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Feds Seek More Info On Intel, STMicro Flash Spin-off

If the inquiry passes FTC muster, the company will be headquartered in Switzerland and have nine main research and manufacturing locations globally.

The Federal Trade Commission has asked for additional information in its review of a proposal by Intel and STMicroelectronics to build a multibillion-dollar semiconductor company focused on making flash memory products for consumer and industrial devices, Intel said Thursday.

In a brief statement, Intel said it planned to respond promptly to the request. "The company will also continue to work closely with the agency as it conducts its review," the chipmaker said.

Once the FTC decides that the parties involved in the deal have complied with all information requests, a 30-day waiting period will begin before the transaction is closed, Intel said.

In May, Intel, STMicroelectronics and Francisco Partners agreed to create the independent company, which is expected to generate $3.6 billion in annual revenue. Intel and STMicroelectronics are contributing research and development, manufacturing and sales and marketing assets. Private equity firm Francisco Partners is investing $150 million in cash for a 6.3% interest.

Flash memory, which has no moving parts and is therefore more reliable and durable than hard disk drives, is used in cellular phones, MP3 players, digital cameras, and other high-tech equipment. While still considerably more expensive than hard disk drives, the cost of flash memory hardware has fallen sufficiently to be an alternative in notebooks, particular those that need to be more rugged for use by mobile workers.

Brian Harrison, VP and general manager of Intel's Flash Memory Group, has been chosen as chief executive of the joint company, and Mario Licciardello, currently corporate VP of STMicroelectronics' flash group, as chief operating officer. The company will be headquartered in Switzerland, have nine main research and manufacturing locations globally, and employ 8,000 people.

The Flash spin-off inquiry isn't the only regulatory challenge that Intel is facing these days. The company is under close scrutiny by European regulators for alleged antitrust practices against Intel rival Advanced Micro Devices.

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