Intel Deal Hints at NOR Flash Fade

Intel(INTC Quote) trumpeted its latest flash memory deal as the start of a new era.

For the chipmaker's investors, though, the best part of the news is that it brings the company closer to closing the book on its involvement with NOR flash memory.

Intel announced plans Tuesday to form a new joint venture with STMicroelectronics(STM Quote) and private-equity firm Francisco Partners. The yet-to-be-named company will focus exclusively on flash memory chips, and have a combined revenue of roughly $3.6 billion.

That would make the company the No.1 player in the market for a flavor of flash memory known as NOR, vaulting it ahead of Spansion(SPSN Quote), which had sales of $2.6 billion last year.

"From the outset, the company will be a leading supplier of flash memory solutions for wireless communications," said Intel's Brian Harrison, who will become the CEO of the new company.

Shares of Intel closed Tuesday's regular session up 1.6% at $22.99. STMicro shares were up 1.9% at $20.26.

Flash memory, which retains data even when an electronic device's power is switched off, has become a popular component in gadgets such as MP3 players, cell phones and digital cameras.

But the fast-growing segment of flash memory is based on NAND technology, which is typically used to store the music files, digital photos and other files. Intel has a separate effort under way to tackle the NAND flash market through its 2005 joint-venture with Micron(MU Quote).