8-KMaterial Agreements

MICRON TECHNOLOGY INC 8-K Report, Agreement Terminated (Mar 12, 2020)

Filed March 12, 2020For Securities:MU

Summary

Micron Technology, Inc. (MU) announced on March 9, 2020, the termination of its Product Supply Agreement (PSA) with Intel Corporation, effective March 6, 2020. This agreement, originally dated April 6, 2012, governed the supply of 3D XPoint wafers from Micron to Intel at pre-determined prices and forecasts. Concurrently, Micron and Intel have entered into a new 3D XPoint wafer supply agreement. Importantly, the company states this new agreement is not material and does not alter Micron's previously issued financial outlook. Specifically, the company reaffirms its expectation of approximately $150 million in quarterly underutilization charges related to its Lehi, Utah fab for fiscal year 2020.

Key Highlights

  • 1Termination of the 2012 Product Supply Agreement (PSA) between Micron and Intel for 3D XPoint wafers.
  • 2Effective date of termination was March 6, 2020.
  • 3A new 3D XPoint wafer supply agreement has been entered into by Micron and Intel.
  • 4The new agreement involves updated pricing and forecast terms.
  • 5Micron explicitly states the new agreement is not material to its financial results.
  • 6Previously communicated fiscal year 2020 outlook for underutilization charges remains unchanged.
  • 7Underutilization charges for the Lehi, Utah fab are expected to average approximately $150 million per quarter in FY2020.

Frequently Asked Questions

Micron Technology, Inc. reported the termination of its Product Supply Agreement (PSA) with Intel Corporation concerning 3D XPoint wafers and the simultaneous execution of a new, non-material wafer supply agreement.

Micron has stated that the new agreement is not material and does not change its previously communicated financial outlook. The company continues to expect approximately $150 million in quarterly underutilization charges related to its Lehi, Utah fab for fiscal year 2020.

3D XPoint is a type of non-volatile memory technology that bridges the gap between traditional DRAM and NAND flash memory, offering faster speeds than NAND and greater density than DRAM.

The Lehi, Utah facility is where Micron produces 3D XPoint technology. Underutilization charges typically arise when a manufacturing facility is not operating at its full production capacity, leading to higher per-unit costs or fixed cost absorption issues.