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Intel spins of NOR flash division in cooperation with STMicroelectonics

There are two basic types of flash memory commonly used in electronics devices from MP3 players to mobile phones and all sorts of things in between. The most common type, NAND, finds uses in MP3 players like the iPod and newer SSD drives that are slowing replacing standard hard drives in notebook computers.

NOR flash, on the other hand, is commonly used in cell phones and is the lesser known of the two types of flash memory. Intel announced today that it is spinning its NOR flash business off in cooperation with STMicroelectronics. The two companies worked together to create a new entity called Numonyx.

It has been no secret that Intel was looking for a way to turn its ailing flash business around as prices and a market oversupply have led to falling profits for Intel and the inability to meet its projections. EWeek reports that Intel is betting that NAND flash prices stabilize in the coming months as more notebook makers move to solid state drives rather than traditional hard drives.

The creation of Numonyx allows Intel to accomplish something else it has wanted to do -- eliminate employees from the payroll. The spinoff will have 2,500 of Intel’s current employees moving to Numonyx.

The deal has Intel contributing all of its assets from the Intel NOR flash division to the venture and STMicroelectronics contributed part of its NAND flash business to the new company allowing Numonyx to work on creating both NOR and NAND flash products.

Intel gets a 45% stake in Numonyx while STMicroelectronics gets a 48% share. Francisco Partners owns 6% of the company. According to eWeek the 2,500 employees Intel is losing as part of this deal are only a portion of the number of employees it hopes to eliminate in 2008. Intel currently has about 86,500 employees and eWeek reports that it wants to reduce than number to about 80,000 in 2008.

Toshiba and Samsung were also looking for ways to make NAND flash operations more profitable in late 2007. Samsung and Toshiba announced a broad cross license agreement of each other’s patents in an attempt to make their NAND flash operations more profitable in December 2007.

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Why would you want to lose employees?
By 4Eyes on 3/31/2008 5:15:33 PM , Rating: 2
I've heard this before of Intel. I don't get it. Why would you want to shuffle employees around to other companies that you have a large stake in? Surely Intel are still responsible for their benefits etc.




RE: Why would you want to lose employees?
By jbzx86 on 3/31/2008 5:47:41 PM , Rating: 2
Think about it: Intel now focuses on R&D and production of its x86 processors.

This new venture company now focuses solely on NOR flash technology and its production.

Intel, as an entity, sees its profits up and is able to see a more enthusiastic projection. If this NOR flash venture tanks, Intel still cut employees that it does not need. This makes perfect business sense.

Also, keep in mind that once Intel invests its capital into the venture, they are no longer responsible for day-to-day operations. I.e., no more investment is necessary.


By Ananke on 3/31/2008 5:57:29 PM , Rating: 2
I see it more like this:
Intel aports capital assets and technology know-how, as well as intelectual rights. STM has more than enough employees, so they get 10 key engineers and the rest 2400 persons are on their own. Actually, STM may not need even those 10 employees.
Sorry, I am not engineer, I am just plain economist working in the Silicon Valley.


By flipsu5 on 4/1/2008 9:56:56 PM , Rating: 2
This action was delayed for many years. The reasons never changed.

You also imply before it didnt focus on R&D and production of x86, but that can't be true, right?

Flash memory is a commodity. If Intel decided DRAM was too dangerous for the same reason, who decided to stick with flash for so long?


By Grast on 3/31/2008 5:59:54 PM , Rating: 2
Shuffle is an interesting word. In reality, it is a called a lay-off of employees. You see employees working in the flash departments (engineers, sales, IT support, etc.. basically any department which was under the FLASH expense) basically have two choices. They can take lay-off package based on time at Intel. Or they can take positions at the new company. Since Intel does not have a pension program, the employee's take their 401K to the new company and start over in regards to pay raizes and advancement.

In any event, these employee's jobs no longer exist at Intel. They have several choices to make either move to the new company, find another job else where, or find another position else where in the company.

Intel does not like to air its dirty laundry but lay-offs, resizing, and transfers are very common at the company. Especially in economies with shrinking margins and slow growth.

Later.


By jasona111 on 3/31/2008 7:45:45 PM , Rating: 2
Intel is no longer responsible for 100% of those staff benefits, they're now responsible for 43%? although I would imagine they're still responsible for the benefits accrued up till the change over


so slow
By semo on 3/31/2008 5:53:21 PM , Rating: 2
quote:
and newer SSD drives that are slowing replacing standard hard drives in notebook computers
if that's supposed to be "slowly" then you need a lot more emphasis on that word.




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