Intel to invest in Micron

The chipmaking giant will make a $500 million equity investment in Micron Technology, the companies announce.

Chipmaking giant Intel will make a $500 million equity investment in Micron Technology, the companies announced today.

Intel said its investment in Micron is part of its strategy to support the development and supply of next-generation memory products. Intel also said that it hopes to help drive personal computer industry growth by accelerating the adoption of Direct RDRAM, a high-speed memory interface technology developed by Rambus.

Gruntal & Company analyst Mona Eraiba raised her rating on Micron to "strong buy" from "buy" after the announcement. Bear Stearns also upgraded the memory chipmaker to "buy" from "attractive."

Shares of Micron were up 2.76 percent, or .88 points, to 32.63. The stock has traded as high as 38.94 and as low as 20.06 during the past 52 weeks. Intel, on the other hand, saw its stock dip slightly, dropping .3 percent or a quarter of a point to 84.31. Intel shares have traded as high as 95.63 and as low as 65.66 during the past 52 weeks.

Earlier this year, semiconductor industry heavyweights moved to embrace Rambus's core technology, which allows a computer's processor to share information with memory chips more quickly.

This new emphasis on memory technology at Intel also makes it clear that these chips are becoming an integral part of the chipmaker's strategy to build ever-faster processors. The Micron investment dovetails with the company's separate, internal push to increase the amount of memory it integrates directly on its processors.

The companies said Intel's investment should help enhance Micron's competitive position in dynamic RAM (DRAM), the main memory used in all PCs today.

"Rambus has developed an interface and the technology for an architecture for DRAM, but they do not manufacture DRAM," a Micron spokeswoman said. "We are not in competition with them.

"Micron has been licensed with Rambus for its core technology for quite some time now," she added.

With the investment, Intel will acquire stock rights exchangeable for common stock representing approximately 6 percent of Micron's outstanding common stock.

"We are pleased with Intel's support for our efforts to provide advanced memory solutions to our customers," Micron president, chairman, and chief executive Steve Appleton said in a statement. "Micron is committed to accelerated support, development, and production of Direct RDRAM."

Micron said it expects to have these products available for shipment as early as the third quarter of 1999.

"Our goal in making this equity investment is ensuring an adequate supply of memory components, particularly Direct RDRAM," Intel president and chief executive Craig Barrett said in a statement. "This is a significant strategic investment that supports our microprocessor road map into 2000 and beyond."

Ironically, after getting out of the memory chip business in the early 1980s, Intel is now becoming a significant force again since its fastest chips require an increasing amount of memory integrated directly onto the processor.

As Intel boosts performance with future Pentium II and upcoming 32-bit and 64-bit silicon, it needs to closely couple its processors with high-speed memory in order to keep them fed with data quickly. This very high-speed memory is called cache.

For several years now, growth in the speed of processors has substantially outpaced growth in the speed of memory, said Dean McCarron of Mercury Research.

"There's a disparity between system memory performance and processor performance," so chip designers have been forced to increase the amount of special high-speed cache memory to try to compensate, McCarron said.

"That's what the cache is all about," McCarron said. "If all memory accesses were instant, we wouldn't have caches."

Intel recently said that it has plans to include large amounts of cache memory on its future processors. The 32-bit Foster chips, due in 1999, and the future 64-bit Merced and McKinley processors are expected to have a large helping of cache memory, which Intel manufactures itself.

Also, Intel currently makes the integrated cache memory going into its new version of the Celeron processor.

RDRAM, on the other hand, is a next-generation technology for the main memory in a computer, which is one step further removed from the processor than cache memory. RDRAM, however, is expected to deliver much greater performance than the main memory used in processors today.

Intel is an investor in CNET: The Computer Network, publisher of News.com.

News.com's Stephen Shankland contributed to this report.

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