Monday, April 21, 2008

Macronix: After the Qimonda Divorce

Just 3.5 months after signing the agreement, Macronix International and Qimonda AG announced that Qimonda terminated the Flash technology license and joint development agreement. Having lost Euro 482 million in the most recent quarter as well as its technology partner, Nanya Technologies to Micron Technology, Qimonda is in survival mode. By cutting back its flash technology development, Qimonda intends to re-deploy resources to focus on ensuring the success of its new buried wordline DRAM technology.

Macronix, on the other hand, will need to either develop flash technology internally or with another partner. With only $487 million cash on its balance sheet at the end of 2007, Macronix will not be able to fund technology development as well as invest in a leading edge 300mm fab. It will clearly require partners.

However, the number of potential partners is limited as all NAND flash vendors with the exception of Samsung are already aligned with others. An earlier agreement to collaborate with Powerchip Semiconductor on flash memory development and foundry services at fab 12M ended due to a fight between the two companies over control of the Macronix board at last year's shareholders' meeting.

One long-shot possibility is Spansion which is rumored to be developing a SONOS-based memory in a NAND architecture dubbed "ORNAND2". However, the ORNAND2 cell is based on Mirrorbit technology and is therefore different than the BE-SONOS technology championed by Macronix which is based on electron tunneling for programming. The fact that ORNAND2 is based on Mirrorbit technology means it is not really a true NAND. Other than the diverging technology strategies, lingering negative sentiment over Spansion's 2006 trademark infringement lawsuit against Macronix makes any collaboration unlikely.

Despite its collaboration with Numonyx, Hynix may be the most attractive partner. Hynix and Numonyx jointly develop product designs, however, technology development rests mainly with Hynix. Normally a technology follower, Hynix will no longer to be able to just copy the technology of others if it is to become a technology leader. BE-SONOS offers a viable scaling path for sub-40nm NAND and a combination of Macronix's strong development team and Hynix's low cost 300mm wafer manufacturing could make a potent team.

Monday, April 14, 2008

Seagate Fires First Volley Against SSD maker

Hard drive maker Seagate a lawsuit against solid state drive manufacturer STEC in the Northern District of California claiming STEC infringed four of Seagate’s patents related to how a SSD interfaces with computers. This is the first time a HDD manufacturer has sued a SSD maker.

It’s hard to see the financial motivation behind such a move. STEC’s enterprise SSD revenues were only $11 million in 2007, although it could reach 4-10x more this year depending on the ramp of the ZeusIOPS and Mach8 MLC product lines. With a market share of over 50% in enterprise HDDs, Seagate clearly sees a longer-term threat from the leading maker of enterprise SSDs.

However, a bigger motivation would be to send a signal to flash memory makers about the value of its intellectual property. It’s no secret that Seagate has been courting NAND flash vendors to secure NAND flash for a SSD it’s planning for the end of the year. A rumored JV with Micron fell apart last year and it is apparently in discussions with two of the three largest vendors. One of the main stumbling blocks is what Seagate could bring to any cooperation as all NAND flash vendors have ambitions to develop and market SSDs. This litigation could be a validation of the IP which Seagate can offer. Western Digital, which along with Seagate, was an early investor in SanDisk (then SunDisk) apparently holds some critical controller and wear leveling IP and could be next to enforce its IP.

SanDisk is taking no chances. In Q2/07, it set up Solid State Storage Solutions LLC with unknown partners that will license IP, presumably SSD-related IP. In July 2007, Solid State Storage Solutions LLC invested $42.5 million for the acquisition of intellectual property. It has apparently purchased relevant SSD and controller IP from Renesas Technology. This IP could prove effective in extracting royalties from flash memory card manufacturers and controller makers entering the SSD space, but it is questionable whether it is enough to counter any future claims by Seagate and WD.

Tuesday, April 1, 2008

Hynix Signs Another Deal

Hynix signed another deal, this time with Grandis to jointly develop spin-torque RAM. Unlike the current MRAM products marketed by Freescale, STT-RAM uses the angular momentum derived from the spin of the electrical current to alter the magnetic orientation of a free layer. By having the current directly pass through the magnetic tunnel unction, the fields required to switch a bit can be scaled down as process geometries shrink.

This is the third in a string of technology deals starting last October with Ovonyx on phase change memory and with Nanosys on nanocrystal memory. Hynix has traditionally been a technology follower, mimicking Samsung’s advances on the technology front. However, as conventional DRAM and flash memories encounter scaling challenges alternative approaches may be required. STT-RAM is one of them.