TI To Sell DRAM Business To Micron

TI To Sell DRAM Business To Micron
After months of speculation and growing losses, Texas Instruments announced Thursday that it was pulling out of dynamic RAM (DRAM) devices by selling the memory business to Micron Technology. In a definitive agreement, TI said it would sell the assets of its memory business to the Boise, Idaho-based company for stock and assumption of debt, totaling $800 million.

The deal includes all of TI's own memory assets as well as its shares in two DRAM joint ventures in Singapore and Japan.

For TI TXN, the end of two decades of DRAM manufacturing is an emotional and historic decision. During most of the 1980s and early 1990s, DRAM devices were used as the principal technology driver for the company's logic products. TI said it had hoped to stay in the DRAM business with joint ventures helping to protect it from the volatile nature of the commodity memory market, but the current downturn proved to be too much for the Dallas-based company. TI (company profile) also has shifted much of its long-term attention on growing digital signal processing (DSP) solutions.

"Several years ago, TI set a course to become a company focused on its leadership position in digital signal processing solutions," said Thomas J. Engibous, TI chairman, CEO, and president. "With this latest transaction, TI truly becomes a DSP solutions company, and we do so under an innovative agreement that positions TI to benefit from an upturn in the memory market."

For Micron MU, the acquisition gives it greater market share and a bigger DRAM business. "This strategic acquisition will enhance Micron's position as the most cost-effective memory producer in the world by leveraging our leading-edge technology into existing fabs without significantly increasing R&D, administrative, and operating costs," said Steve Appleton, chairman, CEO, and president of Micron. "The additional global capabilities, including participation in a unique joint-venture manufacturing strategy, positions Micron to take advantage of future markets."

But greater market share in the DRAM business may not be enough to pull Micron out of its slump. Also Thursday, Micron said its net losses in the third quarter topped $106 million, or 50 cents per share. The company blamed a 30 percent decrease in price per megabit of its memory products and gross margins of -20 percent in that business.

Revenue fell sharply to $610 million, down from $755 million in the second quarter.