Computer chip maker Micron Technology Inc. Monday confirmed plans to buy out rival Intel Corp.’s stake in their flash memory joint venture company IM Flash Technologies for $1.5 billion.

The IM Flash joint venture owns a foundry in Lehi, Utah, which was setup in 2005 and is the world’s only producer of 3D XPoint memory technology. It’s a nonvolatile or persistent memory, jointly developed by the two companies, that provides improved storage performance and reduced server memory costs.

The technology is said to be 1,000 times faster and 1,000 times more durable than older NAND flash technology and 10 times denser than dynamic random access memory, thanks to a manufacturing process called 3-D stacking, in which layers of memory are stacked on top of each other to improve density. It’s currently used in Intel’s Optane-branded line of solid-state storage products for data centers.

Micron already owned a 51 percent stake in IM Flash under the terms of the original joint venture agreement and also had the right to acquire the remaining shares under certain contractual conditions. The company first announced its intent to exercise that right in October. The transaction is expected to close sometime between July 14, 2019 and Jan. 14, 2020.

Micron’s decision to buy out Intel’s share in IM Flash was almost a foregone conclusion, since the companies had already announced last year they were ending their joint development efforts for the second generation of 3D XPoint. Going forward, the companies will pursue their development of the technology independently to optimize it for their specific product needs.

“The Utah-based facility provides us with the manufacturing flexibility and highly skilled talent to drive 3D XPoint development and innovation, and to deliver on our emerging technology roadmap,” Micron Chief Executive Officer Sanjay Mehrotra said in a statement.

Intel will not have access to the facility any longer, which means it isn’t clear how the company will manufacture its 3D XPoint products going forward. One option could be to negotiate a separate agreement with Micron to continue using the Utah plant for such purposes, or it could instead revamp its Fab 68 facility in Dalian, China. “We have a number of manufacturing options available to us and have been shipping a broad portfolio of Intel Optane technology products for more than a year,” Intel said in a statement.

Analyst Holger Mueller of Constellation Research Inc. said Intel’s decision is a tricky one due to the current low demand for 3D XPoint products, which doesn’t really require more than one facility. However, he suspects Intel will most likely go with the China option.

“Intel is playing an untypical risky supply chain strategy here, but only future will tell how this will pan out,” Mueller said. “But we expect Micro to create more demand for 3D Xpoint as soon as possible.”

Intel’s portfolio includes its Optane dual in-line memory modules, which are a series of dynamic random-access memory integrated circuits that were launched in 2017.

“The two companies are going separate ways and I fully expect Intel to assume production control for its next-generation Optane memory,” said Patrick Moorhead, president and principal analyst at Moor Insights & Strategy. “Micron is a company in crisis and really needs to choose carefully its next investments. For Intel, Optane is a big differentiator to its overall Xeon Scalable data center platform play.”

Micron still hasn’t released any 3D XPoint-based products, but has promised to do so before the end of the year.

Photo: IM Flash