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Micron 3D XPoint supply will end with $900M fab sale to TI
Micron's $900 million deal to sell its Utah semiconductor factory to Texas Instruments will end the plant's 3D XPoint supplies for Intel Optane memory and storage products.
Micron Technology's agreement to sell its semiconductor factory in Lehi, Utah, to Texas Instruments for $900 million renews questions about the future supply sources of 3D XPoint memory for Intel, its former development partner.
The Lehi fabrication plant was the primary production site for the 3D XPoint memory chips that Intel sells in solid-state drives and persistent memory modules under the brand name Optane. Micron and Intel co-developed non-volatile memory 3D XPoint technology to fill the performance gap between cheaper NAND flash and more expensive DRAM.
The sale of the Lehi fab came as no surprise, since Micron had disclosed plans to sell the facility in March while also announcing that it would cease production of 3D XPoint technology. At that time, Micron cited "insufficient market validation to justify the ongoing high levels of investment required to successfully commercialize 3D XPoint at scale." The company further said it would shift resources to new memory products based on the emerging Compute Express Link standard for connecting compute, memory and storage.
Texas Instruments (TI) has no presence in the 3D XPoint space and made no mention of 3D XPoint in its announcement on the acquisition of Micron's Lehi fab. However, TI did say the Lehi plant would bring value as its fourth 300-mm fab and that it would start with 65-nanometer (nm) and 45-nm production for its analog and embedded processing products. Attempts to reach TI for comment were unsuccessful.
$900 million sale below Micron book value
Micron estimated the total value of the Lehi fab sale at $1.5 billion, including the $900 million in cash that TI will pay for the fab and about $600 million in "select tools and other assets." David Zinsner, Micron's senior vice president and CFO, said the company would take an "impairment charge" of about $435 million because the $900 million sale price is "below our book value."
Micron declined to provide specific information on the Lehi tools and assets that TI did not purchase and the destination of the equipment that it said it sold. Micron said only that it plans to retain the remaining assets "to redeploy to other manufacturing sites or sell to other buyers."
TI and Micron expect to complete the Lehi fab sale by the end of 2021. Micron said TI would offer all of Micron's Lehi employees the opportunity to join the company after the closing of the deal, although TI would "deploy its own technologies at the site."
Why not Intel?
Longtime semiconductor analyst Jim Handy, general director of Objective Analysis, expressed surprise that Intel did not buy the Lehi fab. "It was already making something that Intel wanted, and it was going for a low price," he said. Handy expects that Intel will make 3D XPoint at its Rio Rancho, New Mexico, manufacturing site.
After Micron and Intel ended their joint development work last year, Micron continued to supply 3D XPoint wafers to Intel under a contractual agreement. A Micron spokesperson confirmed that the company's wafer sale agreement with Intel ends in December 2021, and Micron would complete manufacturing for Intel prior to the closing of the sale of the Lehi fab to TI.
Intel issued the following statement in response to the news of the Lehi fab sale: "This announcement doesn't change our ability to supply Intel Optane products to our customers and partners."
Mark Webb, principal at MKW Ventures Consulting, said Intel has not announced other options for manufacturing Optane memory, so it will need to align capacity with projected demand going forward and make Optane memory at its Rio Rancho facility.
"Intel is on its own going forward and will need to decide how it wishes to support the technology and at what volume," Webb said. "Micron still holds joint legal rights of [intellectual property] with Intel for the foreseeable future. This will most likely need to be resolved."
Carol Sliwa is a TechTarget senior writer covering storage arrays and drives, flash and memory technologies, and enterprise architecture.