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Intel and STMicroelectronics Shake up the NOR Market

On May 22, 2007, STMicroelectronics, Intel, and Francisco Partners announced an agreement to create a new memory company. This company will combine Intel’s NOR assets with ST’s NOR and NAND business with the financial acumen of Francisco Partners.

Rumored to be in the works for months, the new company combines the NOR revenues of the number two and three players in the market to take the top position away from Spansion. However, Spansion hopes to benefit from the new competition. Intel and ST’s NOR businesses, like others in the market, have not been profitable for some time.

Without the deep pockets of the larger companies, the new company won’t be able to compete with the heavily discounted prices seen recently in the NOR market. It’s possible that the consolidation will help Spansion turn a profit, once prices rise back to normal levels. They are very well positioned for profitability with the 300mm SP1 facility in Japan coming online and a host of cost-cutting initiatives already in motion.

There has been a need for consolidation in this industry for some time. Semico believes that between the Intel/ST venture and Samsung gunning for domination, there will be some smaller manufacturers who will either drop out of the market altogether or will sell off their NOR businesses to one of the larger companies.

The creation of the new company will prolong Samsung’s quest to become number one in the NOR market. Other smaller manufacturers may survive for some time by targeting a small niche market in the lower densities.

Perhaps the most important aspect of this development is the fact that the new company will also include Intel’s and ST’s research and development work in the next-generation phase-change memory (PCM). The new company is poised to become the leader in this technology, which, if PCM takes off, will help the company return to profitability. PCM is one of the most promising next-generation memory technologies, and is intended to be a direct replacement for the ailing NOR Flash memory.