Micron Technology Inc is to supply Compaq Computer Corp with memory chips, in a five year deal that could be worth as much as $20bn according to some estimates. Micron will become the near- majority supplier of memory to Compaq, which uses 15% of all the memory chips produced in the world. Compaq is not disclosing the value of deal; or exactly what type of chips Micron is supplying but sources say that DRAM, synchronous DRAM – including the PC133 and double data rate types – Rambus DRAM and Flash memory will all be on the menu.
The deal is part of the company’s efforts to reduce costs and streamline its supply chain. According to Compaq spokesperson, Alan Hodel, Micron will become the main supplier of some memory types – although he wouldn’t specify which. Hodel said that Compaq would be maintaining its existing relationship with memory manufacturers such as Samsung Electronics Co and Hyundai Electronics Co.
The deal reflects a trend in the industry for long term mega-deals that promise vendors in the tooth-and-nail PC market massive economies of scale and a steady supply of parts. Recently IBM Corp cut massive component deals with both Dell Computer Corp and Acer Group. Compaq is already IBM’s largest customer for hard drives and other components, according to Hodel. He wouldn’t comment on possible similar deals and Hodel said the company would continue to look for ways to simplify its supply.
