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Technology Stocks : Micron Only Forum
MU 237.56-0.3%10:09 AM EST
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To: Thomas G. Busillo who wrote (42156)1/11/1999 10:09:00 PM
From: PAinvestor  Read Replies (1) of 53903
 
Hi Thomas. I agree with your points.

Ideally, I'd like to get a lawyer in to have a look at the agreement, but even to my untrained eye, there are so many escape clauses and contingencies that MU could quite easily escape any quantitative requirements without too much explanation to INTC. It seems almost designed to be that way.

Not to mention that the day the agreement came out MU stated that it will use the cash infusion to improve the TXN facilities. Intel's Barrett said in a statement at that time "Our goal in making this equity investment [in Micron] is ensuring adequate supply of memory components". I'm sure that both were privy to the agreement prior to these statements.

I have no problem in accepting that some of the money will be used by MU to accelerate development and production of RDRAM, but nowhere has Intel stated that money cannot be used for other non-RDRAM purposes. All capex by MU is designed to support the development and supply of next generation memory products. MU decides what the mix will be. As such MU will need to spend $1bn on chip shrinkage as it shifts the Idaho fab to 0.18 micron and probably some $1bn more to integrate TXN facilities to lower design rules. That leaves very little to spend on RDRAM development specifically.

Overall, the investment is designed to assist MU in becoming a lower cost and higher volume producer of all chips - not just Rambus. I believe that INTC and MU agree that the current priorities are the points outlined above. Further, the agreement gives MU the flexibility to choose what the priorities are. I also think that INTC is worried about an overall shortage in DRAM.
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