM downturns in 2007 and 2008, which were caused by a glut of capacity, he said.
On the other hand, the company's 25-nm NAND production ''going quite well,'' he said. The NOR market has seen ''mild pricing pressure'' but the business is stable, he added.
With production due mid-next year it seems this could turn out quite fine for Micron given that revenue return should begin soon (assuming uptick in demand) and a larger share of that revenue will be Micron's as they paid the bill.
Some pros and cons here. This could be really good for the industry since Intel apparently won't have first dibs on the output, while at the same time it means there may well be less bidding for the plants output.
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