Intel and Micron Technology are forming a new company to manufacture NAND flash memory chips. The two companies hope to be able to compete in the vibrant and profitable NAND business and they already have their first major customer, Apple Computer.

NAND flash memory continues to be a very hot product area since the memory chips are used in a wide range of consumer electronics device including digital cameras and Apple's iPod music players.

The new firm, IM Flash Technologies, will exclusively produce flash memory for Intel and Micron targeting the consumer electronics, removable storage and handheld communication device markets. Intel and Micron will each contribute around US$1.2 billion to the new joint venture, with each likely to invest an additional $1.4 billion over the next three years.

Intel and Micron hope to finalise the formation of IM Flash by year-end, subject to unspecified closing conditions. The two companies also announced that subject to the closing of the new company, they have each entered into separate long-term agreements to provide Apple with a "significant portion" of IM Flash's NAND flash memory.

In a recent report from market researcher iSuppli, Samsung Electronics had a 50.2 percent share of the NAND flash memory market at the end of the third quarter of 2005. Although Micron was ranked in fifth position with only a 3.4 percent of the NAND market, the revenue the company derived from the flash memory chips increased four-fold over the second quarter, according to iSuppli.