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Investment firm Francisco Partners LP, Intel and STMicroelectronics has closed a deal to create an independent flash memory chip business that absorbs the tech companies' money-losing businesses for memory devices found in portable media players, smartphones, and other handheld computers.

Named Numonyx, the new Switzerland-based company will design, develop and manufacture nonvolatile NOR and NAND flash memory chips used for storing data in portable consumer devices, including cell phones, ultramobile PCs, digital cameras and MP3 music players, said Intel officials.

The deal has Intel contributing all of its assets from the Intel NOR flash division to the venture and STMicroelectronics contributed part of its NAND flash business to the new company. In return, the companies get a 45.1 percent and 48.6 percent stake, respectively. Francisco is paying USD 150 million cash for a 6.3 percent piece of Numonyx.

The three partners announced plans last May to create the new firm. The effort was slowed about three months later when the U.S. Federal Trade Commission sought additional information for its review into the deal's antitrust implications. Numonyx is expected to generate USD 3.6 billion in annual revenue, mostly from flash memory products for consumers and industry. The assets included research and development, manufacturing, and sales and marketing from Intel and STMicroelectronics. "It is rare when a company starts in such a strong position," Numonyx CEO Brian Harrison said in statement.

The creation of Numonyx allows Intel to accomplish something else it has wanted to do -- eliminate employees from the payroll. The spinoff will have 2,500 of Intel’s current employees moving to Numonyx. The Numonyx deal marks the latest effort by Intel to aggressively develop faster and improved flash memory technology to support increased demand for embedded storage devices. The company had earlier launched a joint effort with Micron Technology Inc. to develop new high-speed NAND flash memory technology.

Toshiba and Samsung were also looking for ways to make NAND flash operations more profitable in late 2007. Samsung and Toshiba announced a broad cross license agreement of each other’s patents in an attempt to make their NAND flash operations more profitable in December 2007.