Micron slurps the 66% of Inotera it doesn't already own, for US$3.2bn

Exclusive DRAM supply deal was due to expire, bring lower margins, so Micron swooped

Memory-maker Micron has decided that owning a third of Taiwanese supplier Inotera isn't enough, so will scoop the lot in order to preserve its margins.

The former company's announced it will find US$3.2 billion bucks to acquire the company, paying $0.92 a share.

Inotera cranks out about 120 thousand wafers of 30nm DRAM each month, all sold to Micron.

So why is Micron buying a company it already owns, partly and figuratively? One reason is that it had to negotiate with Inotera to extend its DRAM supply deal, which was due to expire on December 31st. The other is that the two companies had reached a deal under which they would split margin between the two companies from 2016 onwards. Once Micron owns all of Inotera, that agreement goes away and Micron keeps all the margin.

Micron CEO Mark Durcan is positioning the acquisition as “the culmination of a highly successful seven year partnership” that “enables Micron to realize the full financial and operational benefit of Inotera's operations.”

A word on those operations: Inotera says it “will convert approximately 80% of its total wafer-start capacity to 20nm process technology by the end of year 2015.” But Micron's says Inotera “is expected to be fully deployed on Micron's leading-edge 20 nanometer technology by the middle of 2016.” Which sounds rather like the move to 20nm is going well.

Both companies expect the lawyers and regulators will be finished with their part of the deal by the middle of 2016. ®

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