Micron Selling 9% Stake to British Client
Micron Technology, a small Idaho producer of semiconductors whose fortunes have soared as a result of a worldwide shortage of key computer memory chips, announced Tuesday that it has agreed to sell 9% of the company to a British computer maker.
The $75-million deal with Amstrad PLC of Brentwood, England, brings together one of the world’s largest buyers of memory chips with one of the three remaining U.S. manufacturers of components known as dynamic random access memory, or DRAM, chips. The pact assures Amstrad of being able to buy up to 9% of Micron’s chip production during the next three years, the same amount it currently purchases.
Micron officials, who have seen revenue triple in the past year to about $300 million because of the 18-month DRAM shortage, said the deal is designed to give the company a solid base of business after the supply crunch has eased.
The deal was applauded by analysts for uniting a manufacturer with a major customer. “It’s very positive and the wave of the future,” said Jack Beadle, president of InStat Inc., a Scottsdale, Ariz., market research firm. However, the agreement is subject to approval by the U.S. government.
The Micron-Amstrad deal comes six months after Intel Corp. of Santa Clara, Calif., a leading U.S. chip maker, promised to invest $11.6 billion in Micron in an effort to acquire a steady supply of DRAM chips.
‘Not a Takeover’
Micron Chairman and Chief Executive Joe Parkinson said also he wants Micron to put together partnerships with Asian computer makers to expand the company’s international production and sales.
Parkinson dismissed suggestions that the deal favors a British company at the expense of American computer makers and said he is not concerned about possible objections to the agreement by federal regulators.
“This is not a takeover,” Parkinson told a San Francisco news conference. “I don’t understand why (the agreement) would be anti-competitive.”
Micron, Texas Instruments of Dallas and Motorola Corp. of Schaumburg, Ill., are the only U.S. companies producing and selling DRAM chips. Japanese companies dominate the market. Prices have risen because of the chip shortage, prompting many computer makers to raise their prices or scale back production.
Micron officials said proceeds from the deal would be used to finance construction of a 120,000-square-foot chip manufacturing plant that is expected to double the company’s output.
Under the agreement, Amstrad will purchase 3.5 million shares of Micron common stock at $21 each. Micron’s stock closed Tuesday at $20.25 a share, down 37.5 cents, in over-the-counter trading.
