8-KMaterial Agreements

MICRON TECHNOLOGY INC 8-K Report, Material Agreement (Sep 8, 2015)

Filed September 8, 2015For Securities:MU

Summary

Micron Technology, Inc. (MU) has entered into a series of new supply agreements with Intel Corporation, effective September 1, 2015. These agreements refine and expand upon their existing collaboration, focusing on the supply of jointly developed 3D NAND flash memory products. The new arrangements ensure a minimum purchase commitment from Intel for these advanced memory products manufactured using specific, jointly developed process technology nodes. Key to these agreements is the pricing structure, which for the Amended and Restated Supply Agreement and the Supplemental Supply Agreement, is based on a cost-plus model. This suggests a collaborative approach to cost management and profitability for both parties concerning these specialized products. The terms extend for three years following qualification at Micron's Singapore facility for two of the agreements, and one year for the Wafer Supply Agreement, providing a degree of revenue visibility for Micron in the 3D NAND market.

Key Highlights

  • 1Micron entered into three new supply agreements with Intel on September 1, 2015, amending and supplementing their existing collaboration.
  • 2These agreements mandate Intel to purchase a minimum quantity of specific 3D NAND flash memory products manufactured using jointly developed technology.
  • 3Pricing for the 3D NAND flash memory products supplied under the Amended and Restated and Supplemental Supply Agreements is determined on a cost-plus basis.
  • 4The Amended and Restated Supply Agreement and the Supplemental Supply Agreement have terms of three years, commencing after the 3D NAND product is qualified at Micron's Singapore facility.
  • 5A separate Wafer Supply Agreement has a one-year term, detailing weekly supply of 3D NAND flash memory products.
  • 6Each agreement includes provisions for termination in the event of material breaches by either party.
  • 7These agreements solidify the partnership between Micron and Intel in the development and supply of advanced 3D NAND flash memory.

Frequently Asked Questions

The primary purpose is to establish and formalize the supply of jointly developed 3D NAND flash memory products from Micron to Intel. They refine existing terms and add new supply commitments, ensuring Intel purchases minimum quantities of these specific memory products.

For the Amended and Restated Supply Agreement and the Supplemental Supply Agreement, the pricing is based on a cost-plus model, meaning the price reflects Micron's costs plus a defined profit margin, generally consistent with prior agreements.

The Amended and Restated Supply Agreement and the Supplemental Supply Agreement are for three years, starting after the 3D NAND flash memory product is qualified for manufacturing at Micron's Singapore facility. The Wafer Supply Agreement has a term of one year.

Yes, each party has the right to terminate any of the Supply Agreements if the other party commits a material breach of the agreement's terms.