Micron to buy out Intel's share of flash joint venture for $ 1.5 trillion

Micron Technology Inc. said late Thursday it plans to buy out Intel Corp.'s share of a flash memory joint venture that the two chip makers have participated in for a decade.

Micron

MU, -2.48%

agreed to pay Intel $ 1.5 billion for its stake in IM Flash Technologies joint venture, and expects to close the deal in six to 12 months 1. We have a conference call, Chief Financial Officer Dave Zinsner said Micron will pay for the buyout of free cash flow while continuing with its plan to buy back its own shares.

"We ran the calculus that was a good deal and we think the [return on investment] "Zinsner said on the call, noting that a total of $ 6 billion had been invested in Flash IM's Lehi, Utah-based facility.

Zinsner added that the Utah is not only located in the Boise, Idaho, headquarters, but is also the only manufacturer in the world. 3-D XPoint technology, a kind of nonvolatile memory that is meant to improve storage performance reduce server memory costs.

Read: Micron CEO: Memory-chip market is 'structurally different' in post-PC world

As recently as July, Micron and Intel

INTC, -2.00%

announced they would complete a second generation of 3-D XPoint tech by the first half of 2019 before ending their partnership. Under existing agreements, Micron will sell 3-D XPoint memory wafers to Intel for the next year.

"Micron's acquisition of IM Flash demonstrates our strong belief that 3-D XPoint technology and other emerging memories will provide a unique differentiator for the company and be an essential solution for new data-hungry applications," Sanjay Mehrotra, Micron's president and chief executive, said in a statement.

The companies will continue to jointly manufacture 3-D XPoint memory products at the Utah Fab until the deal closed. Back in 2012, Micron and Intel expanded the flash memory joint venture, which began in 2006.

Micron shares rose 0.3% after hours, following a 2.5% decline to close the regular session at $ 41.30. Intel shares also gained 0.3% after hours, followed by a 2% drop to close at $ 44.97 on Thursday. By comparison, the PHLX Semiconductor Index

SOX, -2.51%

fell 2.5%, the Dow Jones Industrial Average

DJIA, -1.27%

declined 1.3%, the S & P 500 index

SPX, -1.44%

shed 1.4%, and the tech-heavy Nasdaq Composite Index

COMP -2.06%

Gave up 2.1%.

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