There\u2019s a certain irony in Intel\u2019s return-to-growth financial projection for 2016 in that some of it comes from a resurgent memory business. Those of us with long memories can recall when Intel left that business, ceding it entirely to the Japanese, who had assembled a semiconductor manufacturing juggernaut.\nAt the time, 1985, the exit was a brave move, a huge gamble for Andy Grove and Gordon Moore, Intel\u2019s president and CEO, respectively. Leaving the dynamic random access memory (DRAM) business meant that Intel\u2019s revenues would plummet \u2014 memory manufacturing accounted for by far the largest proportion of its revenue at that point. Quite rightly, management understood that for every processor sold, many memory units would be attached to it, and since the economics of semiconductor manufacturing are a lot like cake-baking, better to sell more cakes than fewer.\nHowever, the Japanese had figured this out, too, and what mattered was scale. Japanese firms had easy access to capital from friendly banking partners, and U.S. firms faced expensive capital. Remember those 20 percent interest rates? It seems like a dream now \u2026 A high dollar resulted from all that foreign capital flowing into the United States to take advantage of those high interest rates, and that helped kill off exports. Once the Japanese memory industry hopped on the cost curve, it was able to lower prices to the point where all rivals lost money.\nQuality Japanese memories drove Intel to abandon them entirely, just in time to focus on the growing microprocessor business, which was taking off as PCs started to become popular. Processors were more complex than memories, and so commanded a higher price. But most importantly, Intel was the near-sole supplier for a standard that was about to proliferate around the world. \u00a0Although the exit from DRAMs ultimately proved prescient, at the time it meant facing a Wall Street that often misses subtleties in explanations of why a technology company\u2019s revenue is declining.\nBut if you live long enough, everything repeats itself. Well, repeats itself more like a spiral than a circle. Intel is back in the memory business, but that business has changed enormously. \u00a0DRAM technology continues to evolve, but increasingly, system makers like to work with flash, which holds data without electric current but is still pretty fast. \u00a0Flash is critical for mobile devices because it doesn\u2019t use much power, and, with no moving parts, it\u2019s hardier in the field. \u00a0It plays a\u00a0big role in the nascent Internet of Things (IoT) as well. \u00a0In addition, it also figures into dense server architectures that employ tiers of memory and storage for fast, efficient computing.\nTimes have changed, though. \u00a0With its now-unrivaled manufacturing scale, Intel is in a position to dictate the economics of the memory business rather than being victimized by them. This story\u2019s unfolding will be fascinating to watch, particularly given that server processors sell in a ratio to endpoint processors somewhat similar to that of processors to memory chips; that is, one server can serve about 20 endpoints. \u00a0This balance implies that Intel\u2019s 14 manufacturing facilities will have plenty of room to make all the memories it wants.\nIn fact, Intel\u2019s strong growth in servers, mirrored by a sharp decline in mobile and stationary endpoints, points to far fewer g\u00e2teaux\u00a0being baked in its plants overall. Even a memory business growing like a weed might not be enough to fill those factories, which must be kept running at 90 percent capacity or greater to make money. It\u2019s quite possible, then, that Intel will increasingly take on a foundry role in the industry, making chips that others have designed.\nAt the moment, the foundry business belongs to Taiwan Semiconductor Manufacturing Corp. (TSMC), Samsung, and Globalfoundries. Important customers for these services include Qualcomm, Apple, nVidia, and AMD. \u00a0Like all things coming full spiral, there\u2019s a yin-yang quality to the story: strengths are also weaknesses. Owning lots of factories is wonderful, but having to keep them filled is a Sisyphean task. Below a certain level of capacity, that great strength becomes a gargantuan weakness.