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Intel puts NOR fab up for sale

Posted: 18 Jan 2007     Print Version  Bookmark and Share

Keywords:Intel  NOR  flash  memory  wafer fab 

Preparing for a possible exit in the NOR flash-memory market, Intel Corp. said Tuesday that it has put its wafer fab in Colorado Springs in the United States up for sale.

Intel also disclosed lackluster results in Q4 and reduced capital spending for 2007. The company announced that Q4 revenue was Rs.43,960.40 crore ($9.7 billion), up 11 per cent sequentially but down five per cent year-over-year. In addition, net income of Rs.6,798 crore ($1.5 billion) in the period, up 15 per cent sequentially but down 39 per cent from a year ago. Intel reported an EPS of Rs.13.60 (30 cents) a share, up 18 per cent sequentially but down 35 per cent year-over-year.

Despite an apparent price war with Advanced Micro Devices Inc., Intel beat Wall Street's estimates as the chip giant was supposed to earn 25 cents a share on sales of Rs.42,782.08 crore ($9.44 billion).

However, Intel's results were offset by impairments, including a decision to place its Fab 23 facility in Colorado Springs up for sale. The gain and impairments resulted in a net increase to EPS of approximately 2.5 cents.

Intel did not elaborate on the fab news or a possible buyer. The fab mainly produces NOR flash memories, but Intel is reportedly looking to exit the business. Recently, Doug Freedman, an analyst with American Technology Research, said that an un-named private equity institution is preparing to acquire the NOR flash memory businesses of STMicroelectronics and Intel.

And as well as looking at strategic options for a wafer fab in Jerusalem, Intel could also be looking to sell its flash wafer fab, Fab18, at Kiryat Gat, which employs 3500 people, according to another report.

The new spoiled Intel's results. For Q4, total microprocessor units set a record, according to the firm. ''The ASP was higher, driven primarily by a mix shift to leading-edge processors in all segments along with growth in mobile as a percentage of the PC microprocessor mix,'' according to Intel.

For 2006, Intel achieved revenue of Rs.1,60,432.80 crore ($35.4 billion), operating income of Rs.25,832.40 crore ($5.7 billion), net income of Rs.22,660 crore ($5 billion) and EPS of Rs.38.98 (86 cents). Intel paid record cash dividends of Rs.10,423.60 crore ($2.3 billion) and used Rs.20,847.20 crore ($4.6 billion) to repurchase 22.66 crore shares of common stock. Sales were down nine per cent over 2005, while its profit was down 42 per cent over 2005.

For Q1, Intel's sales are expected to be between Rs.39,428.40 crore ($8.7 billion) and Rs.42,147.60 crore ($9.3 billion). Capital spending is projected to hit Rs.24,926 crore ($5.5 billion) plus or minus Rs.906.40 crore ($200 million). The forecast includes significantly higher equipment spending for the ramp of Intel's next-generation 45nm process technology that will be more than offset by savings in a variety of areas, according to Intel.

Intel's spending is slightly lower than last year. Capital spending in 2006was between Rs.25,832.40 crore ($5.7 billion) to Rs.26,738.80 crore ($5.9 billion).

- Mark LaPedus
EE Times

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