No Flash Spinoff for Intel

Intel is not considering spinning off and floating shares of its money-losing flash memory chip unit, CEO Paul Otellini said during a recent visit to Malaysia.

"We are not currently thinking about those kind of things," Otellini told reporters in response to questions about a possible spinoff and initial public offering of the flash memory business, according to news reports.

Speculation has been building that Intel might divest itself of its flash memory business ever since the company announced in April that it was undertaking a broad internal restructuring. CFO Andy Bryant said at the time that Intel would be taking a hard look at anything "with a bracket on it," meaning any division that wasn't profitable.

According to Intel's latest annual report, the flash memory business has lost money for the past three years in a row. In 2005, the flash business had a $154 million operation loss on revenue of $2.28 billion.

Those results are primarily based on the NOR flash that Intel has sold for many years. In November, Intel launched a joint venture with Micron to manufacture the more popular NAND flash chips.

Flash memory retains data even when the power is switched off, making it an ideal means of storing data in electronic gadgets such as MP3 players, cell phones and digital cameras.

Earlier this month, Intel said it was separating its NOR flash manufacturing facilities from its main chip manufacturing operations and would fold them within the flash memory group. Some analysts interpreted the move as a sign that Intel was prepping the business for spinoff.

"What we are thinking about is simply allowing the memory factory team to work much more tightly aligned with the design team," Otellini told reporters in the North Malaysian state of Kedah, where he was attending the opening of a $40 million chip design and development center.

In December, microprocessor rival AMD spun off its NOR flash memory group, dubbed Spansion.

Shares of Intel were recently off 2 cents to $17.87; the stock hit a 52-week closing low on Wednesday.

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