EU approves Intel & STMicro’s Numonyx Venture

Link: EU approves Intel & STMicro’s Numonyx Venture
Filed under: Intel News, Software News, Technology News

The European Union has approved a plan by semiconductor group Intel and Switerland-based chip maker STMicroelectronics, to conbine their flash memory chip businesses in a new joint venture.

The proposal is also expected to involve a US$150 million cash injection from Francisco Partners, a California-based private equity. The venture will create a separate company called Numonyx.

The EU has ruled that the joint venture would not pose an unfair risk to competition in the flash memory sector, which supports a number of strong competitors for both NAND flash and NOR flash, such as SanDisk and Spansion.

NAND flash is used devices such as digital cameras and portable music players. It retains data after power to a device is switched off. NOR flash is used in electronic equipment such as cell phones to store and retrieve software applications.

Intel will own 45.1 percent of Numonyx, STMicro will own 48.6 percent, while Francisco Partners will gain a 6.3 percent stake in exchange for its investment.

The joint venture will give Intel a one-off windfall payment of $432 million, while STMicro will receive around $468 million.

Spinning-off the flash memory side of their businesses will allow both companies to focus on more profitable lines, while the deal should also give their combined businesses economies of scale which will help cope with downward pressure on the price of flash memory products.