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Intel Acquires Stake in Chip Maker Micron

September 25, 2003|From Bloomberg News

Intel Corp., which stopped making computer-memory chips in 1987 as Asian rivals cut prices, invested $450 million in Micron Technology Inc. on Wednesday to ensure an adequate supply of advanced memory.

Micron, the world's second-biggest memory-chip maker and the only major manufacturer left in the U.S., has had losses for 11 straight quarters and has lagged behind some rivals in rolling out the latest, most-expensive manufacturing techniques.

"The availability of high-performance memory is critical as we continue to develop advanced microprocessors and communications components," Intel Chief Executive Craig Barrett said.

The news came on the same day that Micron announced that its fiscal fourth-quarter net loss shrank to $123.2 million, or 20 cents a share, from $586.5 million, or 97 cents, a year earlier.

Sales climbed 19% to $888.5 million in the quarter ended Aug. 28.

Santa Clara, Calif.-based Intel, the world's biggest semiconductor maker, said that under the Micron deal, it would receive rights exchangeable for about 33.9 million Micron shares. Micron has to have certain levels of advanced production and manufacturing capacity, goals in line with Micron's plans.

If Boise, Idaho-based Micron doesn't meet these 2005 milestones and the stock price is below Intel's purchase price, then it may have to pay Intel as much as $135 million. A "substantial portion" of that may be in stock, both companies said.

The deal was arranged through Intel Capital, the investment arm of Intel Corp.

Intel also said it would share technical details of its future product designs, to ensure they're compatible with Micron's memory chips, Intel spokesman Chuck Mulloy said.

Intel, which invested $500 million in Micron in 1998, has invested in other memory-chip makers including Infineon Technologies and Samsung Electronics Co., Mulloy said.

Shares of Micron rose to $14.64 in extended trading after the report. They had fallen 57 cents to $14.10 on the New York Stock Exchange.

Shares of Intel closed down $1.16, to $27.78 on Nasdaq.

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