Intel Corp announced on Friday that it will pay $500m for a 6% chunk of Micron Technology Inc, the Boise, Idaho-based DRAM manufacturer. The deal is intended to, help drive PC industry growth by accelerating the adoption of Direct RDRAM, Intel said. It will also ensure that Intel receives a minimum level of supply of these new, super fast memory chips when they become available. Demand for Intel’s increasingly fast microprocessors could be threatened if slower memory becomes the limiting factor, hence rumors of this investment have been circulating for some time (CI No 3,505). Direct RDRAM is the emerging technology invented by Rambus Inc which it claims gives eight times the bandwidth per pin of alternative high speed DRAM components. The technology is licensed to numerous chip manufacturers, including Micron Technology. Micron’s chief executive, Steve Appleton, said that following the investment by Intel, his company would accelerate the development and production of Direct DRAMs, with the first products expected to ship in the third quarter of 1999. The cash infusion from Intel will also help to ensure reasonable price tag for RDRAM when it arrives next year. The 6% equity stake in Micron will take the form of stock rights exchangeable for common stock, the companies said. Based on Friday’s closing price, a 6% stake in Micron is valued at around $410m. In June this year, Texas Instruments sold its entire memory chip business to Micron in exchange for a 12% stake in the company, making TI Micron’s biggest shareholder. TI also tendered $750m in loans in the deal, thereby easing Micron’s impending liquidity problems at the time.
