July 11, 2008 – Numonyx BV, the flash memory joint venture between Intel and STMicroelectronics, have signed a letter-of-intent for a foundry agreement whereby Elpida will make NOR flash memory for the JV at its 300mm fab in Hiroshima. A formal pact is expected to be finalized in the current quarter (the Nikkei daily already is calling it a five-year deal), with initial production expected to start in mid-2009 using both 65nm and 45nm process technologies.

For Numonyx, the deal provides access to more production of high-density NOR flash without incurring associated costs. It will continue to use 200mm capacity to serve the needs of customers who want to avoid costly re-qualification of parts, but adding 300mm capacity will help Numonyx better target growth opportunities in areas like wireless. “We will get the efficiencies and Elpida’s scale and we won’t have to go through a ramp-up process or capital investment. That’s clearly one of the opportunities,” said Brian Harrison, president/CEO at Numonyx, in a statement.

For Elpida, the work helps improve its mix of DRAM manufacturing and foundry work and better utilize its fab equipment (it similarly forged a partnership with Qimonda earlier this year to help lower costs). “Their innovative process design will enable Elpida to extend the life of production equipment,” noted Yukio Sakamoto, president/CEO of Elpida, in a statement. The Japanese firm will allocate an undisclosed portion of its 120,000 wafers/month output to Numonyx (Reuters says it’ll be 10,000 wafers/month, citing an Elpida spokesperson) for both 65n NOR flash products as well as to-come 45nm process technology.

Mark DeVoss, senior analyst with iSuppli, noted in the Numonyx statement that growth in the handset-driven NOR flash segment has slowed lately, but future growth from the embedded segment could help Numonyx add NOR capacity, and joining forces with Elpida is a good thing for the NOR flash segment overall. “From a financial standpoint it makes perfect sense,” he stated. Numonyx currently trails NOR market leaders Samsung and Toshiba, with about 90% of sales from NOR and the remainder in NAND flash, noted the Nikkei