Business Tech

Updated at 9:10 a.m. PDT: adding analyst comments.

On Tuesday, Intel and Micron Technology announced the development of high-data-capacity flash memory technology for flash cards and USB drives.

Intel-Micron chip will enable high-capacity USB drives

(Credit: Lexar)

And in a related announcement, Intel said Monday that it has validated a fix for its new 34-nanometer X25-M solid-state drive, which is based on similar flash memory technology. The bug affects users who set a BIOS drive password. That update is available here.

The two chipmakers, which partner in the manufacture of flash memory chips, said Tuesday that they have developed NAND flash memory capable of 3 bits per cell based on 34-nanometer technology. This allows greater data density than the standard 2-bits-per-cell technology and will result in high-capacity USB flash drives, according to Micron.

While packing more bits into a cell provides greater data densities, it is not as reliable as flash memory based on more standard technology, according to Kevin Kilbuck, director of NAND marketing at Micron. Therefore, the 3-bits-per-cell chips will be limited initially to flash drives, which don't require the data storage reliability of a solid-state drive, which is used as the primary storage device in laptops and servers.

"The chip is not for all markets," according to Jim Handy of semiconductor market researcher Objective Analysis, writing in a research note published Tuesday about the technology. "The companies explained that they need more experience in production volumes before they will be confident to position it as a chip suitable for the high-write environment of the SSD," he said. Handy is referring to the fact that users of solid-state drives typically record data at a much greater frequency than consumers who, for example, buy flash drives for digital cameras.

But Handy added that he expects the Intel-Micron chip by 2010 to "cause snags for the other vendors in the market: Samsung, and Hynix/Numonyx" and potentially be more profitable than the competition.

Micron is currently sampling the chips and will be in mass production in the fourth quarter.

SanDisk and Toshiba disclosed in February that they had developed 4-bit-per-cell technology, which the two companies said was the highest-capacity flash memory technology in the industry.

Micron Technology is entering the graphics memory business, going up against heavyweights Samsung and Hynix.

Micron is targeting its memory at the upper mid-range of the graphics chip market

(Credit: Nvidia)

Micron, which recently vaulted to the No. 3 spot in global sales of dynamic random-access memory (DRAM), is now aiming at the market for DRAM chips used with graphics processors from Nvidia and Advanced Micro Devices' ATI graphics unit.

The market for DRAM used with graphics processors is about 4 percent of the bits shipped into the DRAM market, according to Micron. DRAM is typically used as the main memory in PCs. This type of DRAM is also referred to as Synchronous DRAM, or SDRAM.

"Our upcoming 50-nanometer technology is very competitive when it comes to power consumption and performance," Robert Feurle, Micron's VP of DRAM marketing, said in a phone interview Thursday.

"I think it's a good point in time to begin discussions with big enablers Nvidia and AMD and get started with some design-ins," Feurle said.

Micron is making its debut with Double Date Rate 3 (DDR3) memory. This is the same type of memory used for the main memory of currently shipping PCs, which have gravitated from DDR2. In the future, Micron will look at making more proprietary graphics memory, referred to as GDDR3 and GDDR5. "No decision has been made yet but we're looking into that very seriously," Feurle said.

Initially, Micron is targeting the "upper mid-range" of the graphics processor market.

Micron says its DDR3 has a distinct power consumption advantage over GDDR3: standard DDR3 can go down to 1.35 volts. "GDDR3 is still running a 1.8 volts. We have a giant power savings advantage," he said.

Micron is targeting memory with speeds of 1600MHz "to get started with and going up from there," Feurle said.

The DRAM market overall has seen sliding sales, falling 20 percent in the first quarter from the fourth quarter and 44 percent from the year-earlier period, according to iSuppli. The problem is overcapacity, which has most notably brought Taiwan memory makers to their knees. In that country, some manufacturers have faced possible bankruptcy.

"Micron now has renewed its competitive vigor, mainly due to its acquisition of a 300mm fab from Inotera in Taiwan," iSuppli said recently. Fab refers to fabrication facility or factory.

Taiwan's economic affairs minister has retreated from previous statements that suggested a merger of the country's ailing memory chipmakers was likely, saying it's "too complicated," according to reports.

Instead, Taiwan Memory Co., the new government-backed entity, will focus on acquiring technologies and tapping existing manufacturing plants in Taiwan, according to a Bloomberg report.

Economic affairs minister Yiin Chii-ming and John Hsuan, a former United Microelectronics Corp. executive who was appointed by the state to oversee the formation of Taiwan Memory, are also saying that the scale of the aid plans will be pared back, Bloomberg said. This is a departure from previous statements that suggested a massive consolidation of the six loss-ridden memory chipmakers was likely.

"It is wrong to assume we would take in these companies with all their debts and problems," Bloomberg reported, citing an interview with Chen Chao-yih, head of the economic ministry's industrial development bureau. The six companies have combined debt of about $11 billion.

Taiwan's memory chipmakers lost a combined $12.5 billion in 2007 and 2008, highlighting the dire straits--including bankruptcies, widespread plant closings, and layoffs--that the memory chip industry is in worldwide.

The six companies are: Nanya Technology, Inotera Memories, Powerchip Semiconductor, Rexchip Electronics, ProMOS Technologies, and Winbond Electronics.

Taiwan named a chip industry veteran to head a state-backed company that will merge six memory chipmakers, following pleas from domestic companies desperate for financial aid.

Previous reports had cited an approval for loans, but on Thursday the economic affairs ministry took this a step further and named former United Microelectronics Corp. executive John Hsuan to head a state-backed company, according to Bloomberg. Taiwan's government will hold less than a 50 percent stake.

Taiwan Memory Co. will be established within six months. It has not been decided yet what role Japan's Elpida Memory or U.S.-based Micron Technology would play, according to the report. One of these two memory chipmakers could either collaborate with the merged companies or become part of the new entity.

At stake is Taiwan's dynamic random access memory (DRAM) industry. DRAM is the main memory used in personal computers. While all memory chipmakers have been suffering, Taiwan's DRAM industry has been falling further and further behind market leaders Samsung and Micron and posting big losses.

The Taiwan-based companies are Nanya Technology, Inotera Memories, Powerchip Semiconductor, Rexchip Electronics, ProMOS Technologies, and Winbond Electronics.

The companies posted combined losses $12.5 billion in 2007 and 2008, Bloomberg said.

Memory chipmakers, the hardest-hit of the silicon suppliers, this week faced bankruptcy, layoffs, and bleak prospects.

Micron Technology kicked things off by announcing that it would cut as many as 2,000 jobs. Micron and other memory chip manufacturers are all singing the same sad song: slumping revenues amid a steep downward price spiral.

The largest U.S. maker of memory chips said decreased demand for specialty DRAM products had "created additional challenges" for its Boise, Idaho, manufacturing operations. As a result, Micron said it will phase out 200-millimeter wafer manufacturing operations at the company's Boise facility.

The same day, flash memory chipmaker Spansion, previously a joint venture of Advanced Micro Devices and Fujitsu, announced layoffs totaling approximately 3,000, or 35 percent of the company's total workforce.

Spansion's CEO, John Kispert, said the Sunnyvale, Calif., company has been forced to "bring our costs in line with the current expectations for significantly reduced revenues."

Kispert also mentioned that he is positioning the company for a "restructuring and/or sale." The company expects the reduction in workforce to provide it with annual cash cost savings of approximately $225 million.

But this wasn't the worst of it. Qimonda, an affiliate of Germany-based Infineon Technologies, said on the same day that it was seeking bankruptcy protection under Chapter 11 for its U.S. unit. In January, Qimonda filed for insolvency protection in Germany after it was not able to secure government financing.

Intel topped off the bad news on Wednesday by disclosing that it was considering getting out of the flash memory-manufacturing business. Intel CEO Paul Otellini made this statement at a Goldman Sachs investor's conference: "It may not be essential for us to have our own NAND factories to build (flash memory). We could probably specify the product that we want and buy it from third parties," he said.

Is there any upside to all this bad news? Maybe.

"A lot of the end-market conditions for all electronics are awful, but we know all this already, and to a certain extent, that is looking backward," said Avi Cohen, managing partner of Avian Securities, which tracks the memory chip market. "Several component (suppliers) and semi(conductor) guys have echoed the fact that February is not getting worse, which is a nice improvement."

Micron Technology is cutting as many as 2,000 more jobs because of slumping demand for its products, as the shakeout in the memory chip business continues.

The largest U.S. maker of memory chips said Monday afternoon that decreased demand for specialty DRAM products has "created additional challenges" for its Boise, Idaho, manufacturing operations. As a result, Micron said it will phase out 200 millimeter (mm) wafer manufacturing operations at the company's Boise facility.

"This action will reduce employment at Micron's Idaho sites by approximately 500 employees in the near term and as many as 2,000 positions by the end of the company's fiscal year," the company said in a statement. Its fiscal year ends in August. Micron added that it has sufficient manufacturing capacity remaining and "does not expect any disruption in product supply required for customer needs."

These job cuts are on top of the workforce reduction announced in October in its flash memory chip operations, the company said. "These workforce changes were not anticipated or included in Micron's earlier 15 percent global workforce reduction announcement last October."

This news follows quickly on the heels of an announcement by German memory chipmaker Qimonda, which said earlier Monday that its U.S. operations would seek Chapter 11 bankruptcy protection.

Micron said that market conditions are not improving for memory products. "We remained hopeful that the demand for these products would stabilize in the marketplace and start to improve as we moved into the spring. Unfortunately, a better environment has not materialized," said Steve Appleton, Micron chairman and CEO, in a statement.

The company will continue to operate its 300mm research and development fabrication facility at the Boise site and perform a variety of other activities.

Cash restructuring charges will be approximately $50 million, which will generate a gross annualized operating cash benefit of $150 million, the company said. The net operating cash flow effect will be neutral for fiscal year 2009.

In the fiscal first quarter ended December 4, Micron posted a net loss of $706 million.

The memory chip industry overall has been caught in a particularly brutal downward price spiral that is hurting even the largest players, including companies like Samsung and Hynix.

The U.S. Supreme Court handed chip designer Rambus a victory Monday, when it refused to hear an appeal by the Federal Trade Commission that alleged the chip designer violated antitrust laws under the Sherman Act.

For Rambus, it ends a seven-year battle with the Federal Trade Commission over its Sherman Act litigation, which alleged in 2002 that the chipmaker intentionally withheld its patent plans from a standards body, which later gave the green light to some of its technology that is now found in the vast majority of PCs and servers around the world.

"It's a good day for us," said Thomas Lavelle, Rambus general counsel. "The Sherman II claims are dead and over."

Lavelle, however, noted it may not be the last that the chipmaker will see of the FTC.

Over the years, the FTC has periodically told Rambus it may bring a case against the chipmaker under Section 5 of the FTC Act, Lavelle said. But he noted the underlying facts in that type of case would be the same as what was used for its failed Sherman Act II antitrust case. Section 5 cases allege deceptive and unfair practices in commerce.

Lavelle, in fact, may indeed get a repeat visit from the FTC.

David Wales, the FTC's Bureau of Competition director, said in a statement:

This is not the decision we were hoping for, and we are reviewing our options.

In the meantime, Rambus' patent infringement lawsuits against memory chip makers Samsung Electronics, Micron Technology, Hynix Semiconductor, and Nanya Technology are still ongoing.

These cases, which could potentially yield Rambus millions of dollars should a jury find its patents are good and valid, were put on hold earlier this month after a U.S. District Court judge ordered them postponed indefinitely, pending appeals of earlier court decisions.

Prior to the postponement, those cases were set for trial this month.

The Supreme Court victory does little to give Rambus an added edge in its patent infringement case against the chipmakers. Last March, Rambus deflected similar allegations brought on by the chipmakers in its patent infringement case.

The Supreme Court decision, at most, continues to keep the memory chip makers from using that argument as a defense.

Solid-state drives may see heady growth despite a sliding world economy, according to a report released Tuesday by a market research company. Devices like the Apple iPod and iPhone are expected to drive growth.

Micron Technology along with its partner Intel are challenging SSD market leaders Samsung and Toshiba, In-Stat said

(Credit: Micron)

Flash memory revenue in the solid-state drive segment will see compound annual growth rates of over 100 percent through 2012, according to market research firm In-Stat. The type of flash used in solid-state drives is referred to as NAND flash.

"You're starting from quite a small base. Back in 2006, you're in the tens of millions (of dollars) kind of a number. By 2012, you're easily over five billion. So the growth rates do get rather high," said Ian Lao, a senior analyst at Scottsdale, Ariz.-based In-Stat. The market researcher forecasts compound annual growth at 106 percent from 2006 through 2012, Lao said.

In the consumer segment, Lao says he expects to see most of the growth in small devices like portable music players and smart phones. Music players such as the Apple iPod and Microsoft Zune will adopt solid-state drives instead of the tiny 1.8-inch hard disk drives they use now because of better durability and shock resistance. "They suffer the risk of, hey, I just dropped my Zune, it doesn't work anymore," Lao said. SSDs will provide much greater reliability, he said.

And as smart phones become more PC-like, they will graduate from relatively simple flash drives to more sophisticated SSDs with the same Serial ATA (SATA) interfaces used in PCs today, Lao said. An iPhone, for example, with a more computer-like operating system and features would use an SSD, Lao said.

Future ultra-portable laptops, represented today by the MacBook Air and HP Voodoo Envy 133, will also drive SSD growth, as will Netbooks.

Sharp growth will also be seen in the corporate enterprise market. SSDs will, in an increasing number of cases, replace very-high-speed hard disk drives in server environments, Lao said.

Flash drives (non-SSD) will remain widely used in various music players, mobile handsets, after-market cards, and USB flash drives, with a combined market share of more than 80 percent during the next couple of years, according to the report. However, this percentage will drop to about 70 percent by 2012, as SSDs grow in importance, the report said.

Worldwide NAND flash revenues are likely to grow at a compound annual growth rate of 29.7 percent from 2007 to 2012 to reach $61 billion, In-Stat said. Revenues for NOR flash--used, for example, to store program code in cell phones--will increase at a 6 percent compound annual growth rate from 2007 through 2012.

Updated on December 18 at 3:25 p.m. with pricing information.

Toshiba said Wednesday that it will showcase a 512GB solid-state drive at the Consumer Electronics Show next month and begin shipments in the second quarter of 2009.

Toshiba 512GB solid-state drive rivals hard disks in capacity

(Credit: Toshiba)

To date, this would be one of the largest-capacity solid-state drives for use in laptops and come close to matching the size of mobile hard-disk drives.

Samsung has begun mass production of a 256GB SSD and Micron Technology is readying a 256GB drive that will ship in March.

Toshiba said it is releasing a broad family of "fast read/write SSDs" based on 43-nanometer Multi-Level Cell (MLC) NAND flash technology that will be showcased at CES. MLC technology allows solid-state drive makers to deliver higher capacity drives at lower prices.

In addition to the 2.5-inch 512GB drive, the new series of Toshiba drives also includes capacities of 64GB, 128GB, and 256GB, offered in 1.8-inch or 2.5-inch drive enclosures or as SSD Flash Modules, the company said in a statement.

Samples of the new drives will be available in the first quarter of 2009, with mass production slated for the second quarter, in the April to June time frame, according to the company.

Pricing in sample quantities ranges from $220 for the 64GB drive to $1,652 for the 512GB drive, Toshiba said.

The drives achieve a maximum sequential read speed of 240MB per second (MBps) and maximum sequential write speed of 200MBps. This is roughly the same read-write speeds offered by Samsung on its 256GB SSD.

Toshiba said it sees SSDs growing to approximately 25 percent of the notebook market by 2012.