Intel cuts loose Flash memory

24 May 2007

Intel, the world’s biggest chipmaker, has sectioned off its Flash memory production unit and set it up as a new, as yet unnamed, company in conjunction with STMicroelectronics.

The new company will have 45.1pc ownership by Intel and a bigger stake of 48.6pc by STMicroelectronics, and will also be owned in part by a venture capital company from Silicon Valley who paid US$150mn for its 6.3pc.

Last year Intel already made its Flash memory division independent, with Brian Harrison as general manager, in what industry watchers saw as a preparation for a sale or outgrowth.

Intel, which generates the bulk of its profits from the sale of Nor Flash memory, the kind found in PDAs and mobile phones, has seen sale of this memory drop by 20pc in the last quarter.

This is due to the other industry-standard Flash memory, Nand, used in USB sticks and digital cameras, outselling it.

The new company, which will be based in Switzerland and aims to employ 8,000, will produce both Nor and Nand Flash memory.

“The new memory company will have the people, scale and technology leadership to meet the needs of customers requiring leading-edge products in this highly competitive marketplace,” said Paul Otellini, Intel president and CEO.

However, both Intel and STMicroelectronics currently employ a combined staff of 9,300, indicating imminent job losses.

Although Intel supplies its Flash memory to all of the technology sector, Harrison, tipped to become CEO of the new company, said: “From the outset the company will be a leading supplier of flash memory solutions for wireless communications.”

By Marie Boran