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Intel has announced that it will join with STMicroelectronics, a Swiss semiconductor maker, to form a new company to sell flash memory chips.
Flash memory is considered one of the most erratic segments of the semiconductor market.

Intel will sell only the part of its flash business known as NOR, used in cellphones, and will receive a stake of about 45 percent in the new company and $432 million in cash.
STMicroelectronics, which will sell its NOR and NAND flash memory businesses, will receive a stake of about 49 percent, along with a payment of $468 million.

According to analysts this move was unexpected since in December, Intel sold its cellular chip business to Marvell Technology Group, making Intel's presence in the NOR memory business less strategic to the company.
Investors cheered the move, not just for Intel, but because further consolidation of the flash memory industry could lead to more stable pricing, according to Christopher Caso, an analyst with the Friedman, Billings, Ramsey Group.

The combined company, which will be based in Geneva, will have $3.6 billion in annual revenue and 8,000 employees.
According to executives of the companies by joining forces, Intel and STMicroelectronics will gain the scale to make them more competitive.

Intel executives said that, as a result of the deal, which is expected to close in the second half of the year, the company expected fourth-quarter revenue to decline slightly but remain within the company's forecast.