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What’s Intel’s Management’s Plan for Its Memory Business?

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Updated

IMFT joint venture 

Previously, we learned that Intel’s (INTC) NSG (Non-Volatile Memory Solutions Group) barely broke even in 2018. The company develops and manufactures its 3D NAND (negative-AND) and 3D XPoint-based Optane products in a joint venture with Micron Technology (MU).

In January, Micron recalled its interest in the IMFT (Intel Micron Flash Technologies) joint venture, raising concerns among Intel’s investors about its memory business.

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On Intel’s fourth-quarter earnings call, its CEO, Bob Swan, assured investors that the end of the joint venture wouldn’t affect Optane’s production, as Intel has long-term supply agreements with Micron that extend beyond the joint venture’s termination. He added that Intel also has its own production facilities.

While IMFT’s termination won’t affect impact Optane’s memory production, it will increase NSG’s research and development costs.

Intel’s management on NSG

It has been two years, and NSG is barely breaking even. With the end of the Micron joint venture, the memory business will take longer to churn out profits. The state of Intel’s NSG has many analysts wondering about Intel’s tolerance level in terms of retaining a loss-making business.

Answering analysts’ questions on the earnings call, Swan stated that from a CFO perspective, commodity NAND products aren’t attractive. Hence, Intel is moving to differentiated technology in memory, especially in the data center space. He added that memory is one of the six pillars of technology on which Intel’s data-centric business is built. Memory plays a key role in central processing unit advancements.

Swan’s statement indicated that NSG is here to stay despite its losses, as its contribution is crucial to the growth of the company’s other business.

Next, we’ll look at Intel’s other data-centric businesses: Internet of Things and Programmable Solutions.

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