Intel signs new 3D XPoint supply deal with Micron

AnandTech writes Intel reached a new 3D XPoint wafer supply deal with Micron. The companies jointly developed the technology but after their joint-venture ended Micron bought out Intel's stake and at the moment the latter still has no 3D XPoint production capacity of its own. As such, Intel will likely have to pay a higher price to Micron to get supply for its Optane products.

On March 9, 2020, Micron Technology, Inc. (“Micron”) and Intel Corporation (“Intel”) agreed to terminate, effective March 6, 2020, the Product Supply Agreement, dated April 6, 2012, among Micron, Intel, and Micron Semiconductor Asia Pte. Ltd. (the “PSA”). The PSA set forth the terms under which Micron agreed to supply 3D XPoint wafers to Intel at prices determined under a defined formula and in accordance with a negotiated forecast. Contemporaneous with the PSA’s termination, Micron and Intel entered into a new 3D XPoint wafer supply agreement with changes to pricing and forecast terms. The new agreement is not material to Micron and does not change Micron’s previously-communicated outlook that underutilization charges associated with Micron’s Lehi, Utah fab will average approximately $150 million on a quarterly basis in fiscal year 2020.

Analysts believe that despite the premium pricing, Intel is losing a ton of money on Optane:

Jim Handy, an analyst with Objective Analysis, told Blocks & Files the following:

“Intel is losing money in its NVM Solutions Group (NSG) because 3D XPoint is proving very unprofitable to produce. By my estimate Intel lost about $2 billion on 3D XPoint in each of 2017 and 2018, and $1.5 billion in 2019.”

Perhaps, indirectly, not very favorable costs of 3D XPoint are confirmed by Micron’s reluctance to build products on their base. So far, Micron has announced only one SSD series featuring 3D XPoint memory, the X100.