It has been reported over the holiday weekend that Intel is in talks with Micron over a proposed merger that would value Micron at $70 per share in a deal of a combination of stock and cash for Micron shareholders. It is said that the boards of both companies have already approved the deal.
Intel’s CEO Brian Krzanich said, “We see enormous upside in the memory market over the next decade with the continued move to all things data. We view this as a perfect fit with our position in the data center and new data centric applications”
BK went on to explain why the deal was being done now; “We saw a value opportunity created as our stock price increased on declining sales while Micron’s stock price has declined on increasing sales, this aberration in the stock market created an opportunity we could not ignore.”
It was also reported that part of the unspoken reason for Intel’s acquisition was that Intel was under pressure from the administration to cease its cooperation with China, particularly the new memory fab it was planning on transferring technology to.
In related news, the Trump administration has called for a halt in chip equipment sales to China. The administration is using a unique combination of CFIUS and war powers act to block sales of advanced chip technology to China citing the military and economic threat.
In separate news, Hock Tan has vowed to keep up the fight to convince the administration to allow his bid for Qualcomm to continue.
Broadcom/Qualcomm failure motivated Intel/Micron
An unnamed source at Intel said, “Once the Broadcom/Qualcomm deal was dead we (Intel) were free to pursue other deals without the fear of a new chip behemoth”. ” We feel the Micron deal is a regulatory slam dunk as it’s two US companies in the face of foreign competition. We get an added bonus of bragging rights against Samsung by becoming the world leader in chips once again”.
Merger Moves
There are some other concerns about the merger. As part of the pre-arranged deal with the government included a move of the combined companies headquarters to Boise Idaho which would support the administrations goal of bringing more jobs to the American heartland and out of California.
A White House spokesperson said ” We are supportive of the move of the US chip industry back to its roots and source of its core ingredient in Idaho”
Intel going back to its beginning
By merging with Micron, Intel is going back to its early roots of being a memory manufacturer. Intel was the first to produce a DRAM chip in 1970 with the 1103 one kilobyte memory chip. In 1974 it controlled over 80% of the DRAM market before losing out to foreign competition. Mr Krzanich said “Our goal is to get back to a very high share of the memory market,… if at first you don’t succeed, try, try again….”
Chip Equipment sales to China Halted
As part of the back and forth in the trade tussle between China and the US, the administration took a pre-emptive move by halting “any chip equipment sales to China that includes unique American technology”.
President Trump hailed the decision as part of a comprehensive package aimed at limiting China’s economic and military aspirations.
Press secretary Sarah Sanders went into further detail about specific companies and products; ” Included in the chip equipment ban are laser anneal systems made by Veeco which “bake” chips. Etching systems made by Lam Research which are used to create patterns of “waves or Ruffles” on chips using SADP (self aligned double patterning) printing techniques. Applied Materials deposition equipment was cited for its ability to deposit unique layers of material flavorings including BBQ and Sour Cream”. Sanders went on to say, “We are also protecting our chip packaging industry by limiting the sales of equipment related to chip stacking as currently employed by Pringles which allows for very dense stacking of chips in a unique singular, protected package”
Trump went on to say, ” The American public was kept in the dark about real purpose of all this “chip” technology and its sales to China. We will protect the American chip industry and protect its workers so that Americans will be free to savor chips made in the US for future generations “
Further “Americanization” of Broadcom
As part of its efforts to gain approval to move ahead with its Qualcomm bid the company has accelerated the move of its headquarters and legal domicile back to the United States. This was also part of the agreement with the US agency CFIUS in order for the Brocade acquisition to go through.
In a little noticed SEC filing Broadcom announced that Hock Tan, CEO of Broadcom, has legally changed his name to “Harold Thomas”.
Separately it was announced that Trump would be having an oval office “photo op meeting ” with Thomas. Trump was quoted as saying ” I have never met Thomas before but any American bringing jobs back from Asia will have my full support in whatever he wants to do”. CFIUS was said to be re-evaluating its stance given those comments.
Happy April First!!!
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