Micron Technology Inc. announced Tuesday afternoon that it would drop development of a next-generation memory product it had once developed in concert with Intel Corp.
Micron MU, +2.90% announced that it will end development of 3D XPoint memory technology, which was an attempt to improve data-center memory products. Micron had partnered with Intel on the 3D XPoint effort, leveraging a fabrication facility in Utah, but Intel INTC, +1.55% dropped out in 2018 and sold its stake in the joint effort to Micron for $1.5 billion.
“Micron has now determined that there is insufficient market validation to justify the ongoing high levels of investments required to successfully commercialize 3D XPoint at scale to address the evolving memory and storage needs of its customers,” the company said in an announcement Tuesday afternoon.
Micron said it will instead focus on compute-express link, or CXL, technology as it seeks to create memory chips that take advantage of the large and growing data-center market. It will seek to sell the Lehi, Utah, fabrication facility by the end of the year, amid a semiconductor shortage that has been partly blamed on chip manufacturing largely taking place in Asia.
Micron Chief Executive Sanjay Mehrotra said in a conference call Tuesday afternoon that Micron is “in discussions with several potential buyers of our dedicated 3D XPoint fab in Utah.”
“We expect that the overwhelming majority of our team members in Lehi will find strong career opportunities with the buyer of the fab,” he added.
Micron disclosed that the change could result in charges against its GAAP financial results, though is expected to be accretive to adjusted earnings results in the near and long term. Mehrortra said that underutilization charges on the Lehi fab had been affecting non-GAAP results at an annual run rate of $400 million.
Micron shares dropped 2.0% in premarket trading Wednesday, after closing Tuesday with a 2.9% gain at $91.43. Shares have increased 81.2% in the past six months, as shortages of chips have pushed demand and prices higher; the S&P 500 index SPX, -0.16% has gained 17.2% in that time.
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