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MICRON TECHNOLOGY INC 8-K Report, Material Agreement (Nov 21, 2005)

Filed November 21, 2005For Securities:MU

Summary

Micron Technology, Inc. (MU) has filed an 8-K report on November 21, 2005, announcing a significant strategic partnership with Intel Corporation to form a joint venture named IM Flash Technologies, LLC (IMFT). This venture will focus on the manufacturing of NAND flash memory products. The agreement involves substantial capital contributions from both companies, with Micron contributing $995 million in assets and $250 million in cash, and Intel contributing $1,196 million in cash and notes. Micron will hold a 51% ownership stake in IMFT, while Intel will own 49%. This collaboration aims to leverage the combined strengths of both companies in the NAND flash memory market. Key aspects of the agreement include shared R&D costs, proportional sharing of IMFT's output based on investment, and the formation of a Board of Managers with equal initial representation. The venture's initial operations will utilize Micron's facilities in Manassas, Virginia, and Lehi, Utah, with plans to equip them for 300mm NAND wafer processing. The agreement also outlines potential future ownership adjustments, with Intel having an option to increase its stake to 51% after two years.

Key Highlights

  • 1Formation of a joint venture, IM Flash Technologies, LLC (IMFT), with Intel Corporation to manufacture NAND flash memory products.
  • 2Micron will own 51% and Intel will own 49% of IMFT.
  • 3Significant capital contributions are involved: Micron contributes $995M in assets and $250M in cash; Intel contributes $1,196M in cash and notes.
  • 4Both companies will share IMFT's output proportionally to their investment and will share initial R&D costs equally.
  • 5Micron will lease approximately 50% of its Manassas, Virginia facility and contribute its Lehi, Utah facility to IMFT.
  • 6Intel has an option to purchase sufficient interest after two years to achieve a 51% ownership in IMFT.
  • 7Micron has secured a NAND Flash Supply Agreement with Apple Computer, Inc., including a $250 million pre-payment.

Frequently Asked Questions

The primary purpose of IM Flash Technologies, LLC (IMFT) is to jointly manufacture NAND flash memory products, leveraging the combined technological expertise and manufacturing capabilities of both Micron and Intel in this market segment.

IMFT will be governed by a Board of Managers with initial equal appointments from both Micron and Intel. The parties will share the output of IMFT and R&D costs in proportion to their investment, which is initially 51% for Micron and 49% for Intel. Micron will contribute assets and cash, while Intel will contribute cash and notes.

Micron will contribute a lease for approximately 50% of its Manassas, Virginia facility and its entire Lehi, Utah facility to IMFT. IMFT plans to equip these facilities for 300mm NAND wafer processing. Additionally, Micron has entered into a five-year wafer supply agreement with IMFT for its Boise, Idaho facility and a ten-year lease for the Manassas facility, indicating ongoing operational ties.

Yes, the agreement allows for potential changes in ownership. Intel holds an option to purchase sufficient interest after two years to gain a 51% ownership stake in IMFT. Furthermore, a party owning at least 90% of the investment in IMFT has the right to buy out the other party's interest.