Micron Technology and Nanya Technology Corp., two leading producers of dynamic random access memory (DRAM) and flash, on Monday announced today that the two companies had signed an agreement to create MeiYa Technology Corp., a new DRAM joint venture.

The partnership will leverage both Micron and Nanya’s manufacturing technology, strengths and experience. As part of the joint venture, a 200mm Nanya manufacturing facility in Taiwan will be upgraded to 300mm technology starting this year, with the facility coming online for production in 2009. In addition to MeiYa, the parties will jointly develop and share future process technology technology.

“This partnership brings greater scale and efficiency to the DRAM manufacturing operations of both parent companies, and Micron is pleased to officially enter into this joint venture with Nanya,” said Mark Durcan, Micron’s president and chief operating officer.

Both parent companies will own 50% of the joint venture initially, and each will contribute $550 million in cash by the end of 2009. The transaction is subject to customary closing conditions, including regulatory approval in Taiwan, and is expected to close within the next few months.

Nanya already has a joint-venture with Qimonda AG, former memory business unit of Infineon, called Inotera Memories. Meanwhile Micro Technology is not involved into any DRAM joint-ventures, but co-owns IM-Flash joint-venture with Intel Corp. Back in the days Micron wanted to acquire Hynix Semiconductor and even was rumoured to be aiming Qimonda before its spin-off from Infineon, however, with no luck.

Joint-ventures between DRAM companies are not new. It is a costly process to develop fabrication technologies and build a fab to produce memory chips, but it is also uneasy to fully utilize manufacturing capacities. Joint ventures allow memory makers to share the costs and then utilize capacities more efficiently. Another way for large memory vendors like Micron to acquire additional production capacities is to trade process technology for capacity, though, such relationships are not as stable as joint-ventures.

“We are sure that MeiYa will demonstrate the synergistic combinations of Nanya and Micron’s strength in the DRAM industry. Nanya has a very high expectation for this new entity,” said Dr. Jih Lien, Nanya’s president.