Intel and Micron Technology agreed Monday to form a joint venture to produce flash memory for consumer electronics and said the new company...

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SAN JOSE, Calif. — Intel and Micron Technology agreed Monday to form a joint venture to produce flash memory for consumer electronics and said the new company has a $500 million deal to supply chips to iPod-maker Apple Computer.

IM Flash Technologies will focus on a form of memory known as NAND flash, which is used in a growing number of popular devices such as the iPod Nano and other music players, digital cameras, storage gadgets and handhelds.

Apple said it will pay $250 million each to Intel and Micron to supply the memory for iPods. The company also reached long-term supply agreements with Hynix Semiconductor, Samsung Electronics and Toshiba. In total, Apple’s flash deals are worth $1.25 billion.

“We want to be able to produce as many of our wildly popular iPods as the market demands,” said Steve Jobs, Apple’s CEO.

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Steve Appleton, chief executive of Boise-based Micron, said the venture with Intel would have occurred even without Apple’s demand for NAND memory chips.

“The NAND market is about a third the size of the DRAM (dynamic random access memory) market, but it is growing at 100 to 120 percent per year, while DRAM is growing at 45 to 50 percent per year,” he said.

Unlike the DRAM chips common in computers and other electronic devices that Micron and others make, flash memory holds data even after the appliance device is turned off.

Starting in early 2006, production will take place at Micron factories in Boise; Manassas, Va.; and Lehi, Utah. Micron will hold 51 percent of the venture, with Intel holding the remainder.

The new company is good news for other flash-based devices manufacturers that have had trouble procuring enough chips, said Nam Hyung Kim, an analyst at the research firm iSuppli.

“This new joint venture will supply quite a bit of capacity,” he said. “That will ease the supply issue in the NAND flash market.”