Intel, STMicroelectronics, and Francisco Partners finally closed a deal on Monday to launch Numonyx, a flash-memory joint venture between the three companies, with much less funding than originally expected.
The company will receive $450 million in loans from lenders, about $900 million less than the secured debt that was expected when the Numonyx deal was originally announced in May last year. The deal then called for lenders to provide up to $1.3 billion to finance Numonyx. Stemming from the turmoil in debt markets, Intel in December said the parties renegotiated the commitment letter, calling for lenders to provide a $650 million loan and $100 million in a revolving credit facility.
Numonyx will combine Intel's and STMicroelectronics' efforts to manufacture NOR and NAND memory for consumer and industrial products including cell phones, digital cameras, PCs and other embedded devices. The new company will also merge research and development efforts.
Although the debt markets are experiencing turmoil, the basic structure of the deal hasn't changed and Numonyx will be more efficient as a result, said Brian Harrison, president and CEO of Numonyx, during a news briefing in San Francisco. It will be leaner and in a better position to add funds in the future, he said.
That lenders would backtrack on millions of dollars pledged to the initiative is "mysterious," with the launch delay possibly stemming from turmoil in the debt market, said Jim Handy, director at Objective Analysis.
STMicroelectronics and Intel will hold a 49 percent share and a 45 percent share in Numonyx, respectively. Francisco Partners, which is providing $150 million in cash to the venture, will hold a 6 percent share. Numonyx will have an annual combined estimated revenue of $3 billion, making it the third-largest nonvolatile memory manufacturer in the world after Samsung and Toshiba, Harrison said.
Numonyx will merge seven fabs from both companies into two fabs, with one in Singapore and the other in Israel, Harrison said. It will produce memory using the 65-nm manufacturing node, with a ramp to the 45-nm manufacturing node planned for later this year.
Numonyx will also enter a joint venture with Hynix Semiconductor to manufacture NAND flash memory, with Numonyx getting access to a 300mm wafer fab in China. Under terms of the joint venture, Numonyx can own up to 33 percent of the facility.
By combining resources, Intel and STMicroelectronics will no longer duplicate manufacturing and design or research and development efforts, which should lead to savings, Handy said. Numonyx will also focus on fabs dedicated to manufacturing specific types of memory technologies, instead of mixing up memory production in fabs. Numonyx's joint venture with Hynix will focus on manufacturing NAND flash, while Numonyx facilities in Israel and Singapore will focus on producing NOR flash and small amounts of phase-change memory.
The company will ramp up phase-change memory production in the future, but will continue to produce NOR and NAND flash, Harrison said. The company has already delivered samples of Alverstone, a phase-change memory chip, which uses a glass-like material that can change from an amorphous, or gaseous, state to a crystalline state as its atoms are rearranged. The state of the material corresponds to the 1s and 0s in computing, allowing it to be used to store data.