8-KMaterial Agreements

MICRON TECHNOLOGY INC 8-K Report, Material Agreement (Jul 8, 2010)

Filed July 8, 2010For Securities:MU

Summary

Micron Technology, Inc. (MU) has entered into significant agreements with Nanya Technology Corporation (NTC) that will impact their ongoing joint development and licensing arrangements. Key among these is the elimination of royalties payable by NTC to Micron on Stack DRAM Products manufactured using process nodes smaller than 50nm. This change, effective April 9, 2010, restructures the financial obligations between the two companies and may influence future profitability for both. Furthermore, a new Joint Development Program and Cost Sharing Agreement (JDP-CSA) has been established, also effective April 9, 2010, specifically for the development of Stack DRAM Designs and Process Technology for nodes under 50nm. This agreement supersedes previous arrangements and introduces cost-sharing for certain research and development expenses through 2017. These agreements signal a deeper collaboration and a shift in how R&D costs are managed for next-generation DRAM technologies.

Key Highlights

  • 1Micron and Nanya Technology Corporation (NTC) entered into a Second Amended and Restated Technology Transfer and License Agreement.
  • 2Royalties payable by NTC to Micron on Stack DRAM Products manufactured on JDP Process Nodes of less than 50nm have been eliminated, effective April 9, 2010.
  • 3A new Joint Development Program and Cost Sharing Agreement (JDP-CSA) was established between Micron and NTC, effective April 9, 2010.
  • 4The JDP-CSA focuses on the joint development of Stack DRAM Designs and Process Technology for process nodes of less than 50nm.
  • 5The new JDP-CSA supersedes prior joint development agreements concerning process nodes less than 50nm.
  • 6The JDP-CSA includes provisions for sharing certain Micron research and development costs through 2017.

Frequently Asked Questions

The elimination of royalties payable by NTC to Micron on Stack DRAM Products manufactured on process nodes less than 50nm means NTC will retain more revenue from these sales. This could improve NTC's profitability and potentially make their products more competitive. For Micron, it represents a shift in revenue recognition from royalties to potentially other forms of cost-sharing or future profit participation.

The JDP-CSA is specifically for the development of Stack DRAM Designs and Process Technology for nodes under 50nm and supersedes prior agreements in this specific area. A key difference is the inclusion of cost-sharing for certain R&D expenses, which was not explicitly detailed in previous filings regarding these specific technologies and nodes, and extends through 2017.

Sharing R&D costs means Micron will bear a portion of the development expenses that it previously might have fully funded or recouped solely through royalties. This could reduce Micron's upfront R&D expenditures while still allowing participation in the development of advanced technologies. The specific terms of the cost-sharing are crucial for understanding the net financial impact on Micron.

Stack DRAM is a type of memory where multiple DRAM layers are vertically stacked. The '50nm' (nanometer) refers to the size of the transistors on the chip, with smaller nodes generally indicating more advanced, denser, and potentially faster and more power-efficient technology. The focus on nodes less than 50nm signifies that these agreements are geared towards cutting-edge DRAM development.