In the acquisition of primarily NOR flash manufacturer, Numonyx, which was a joint venture between Intel Corporation, STMicroelectronics and Francisco Partners, Micron Technology’s, Chairman and CEO, Steve Appleton noted in a conference call that the newly combined organization would have the second largest share of the memory market, after Samsung. Appleton claimed that it would 19% share, with Samsung holding 29% and slightly more that 17% share noted for Hynix, which has been the longstanding number 2 in the market. Privately held Numonyx was acquired by Micron, via an all-stock transaction valuing Numonyx at approximately US$1.27 billion.
Appleton noted in the call that Micron now one of broadest memory portfolio’s of DRAM, NAND and NOR memory as well as Phase Change Memory (PSM), still potentially a technology that could replace current memory technologies, when scaling and cost issue impact conventional technology.
“Acquiring Numonyx brings together two memory leaders and positions Micron to offer the most comprehensive, cost-competitive solutions in the industry to a broad range of customers and end-markets,” said Appleton, in a statement.
As Numonyx has not been profitable but cash generative, according to Appleton, the transaction would only become accretive on both free-cash flow and non-GAAP earnings late in the year at the earliest and more realistically sometime in 2011.
However, the boost to quarterly revenue is significant as it was revealed that Numonyx had quarterly revenue of US$547 million. Even without further expected memory price rises due to the capacity constraints across the industry, quarterly revenues should now regularly exceed $2 billion. Micron posted revenue of US$1.74 billion in its most recent quarter.
Micron executives were hesitant to cover possible cost cutting measures, due in part to the need to go the books and make a full assessment of Numonyx. However, they did note that they would expect to reduce IC fabrication costs at the Numonyx, based on their experience and well known lean manufacturing practices.
Appleton also noted that Numonyx would ‘stand alone’ and that various manufacturing partnerships Numonyx has made, such agreements with Elpida and Hynix, via a JV 300mm facility in China were not at threat, though Appleton said that there had not yet been time to discuss these partnerships with either Elpida or Hynix.
Micron/Numonyx and STMicroelectronics will continue to share the R2 facility in Agrate, Italy, for technology R&D and manufacturing activities. However, the 300mm fab, M6, which was originally transferred to Numonyx from ST when the JV was established with Intel and Francisco Partners, has recently been given to a new photovoltaic joint initiative between Enel, Sharp and ST.
However, ST confirmed to Fabtech that should the thin film module manufacturing JV not get off the ground, the M6 fab would revert to Micron/Numonyx.