Micron Technology Inc. (MU) plans to buy out Intel Corp.’s (INTC) share of their flash memory joint venture.

In a press release, the chipmaker said it decided to exercise its right to take full control of IM Flash Technologies when the option becomes available Jan. 1, 2019. The deal, which is expected to take between six and 12 months to complete, requires Micron to pay $1.5 million in cash and a further $1 million to cover Intel’s debt in the venture.

The two chipmakers initially contributed about $1.2 billion each when they set up IM Flash in 2006, according to Reuters. On a conference call, reported on by MarketWatch, Micron CFO Dave Zinsner said Micron will fund the buyout from free cash flow, adding that the deal won’t interfere with its plan to buy back its own shares.

“We ran the calculus whether that was a good deal and we think the [return on investment] on this is very good,” Zinsner said, adding that $6 billion had already been invested in IM Flash’s Lehi, Utah-based facility.

Potential Game-changing Technology

IM Flash makes 3D XPoint, a memory storage technology designed to turn huge amounts of data into valuable information in real time. 3D XPoint has been described as better than dynamic RAM and NAND flash and an ideal solution to improve storage performance and reduce server memory costs. If all goes to plan, a lack of competition should see the technology command high profit margins.

In its early days, the technology was expected to usher in a new golden age for memory computing. But the partnership between Micron and Intel slowly started to unravel, first when Intel sold its stakes in IM Flash labs in Singapore and Virginia back in 2012 and then when the two companies announced in July their decision to pursue 3D XPoint independently. 

Intel is believed to want out because demand for the technology it uses 3D XPoint in, Optane SSDs, has struggled to generate much demand. Micron, meanwhile, has ambitious plans to use the technology across various end-markets, including automotive, mobile devices and various emerging applications.

"Micron's acquisition of IM Flash demonstrates our strong belief that 3D XPoint technology and other emerging memories will provide a unique differentiator for the company and be an essential solution for new data-hungry applications," said Micron President and CEO Sanjay Mehrotra. "This investment provides Micron with an established development and manufacturing facility and a highly skilled workforce with a strong track record of innovation and execution."

What’s Next?

Micron is set to launch its own 2nd Generation 3D XPoint-based products in late calendar 2019. The chipmaker is also obligated to sell 3D XPoint memory wafers to Intel for up to a year after the transaction closes at pre-agreed prices.

Boise, Idaho-based Micron does not expect the transaction to impact its financial results or change its fiscal 2019 capital expenditures. 

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