Texas Instruments, a major analog chip maker, announced that it has signed an agreement with Micron to acquire Micron's Lehi 12-inch wafer fab in Utah for US$900 million. After the transaction is completed, Lehi fab will become Texas Instruments’ fourth 12-inch fab after DMOS6, RFAB1 and RFAB2 to be completed.
According to data, the Lehi wafer fab in Utah was originally the factory where Micron produced 3D XPoint products. 3D XPoint technology is a revolutionary storage technology jointly developed by Intel and the United States. In 2006, the two parties invested 1.2 billion US dollars to establish a joint venture (IM Flash Technologies) to develop 3D XPoint technology, and announced the results of their cooperation for the first time in 2015. In 2018, the two parties ended the joint development work, and Micron bought out the joint venture with Intel for US$1.5 billion.
However, on March 16 this year, Micron announced that it would immediately stop all product development work based on 3D XPoint technology and plan to sell the Lehi fab in Utah, which mainly produces 3D XPoint flash memory products. The reason is that the demand for 3D XPoint is insufficient, and there is not enough market scale to verify the rationality of continuous investment for the large-scale commercialization of 3D XPoint technology.
Although Micron has announced several storage devices based on 3D XPoint flash memory chips, such as X100, they have not been officially listed. This makes Intel the only supplier that sells products using 3D XPoint flash memory chips. It is understood that Micron has already lost $400 million in the 3D XPoint product line.
At present, Intel continues to use 3D XPoint flash memory chips in the Optane product line, which still relies on the supply of Micron’s Lehi fab, but the supply agreement between the two parties will end at the end of this year. After that, Intel will produce 3D XPoint flash memory chips for its Optane product line at its fab in New Mexico.
Although Micron stopped 3D XPoint technology research and development and sold the Lehi wafer fab in Utah, which mainly produces 3D XPoint flash memory products, Micron still retains all its intellectual property rights related to 3D XPoint. Later, resources will be transferred to focus on accelerating the development of memory products that support the Compute Express Link (CXL) standard.
For the sale of the Lehi wafer fab, Micron’s chief financial officer Dave Zinsner said that the $900 million sale price is lower than the asset’s book value, so Micron needs to recognize approximately $330 million in asset impairment charges after tax.
Texas Instruments plans to complete the acquisition before the end of 2021. After the completion of the acquisition, Texas Instruments will transform the Lehi wafer fab so that it can produce Texas Instruments analog chips and embedded processing products through 65nm and 45nm processes, and can also step into more advanced manufacturing processes if necessary.
Texas Instruments CEO Rich Templeton said that this investment is part of Texas Instruments' long-term capacity planning and will continue to strengthen Texas Instruments' competitive advantages in manufacturing and technology.
Micron CEO Sanjay Mehrotra said on the earnings call that Texas Instruments will invite all team members of the Lehi fab to join Texas Instruments after the completion of the plant acquisition.
Since the second half of last year, due to strong market demand, global wafer manufacturing capacity has continued to be in short supply, chip shortages and price increases have been prominent. Against the background, as the world’s largest analog chip manufacturer and the fifth largest automotive chip manufacturer, Texas Instruments’ chips are also in short supply. Many of its chips also suffer from serious shortages and price increases. Some chips are available. The cycle has been extended to 36 weeks.
Obviously, the acquisition of Micron's Lehi 12-inch wafer fab will help Texas Instruments to further increase its production capacity and increase the supply of 65nm and 45nm process analog chips and embedded processing products. And the price of US$900 million is much cheaper than building a 12-inch wafer fab.
However, UBS analyst Tim Arcuri previously pointed out that the Lehi fab that originally produced 3D XPoint storage products cannot easily switch to the production of logic chips or analog chip specifications. It may cost 3 billion to eliminate and replace equipment. Around the dollar.
In addition, due to the transformation of the production line, Texas Instruments estimates that it will also recognize $75 million in low utilization costs for Lehi wafer fabs every quarter in 2022.
Texas Instruments predicts that Lehi wafer fab will start contributing revenue from early 2023. Although it will take two years for the Lehi wafer fab to contribute revenue, it is at least much faster than the self-built wafer fab.
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