Intel and Micron Technology have formed a new company to manufacture flash memory products for mobile handhelds, removable storage products and consumer products like digital cameras.
The first big customer to sign up for its products is Apple, which has already paid the pair $500m (£295m) in advance for their flash memory solutions.
The two companies have formed IM Flash Technologies LLC to manufacture NAND flash memory systems. Each company will contribute around $1.2bn to form the new company, which is set to start production early next year.
Intel and Micron said they each plan to invest an additional $1.4bn in the company over the next three years.
Apple’s payment is in return for a “significant” portion of the new firm’s output.
News of the company’s formation sent share prices at Asian companies that make flash memory products sliding, as they are already suffering from tight margins on such products.