Hynix Develops x3

Hynix announced it has developed a 32Gb 3-bit per cell NAND flash slated for production in October. Hynix stated that the 3-bit per cell technology would enable cost reductions of 30% over 2-bit per cell technology. The 32Gb chip is based on 48nm process technology.

Based on my estimates, the die size of this device should be over 200mm2, much larger than the 172mm2 of the recently announced 34nm 32Gb MLC NAND flash from Intel/Micron. It is unlikely the chip is using the All-Bitline architecture developed by SanDisk and Toshiba implying a fairly low program performance.

The 32Gb chip will probably be employed as a learning vehicle for applications enablement until a more competitive 41nm offering comes out next year.

Intel and Micron Leapfrog the Competition

Intel and Micron announced today that it will be sampling a 34nm 32Gb MLC NAND flash to customers in June with production slated for the second half of 2008. Owing to the aggressive gate half-pitch, immersion lithography with self-aligned double patterning employing spacers is most likely being used. Also expect changes in the bitline and wordline materials as well as a higher k interpoly dielectric in comparison to the 50nm generation.

At 172mm2, Intel-Micron's 32Gb product will be the only 32Gb monolithic MLC device capable of fitting in a TSOP package. If the ramp of IMFT's 50nm 16Gb device is any guide, we should expect to see volume in December or in early Q1/09. It's quite remarkable that Intel-Micron have managed to catch up and surpass the other NAND flash vendors on process technology in the short span of three years. IMFT achieved this milestone by skipping the 6xnm and 4xnm nodes. However, any cost advantage could be short-lived if IMFT fails to ramp up the technology smoothly and SanDisk/Toshiba ramps its 43nm 32Gb x3 in Q1/09 as planned.

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.

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.

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.

Numonyx Born #1

Intel and STMicroelectronics today announced the official launch of their JV, Numonyx. Numonyx combines the NOR flash assets of Intel and NAND and NOR assets of ST under one roof.

Numonyx starts out its first day as the number one NOR flash vendor, overtaking Spansion. Now, like Spansion and other NOR flash vendors, it must find a way to make money. It’s not going to be easy with the economy in bad shape and NOR flash pricing affected by falling NAND flash prices. The new company, does however, have a few things going for it.

1. By merging two similar businesses, there’s a lot of low hanging fruit and
opportunities to cut costs.

2. Numonyx will have dedicated facilities for production unlike in the past when it had to compete for resources with chipset or logic products.

3. Numonyx is 1.5 years and 2 years ahead of Spansion and Samsung on the technology roadmap.

4. At Intel and ST, flash memory was a side business. At Numonyx, flash memory is a core business.

This last point is what makes Numonyx a formidable competitor. It must succeed just to survive.

Hynix Connects the Dots

On March 20, Nanosys, Inc. announced that Hynix Semiconductor Inc. will collaborate with Nanosys to employ Nanosys' quantum dot flash memory technologies (QDM) for NAND based flash memory. Hynix is the third major semiconductor manufacturer to sign up for access to Nanosys’ technology. Intel invested $38 million in Nanosys’ second round financing that closed in May 2003 and subsequently, announced a technical collaboration in 2004 to explore the use of nanocrystals in memory devices. In 2006, the collaboration was expanded to include Intel’s NAND flash memory partner, Micron Technology.

NAND-based nanocrystal memories can potentially provide a scaling path for current floating gate (FG) technologies by reducing the capacitive coupling between cells and eliminating SILC. The main challenge has been the controllability and uniformity of the nanocrystal size and distribution with technology scaling.
Nanosys claims to have solved this issue. Nanosys’ QDM with proprietary ligands are applied with a traditional spin-on process and self-assemble into a consistent monolayer on the wafer. The integration involves fewer process steps than either FG or nitride charge trap flash (CTF) alternatives while offering a very large voltage threshold window for enhanced MLC capability.

If QDM can deliver on its promise, we could see QDM enter into production at the 3xnm node and beyond.

Micron-Nanya Deal Re-shapes DRAM Landscape

The signing of a memorandum of understanding between Micron Technology and Nanya Technology to jointly develop and manufacture sub-50nm DRAM technology re-shapes the DRAM landscape and places Nanya partner, Qimonda AG in a precarious situation. Although specifics of the final agreement are sketchy, one of the options is to form a 50/50 manufacturing JV in Nanya’s Fab3 which is only equipped to half of its full capacity. Nanya would license Micron’s 68nm technology platform and possibly participate in the joint development of 50nm and below technologies.

The following is our assessment of the impact on the various players.

Micron Technology

The big winner in this is Micron which reduces its capital intensity and increases its access to low cost Asian manufacturing capacity. In the last few years, Micron’s DRAM market share has dropped as it diversified its product portfolio into NAND flash and CMOS image sensors. As the 5th largest DRAM vendor in 2007 with roughly 10% market share, Micron is well poised to vie with Qimonda and Elpida for the No. 3 position.

Nanya Technology

It appears that Nanya, having completed joint development of 58nm trench technology with Qimonda harbored doubts about the scalability of the technology. Its concerns were validated last week when Qimonda announced the development of its “Buried Wordline” stack technology and a roadmap to continue scaling its DRAM technology based on this technology.
By cooperating with Micron, Nanya gains a clear technology roadmap for its business and more importantly, the relevant intellectual property and trade secrets required to manufacture stack technology.

The downside is that it’ll have to continue supporting two technology platforms in the next 2-3 years and absorb any manufacturing inefficiencies and additional fab investment required to make the conversion.

Qimonda AG

Qimonda loses a strong partner in Nanya and indirectly, the Formosa Plastics Group, and except for Samsung, is now the odd man out in relation to the partnerships of Hynix/ProMOS, Elpida/Powerchip and Micron/Nanya. In three years time, Qimonda may find itself in the position that Micron is in today: No. 5 and unprofitable – unless it is able to execute on its Buried Wordline technology.

A bigger issue is the impact on Inotera and the capacity implications for Qimonda.

Inotera

Inotera will have to eventually transition to stack technology whether it be from Micron or Qimonda, however, it is unlikely that Nanya will continue to work with Qimonda on the future technologies once the Micron deal is finalized. Qimonda has neither the cash nor resources to buyout and manage Inotera.

The likely outcome is for Qimonda to exit Inotera either by selling its shares to Nanya or institutional investors or to sell the shares on the open market. If it sells the shares via the open market, it may take a year to unwind its stake as Taiwan Stock Exchange regulations limit the amount of shares which can be disposed daily.

Qimonda which obtains 50% of the 120k wpm capacity from Inotera will lose out on 60k wpm which will not be easily replaced.

Perhaps a harbinger of the future of Inotera and the intense negotiations going on between Nanya and Qimonda, the domain name www.inotera.com has expired.

ProMOS

Infineon exited ProMOS after a nasty spat with partner Mosel Vitelic. ProMOS has been having difficulties in obtaining 66nm technology from Hynix due to Korean government restrictions on the export of advanced sub-80nm technologies. Is re-marriage in the cards for the former Infineon/Qimonda partner? Difficult to say, but don’t expect Hynix to give up on ProMOS without a fight.

Winbond, SMIC

Expect Qimonda to shore up its alliances with Winbond and SMIC. It needs the capacity. Winbond and SMIC have the upper hand and should be able to negotiate more favorable terms for producing the Buried Wordline technology. A deeper relationship with Winbond could be in the offing.

Market

It is unlikely to impact the supply-demand situation in the short term, but could negatively impact the supply-demand in the mid-term as competitors react by increasing output to maintain market share.
The Micron-Nanya cooperation creates a more formidable competitor in both the DRAM and NAND space and sets up Micron to become one of the top three memory vendors along with Samsung and Hynix. Elpida and Qimonda, pure DRAM vendors are looking for a NAND play. Stay tuned.

NAND Flash Capex - Full Steam Ahead!

Despite the current oversupply environment and the heavy price drops this quarter (Intel reported ASP declines of 53%), NAND flash manufacturers are maintaining aggressive capex plans. Samsung's ramp of its Austin facility and Hynix's ramp of M11 will offset some of the retirement of 200mm NAND capacity from both companies.

IMFT has maximized its capacity at Manassas and Lehi and will ramp its Singapore fab with maximum capacity of 60k wpm starting in Q3/08. Toshiba/SanDisk's Fab3 reached its full capacity of 150k wpm in September 2007 with Fab4 volume ramp started in December. Fab4 is a massive fab with maximum capacity of 210k wpm.

Powerchip Semiconductor is currently building two fabs P4 and P5 dedicated to the manufacture of NAND flash. These fabs are not expected to ramp in volume until the 50nm generation in 2009.

Spansion as well as foundry partners TSMC and SMIC capex figures includes fungible capacity that may be used to manufacture Mirrorbit NOR.

Qimonda Digs Itself Out of Trench

Qimonda created a stir last week when it unveiled a new DRAM technology called “Buried Wordline Technology” which purportedly consumes less power than conventional stacked capacitor DRAMs. This is achieved by reducing the capacitive coupling between the bitline and wordline by burying the wordline in the substrate of the device. An image of the buried wordline in Qimonda’s presentation appears to show tungsten as the wordline material. The middle of line process in the memory array is greatly simplified compared to standard stacked capacitor devices resulting in reduced process complexity.

Another surprising feature was the absence of a trench capacitor. Qimonda has responded to skepticism regarding the scalability of trench technology by switching to a cylindrical stacked capacitor for its DRAM roadmap down to the 3xnm generation. Qimonda plans to ramp its 65nm buried wordline technology with cell size of 6F2 in parallel with its 58nm 8F2 trench capacitor technology in the second half of 2008. The 65nm 1Gb device sports a die size of 55mm2 comparable to Micron’s 68nm 1Gb DDR2 chip size of 56mm2.

Subsequent 46nm and 3xnm 6F2 generations will be introduced in 2009 and 2010 respectively with a 3xnm 4F2 technology targeted for 2011. According to Qimonda, the 46nm technology is expected to effectively double the number of die per wafer versus the 58nm trench technology allowing the company to take the lead in productivity vis-à-vis the competition. This productivity boost is particularly important for driving down costs, especially in light of the massive €598 million net loss the company posted in the fourth quarter of calendar year 2007 on net sales of €513 million.

Qimonda stated that an incremental investment of €100 million over its existing investment for trench technology would be required to make the transition to the new technology. This would include deposition and etch tooling for hi-k capacitor formation.

The company hinted that the new technology opens up partnering opportunities which is expected to include Qimonda’s manufacturing and foundry partners, Winbond and SMIC although Inotera's participation is questionable given the recent tie-up between Nanya and Micron Technology. If licensing deals with these parties are reached, they would be expected to make similar investments for the conversion from trench to stack technology.

Currently, Qimonda, along with partner Nanya Technology, are the sole remaining DRAM players engaged in the development and production of trench capacitor DRAM technology accounting for a combined 18% of the DRAM market in 2007. The remaining 82% consists of Samsung, Hynix/ProMOS, Elpida/Powerchip and Micron Technology, which are all part of the stacked capacitor camp. With Qimonda’s announcement, trench technology is expected to be phased out of the market in the next three years.

It is also difficult to ignore the timing of the announcement. It appears that Qimonda was pressured to reveal details of its roadmap plans after rumors of a joint development and production agreement between its partner, Nanya Technology and Micron Technology surfaced. The rumors were subsequently confirmed when a memorandum of understanding was announced between the two parties on March 3.