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Intel pays Micron to boost server RAM output

Memory maker still losing money, though

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Intel will slip Micron $450 million to beef up its DDR 2 production, the companies said yesterday, even as the memory maker announced a massive fiscal year loss of $1.27 billion.

Publishing its latest quarterly figures, Micron reported a loss of $123 million (20 cents a share) on revenues of $889 million for the three months to 28 August, its fourth quarter. Sales were up 21 per cent on Q3, thanks to a 15 per cent increase in megabit part prices and growing demand for those chips. That demand exceeded production - up eight per cent sequentially - during Q4, allowing Micron to reduce its inventory below last quarter's levels and the previous year's figure.

For the year as a whole, the company realised revenues of $3.09 billion, up 19 per cent on the previous year, but not enough to push the company into the black. However, 256Mb DDR prices in particular fell around 30 per cent year on year, Micron said.

The Intel investment will see the chip giant take stock rights worth 33.9 million common shares. It's the second time Intel has put money into Micron - in 1998 it invested $500 million in the memory maker. This time, the injection follows the pattern of Intel's other recent memory company activity, in particular the $123 million it invested in Elpida, in two rounds. And like Elpida, Micron will use some of the money for the "deployment of DDR 2 memory".

Intel is keen to drive up DDR 2 production in time for the launch of DDR 2 server chipsets next year, followed by more mainstream chipsets which also support the next generation of DDR SDRAM. ®

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