August 30, 2007 8:10 AM PDT

FTC demands more details on Intel-STMicro deal

FTC demands more details on Intel-STMicro deal
Federal Trade Commission officials are taking a deeper look into Intel's plans to create a private chip company with STMicroelectronics and private equity firm Francisco Partners, Intel said Thursday.

The FTC is requiring more information, otherwise known as a "second request," as it reviews the deal for possible antitrust violations.

Under the deal announced in May, the three parties will form an independent flash-memory company in Switzerland. The chips will be used in both consumer and commercial devices, ranging from cell phones to digital cameras to computers.

One antitrust attorney and former FTC regulator noted that second requests are not very common and are a signal that the government has serious concerns about a transaction.

"The government simply doesn't issue a second request just because a transaction is large," said Howard Morse, an antitrust attorney with Drinker Biddle and former federal regulator. "The government generally issues second requests in less than 5 percent of transactions that are notified to the government. And the government takes action in about half of the second requests."

Three weeks ago, the European Commission's antitrust bureau approved the deal.

The deal would bring a consolidation to the NOR memory industry, by combining Intel's NOR assets with those of Switzerland-based STMicroelectronics. That would reduce the industry from four large players down to three. The other two are Samsung and the joint-venture between Fujitsu and Advanced Micro Devices.

NOR memory, which has traditionally been used by the mobile phone industry for its short read-times, has been losing ground to NAND memory. As a result, NOR memory is increasingly considered a slow-growth industry.

Although Intel had expected to close the transaction in the later half of the year, it now faces delays. Intel noted that the FTC will need to review the additional information it will submit and, then, if the FTC issues a determination that Intel has substantially complied with the second request, Intel will need to wait another 30 days before the deal may close.

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STMicroelectronics, antitrust, transaction, government, Switzerland

 

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