8-KMaterial AgreementsExhibits & Filings

MICRON TECHNOLOGY INC 8-K Report, Material Agreement (Jan 17, 2013)

Filed January 17, 2013For Securities:MU

Summary

Micron Technology, Inc. (MU) filed an 8-K on January 17, 2013, detailing a comprehensive restructuring of its agreements with Nanya Technology Corporation (NTC) and Inotera Memories, Inc. (Inotera). The core of this filing is the Master Agreement, which significantly realigns the supply of DRAM products from Inotera. Under the new structure, Inotera will transition to supplying substantially all of its DRAM output to Micron throughout 2013, with NTC's access to Inotera's capacity drastically reduced. This change aims to consolidate Micron's control over Inotera's production and streamline operational and intellectual property arrangements. The filing also outlines the termination of various existing agreements, including joint development programs and prior supply arrangements, and the execution of new ones. Key among these are a new Supply Agreement between Inotera and Micron (retroactively effective January 1, 2013), a new Joint Venture Agreement governing the parties' ownership of Inotera, and updated intellectual property agreements. These changes represent a strategic shift for Micron, enhancing its DRAM supply chain and solidifying its relationship with Inotera.

Key Highlights

  • 1Micron entered into a Master Agreement with NTC and Inotera, effective January 17, 2013, to restructure their business relationships.
  • 2Inotera will exclusively supply DRAM products to Micron, with NTC's access to Inotera's capacity limited to less than 5% from February 1, 2013.
  • 3Existing supply, joint development, and intellectual property agreements were terminated and replaced with new arrangements.
  • 4A new Supply Agreement between Inotera and Micron grants Micron priority access to Inotera's DRAM output, with pricing based on a discount from market prices.
  • 5The Joint Venture Agreement modifies the governance of Inotera, adjusting board and supervisor designations and introducing potential buy/sell arrangements.
  • 6Micron has granted NTC an option to license 20nm DRAM manufacturing technology, subject to certain conditions and fees.
  • 7Several material definitive agreements were terminated, including prior joint venture, supply, and intellectual property agreements.

Frequently Asked Questions

The primary impact is that Micron will gain exclusive access to substantially all of Inotera's DRAM output throughout 2013. NTC's share of Inotera's production will be reduced to less than 5% starting February 1, 2013, consolidating Micron's control over Inotera's manufacturing capacity.

The new Supply Agreement between Inotera and Micron prices DRAM products based on a discount from actual market prices. This provides Micron with a cost advantage compared to purchasing at full market rates.

The Joint Venture Agreement alters the board composition and nomination rights for Inotera's directors. While initially balanced, it outlines a future shift where Micron's influence may further increase. It also introduces mechanisms like buy/sell arrangements for share transfers in specific circumstances, potentially impacting ownership stakes.

This agreement grants NTC an option to acquire technology from Micron for manufacturing DRAM products on a 20nm process node. If NTC exercises this option, they will be required to pay Micron a technology transfer fee and royalties for the license. This indicates potential future technology collaboration or licensing opportunities between Micron and NTC.