Speculation centres on Intel memory spin-off
By Chris Nuttall in San Francisco
news.ft.com
Published: May 8 2006 18:52
Last updated: May 8 2006 18:52
"Shares in Intel rose more than 3 per cent, becoming the most actively traded on Nasdaq on Monday, as Wall Street responded to speculation that the world’s biggest chipmaker could sell or spin off its memory business.
Intel confirmed a reorganisation of memory operations under Brian Harrison, who was made head of the Flash Memory group when the post was created last November. Intel’s Chuck Mulloy said the move was intended “to get greater alignment of resources and efficiency through the system”. Talk of a spin-off would be speculation and Intel would not comment, he added.
Analysts have suggested that Intel’s memory business, running at an operating loss, is a prime target for a sale or initial public offering. It is focused on Nor Flash, which has been losing out to Nand Flash in supplying the memory for storing pictures and music on digital cameras and mobile phones.
Advanced Micro Devices, Intel’s microprocessor rival, last year spun off the Spansion flash memory joint venture with Fujitsu after it had dragged down its financial performance over a number of quarters.
Paul Otellini, Intel chief executive, announced a 90-day review of the company’s operations last month that is expected to lead to restructuring. He also said there would be $1bn in cost-savings this year.
Intel disappointed with its first-quarter results. It expects sales to fall 3 per cent in 2006, after three years of double-digit growth and at a time when the rest of the industry is performing strongly. Its stock price fell more than 20 per cent in the first quarter.
In a research report on Monday, Doug Freedman, American Technology Research analyst, revealed that Intel had recently separated its Nor Flash production from Intel’s main manufacturing group – “likely signalling the IPO or sale of the business”.
Mr Mulloy confirmed that a number of facilities had been taken out of the main Technology Manufacturing Group, or TMG. These included Fab 18, a 90-nanometre Nor Flash production plant in Israel, a 200mm wafer fab in Ireland and D2, a development fab at Intel’s headquarters in Santa Clara. Also two test assembly facilities in the Philippines and China were now under Mr Harrison, who previously relied on TMG for manufacturing the flash memory while he looked after product development, sales and marketing and a Nand flash joint venture with the Micron chip company.
“We have the number one position in Nor Flash,” Mr Mulloy said.
“We want to extend that and improve profitability.” |
