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.

Qimonda and Macronix Join the Flash Memory Fray

On January 3, Qimonda AG and Macronix International announced they had signed an agreement to jointly development a variety of non-volatile memory technologies over a five-year period. Qimonda will contribute its 300mm wafer-based technology and non-volatile development expertise while Macronix will contribute its extensive know-how in flash memory technologies. Both partners will share development costs and contribute engineering resources and know-how. The joint development will be conducted at Qimonda’s 300mm R&D and manufacturing facility in Dresden, Germany.

Our Take

Macronix’s original Taiwan Stock Exchange filing reveals that this agreement is a “Flash Technology License and Joint Development Agreement”. This coupled with Qimonda CEO, Kin Wah Loh’s remarks concerning Qimonda’s intent to resume production of NAND flash memory chips in 2009 implies that both parties intend to participate in the NAND flash memory space.

Macronix has made some notable progress with its charge trap flash technology, BE-SONOS and it is quite possible the joint development will direct its efforts on this technology, among others. Macronix’s plan to develop 45nm BE-SONOS in 2010 does not totally square with Qimonda’s 2009 timeframe. BE-SONOS is unproven and even if both parties were able to introduce product in 2009 or 2010, they would still be one to two process generations behind the current NAND players. On the other hand, if they are successful, they could have a technology which is more scalable than the current floating gate technology.