Micron Technology will pay $600 million to buy back Intel Corp’s stake in two wafer factories as the chipmaker bets on the fast-growing NAND flash market to offset margin erosion in its mainstay memory chips. NAND memory, used in portable storage devices such as USB drives and smartphones, are fast replacing hard drives in notebooks -such as the super-thin Ultrabook laptops that Intel promotes. Intel had invested in the JV in 2006 to spur growth in the then-emerging technology. NAND has since gained prominence as computing power shifts to smartphones and tablets. As part of the agreement, Micron, the largest US-based maker of computer memory chips, will continue to supply NAND chips to Intel. “Micron is going to get as much as a 30 per cent more capacity from the deal and they would now be able to sell a significant portion of this back to Intel at an incremental profit,” Raymond James analyst Hans Mosesmann told Reuters. Intel pays Micron almost $1 billion annually for flash memory. The deal is expected to give Micron better margins on at least half of these sales, without increasing supply. Wells Fargo analyst David Wong said in a note that it made sense for Intel to enter into the initial joint venture to drive growth of NAND supply, and it is now an appropriate time to exit given Micron’s lead in investing in the venture. Micron got about 40 per cent of its revenue from DRAM chips -used as primary memory in PCs -in the last fiscal but oversupply has dented margins. Top DRAM maker Elpida Memory filed for bankruptcy on Monday. Analysts expect Micron to buy some of Elpida’s NAND factories. Intel and Micron formed the joint venture, IM Flash Technologies, investing $1.2 billion each in cash, notes and assets. As part of the sale, Intel will get half of the $600 million in cash while the rest will be deposited with Micron, to be refunded or adjusted against Intel’s future purchases. “It’s a great deal for Micron, they’re getting it for the cheap,” Raymond James’ Mosesmann said. According to Intel’s latest annual filing, the carrying value of its stake in the JV stood at $1.3 billion as of Dec.31. Intel shares were up 1 per cent at $27.27.