November 20, 2003 1:50 PM PST

In a flash, Intel loses memory lead

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Samsung has displaced Intel as the world's leading manufacturer of flash memory, a rare change that reflects some trends in the growing market.

Korea-based Samsung sold approximately $615 million of flash memory in the third quarter, a 50 percent increase from the same period a year ago, according to research firm iSuppli. The sales surge was enough to give Samsung a 20 percent market share, the largest share of any other company.

Toshiba placed second with $532 million in sales, a 61 percent jump from 2002 that amounted to 17.3 percent of the overall market. Spansion, the name of the now-combined joint venture between Advanced Micro Devices and Fujitsu, grew 3 percent to account for $424 million in sales, or 13.8 percent of the market.

Intel, which had led the pack for decades, slipped to fourth place with $416 million in sales, a decline of 4 percent from a year ago. Overall, iSuppli said flash sales topped $3.1 billion in the third quarter, up 27 percent from 2002.

"This marks the first time that Intel has not been the No. 1 overall flash supplier during a quarter," iSuppli said.

The shift is a result of underlying demand trends and a fateful decision on Intel's part.

Samsung and Toshiba primarily manufacture NAND flash memory, while Intel and AMD primarily make NOR flash.

NAND stands for "N and," a reference to how data is retrieved. These chips can hold far more data than NOR (N or) chips and are cheaper at comparable densities. NOR, however, is less prone to data corruption.

NAND is used in digital camera flash cards and MP3 players, two rapidly growing markets, iSuppli said. NOR is used to store information on cell phones and set-top boxes, markets not growing as fast, the firm said.

As a result, the growth trajectory of Samsung and Toshiba is largely due to a split in the markets in which the two types of chips are used. Direct competition between the two architectures doesn't often occur. Samsung, for instance, landed a contract to supply Nokia with flash for phones but supplied Nokia with NOR flash.

"NAND unit shipments in the third quarter increased by 30 percent to 132 million units, while bit growth (total memory capacity) skyrocketed by 76 percent," the firm stated.

In addition, Intel in January raised the price of its NOR flash by as much as 40 percent. The Santa Clara, Calif.-based manufacturer predicted that shortages would occur, allowing it to justify higher prices.

Instead, customers gravitated toward NOR flash. Ironically, tightening supplies may soon permit NOR makers to try to raise prices, iSuppli predicted.

Over the next few years, more changes will likely impact the flash market. Many engineers and analysts believe that the underlying architecture of flash will have to change. Large and small companies are currently experimenting with different structures and materials, such as memory made of polymers or nanocrystals, for products that may appear by 2007.

In the interim, NAND and NOR will compete more directly, as NAND becomes more reliable and NOR becomes cheaper to manufacture, some industry executives have said.

 

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