Fab-18 to be 'flagship' of Intel-STM partnership

The Kiryat Gat plant, with more than 1,400 employees, has been the leading factory for Intel's flash memory division and will now assume this role for the new company.

intel 88 (photo credit: )
intel 88
(photo credit: )
Intel's Kiryat Gat Fab-18 manufacturing plant, designated for reassignment as part of the new partnership between Intel and STMicroelectronics, will be the "flagship wafer manufacturing facility" for the as of yet unnamed company, CEO Brian Harrison said Monday. "We will be consolidating production there and broadening our already broad line of products that Intel currently manufactures there," said Harrison. "The Intel employees who are currently working there will migrate over to the new company," he added, calling the move a "repurposing" of the employees, in order to streamline and broaden the new company's product line. Harrison also stressed that he does not envision any lay-offs at the Kiryat Gat facility. "The sole function of the plant in Israel is manufacturing and the new company will not change this," he said. The partnership between Intel-Israel's parent company and STMicroelectronics, announced late last month, will combine the two companies flash-memory businesses, allowing the new company to increase its role from a bit-player in the burgeoning NAND-based market and positioning the company to take a leadership position in the NOR technology field, overtaking current market leader Spansion Inc. "Both Intel and STM had been underperforming in the flash memory business, below a threshold of success and now we are going to be able to take advantage of the synergies that exist between Intel and STM," said Harrrison. "By doing so, we will be creating a company with almost $4 billion in sales last year and now we will be able to go after significant market segments." The Kiryat Gat plant, with more than 1,400 employees, has been the leading factory for Intel's flash memory division and will now assume this role for the new company. Flash memory is non-volatile computer memory, meaning that it does not need power to maintain the information stored on the chip, that can be electrically erased and reprogrammed. It is a technology that is primarily used in memory cards and USB flash drives that are used for general storage and transfer of data between computers and other digital products. Additionally, it is used in laptop computers, digital cameras and mobile phones. According to Harrison, who said that the new company will begin operations at the end of the third quarter or the beginning of the fourth, the company will build off of the products it manufactures for the cellular market and slowly grow its other product divisions adjacent to this. "Our idea is to intelligently grow in the cellular market and expand from there," said Harrison. "The company already has $500 million in the bank and a credit line that runs beyond that," said Harrison, "and we expect that it will generate positive cash within the first year, build on our own competencies and fund our own growth," he added. Under the new partnership, Intel will hold hold 45.1 percent of the combined company, while STMicroelectronics will hold 48.6%. Fransisco Partners, an equity firm based in California, will invest $105m. into the venture and own the remaining 6.3%. STMicroelectronics is a partnership of Italy's SGS Microelectronica and France's Thomson Semiconductors, and was founded in 1987. The company employs some 50,000 workers in factories around the world and reported annual sales of $9.85b. last year. "Our customers are excited about the new company and the new opportunities that will be presented to them - we are now a one-stop shop for many of the solutions that they are looking for," added Harrison.