Flash and it’s gone

Intel could sell off its flash and SSD business

Intel has announced its Q1 fiscal 2008 earnings and CEO Paul Otelllini has hinted that the remaining flash business may be sold off.

Otellini reiterated his committment to sorting out the flash business, but not, specifically not, to making a success of it. This business has been hit by lower prices per GB. Flash production increased from the last quarter of 2007 to the first quarter of this year as a new Intel flash foundry came into operation. Chip capacity doubled but prices went down. There is over-supply and little prospect of prices going back up in the near-term.

Researcher iSuppli has forecast a flash slump.

Otellini said in the earnings’ call, commenting upon this current over-supply in the NAND flash market: “Recently we made a decision with Micron to push out the timing of the joint Singapore plant. Last month I committed to our investors that I would not let the flash memory business become a long-term drag on company financials. … I want to assure shareholders that we entered this business to make money and we will continue to make the appropriate decisions necessary to that end.”

Otellini added: “We will continue to look at other options and keep you informed.”

Considering that he’d earlier referred to the sale of the NOR flash business to Numonyx, which closed this quarter, as an important step for Intel, the coded message is clear. Intel’s stake in the joint flash venture with Micron is potentially up for sale.

An analyst asked about this possibility in the Q & A session following the prepared remarks in the earnings call. Otellini’s reply gave out an even stronger hint of selling the flash business being on the agenda: “There’s a lot of ideas that we have here. Talking about them publicly before they’re realised or discussed I think is inappropriate and weakens our negotiating position and our options.”

“(I) really can’t comment on that prior to doing it. We had similar questions raised on NOR a year and a half ago. About what are you going to do about it. Couldn’t answer those even though we were in discussions with ST (Microelectronics) at that time.”


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