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In the midst of a tight market for flash memory, SanDisk and Samsung Electronics have renewed two key agreements that both companies expect will strengthen their positions.

(Credit: Business Wire)

In the first of the two deals, SanDisk and Samsung announced on Wednesday an agreement to renew the cross-licensing of certain semiconductor patents. The agreement means that each company has the right to use each other's patents in producing cell flash memory and flash storage systems, such as solid-state drives. It does not include patents related to 3-D memory, a new technology that could eventually replace traditional flash memory in portable devices.

Both companies also signed a flash memory agreement that guarantees a specific portion of Samsung's flash memory chip output to SanDisk.

The deals will "enable both parties to focus on the growth markets at hand," Eli Harari, chairman and chief executive officer of SanDisk, said in a statement. "We are excited about our opportunities in mobile, computing and consumer flash storage markets. Furthermore, continued access to Samsung's flash capacity under competitive terms gives us greater flexibility in managing our future capital expenditures for captive capacity."

Samsung also expressed faith in the agreement. "The renewal agreements enable Samsung and SanDisk to each focus their energies on restoring flash market growth," Oh-Hyun Kwon, president of the semiconductor business at Samsung, said in a statement. "It is clear that these renewal agreements are aimed at strengthening the on-going business relationship between Samsung and SanDisk, and we are pleased that the two companies have worked hard to achieve a significantly improved balance on the patent license."

The new agreements go into effect when the current cross-license and supply agreements expire on August 14 and will run for seven years from that date.

SanDisk and Samsung have a checkered history together. Last year, Samsung had pursued a buyout of SanDisk but eventually withdrew the offer when the two companies couldn't agree on terms. Both companies are battling for a slice of the growing market for solid-state drives. SanDisk is pursuing the consumer Netbook segment, while Samsung is focused on the server arena. SSDs use flash memory for storage to provide greater speed and efficiency over mechanical hard disks.

SanDisk has been under intense pressure because of slower consumer spending and a dour market for flash memory. In February, the company reported a loss of $1.86 billion for its fiscal 2008 fourth quarter. But Samsung's latest results have been strong, thanks to cost cutting and its hot mobile phone business. In April, the company reported a first-quarter profit of $349 million versus a loss of $550 million in the year-ago quarter.

SanDisk shares rose sharply Friday morning, as speculation surfaced that Samsung and Toshiba are interested in a buyout of the company.

SanDisk soared 11 percent to close at $11.05 a share, following a report in the EETimes.

The article, citing unnamed sources, said Samsung, which last year launched an unsuccessful bid for the company, and SanDisk's joint-manufacturing partner Toshiba are both interested in making a bid for the flash memory maker.

Last year, when Samsung made an unsolicited bid for the company, it offered SanDisk $5.85 billion for the company. SanDisk had rejected Samsung's overtures, citing the $26 a share offer as inadequate.

In late October, Samsung withdrew its offer, saying it had made no progress in its six-month effort to acquire the company.

A SanDisk spokesman declined to comment Friday. Representatives from Samsung and Toshiba were not immediately available for comment

SanDisk is disclosing at a San Francisco technology conference Tuesday that it will begin mass production of memory chips that will allow consumers to store up to 64GB of data on tiny flash cards.

SanDisk X4 memory chip packs in four bits per cell

(Credit: SanDisk)

The Milpitas, Calif., company's X4 technology will pack four bits of data into each memory cell. To date, flash memory chipmakers typically stored one bit or two bits per cell.

SanDisk--the largest supplier of retail flash cards--is making the disclosure jointly with Toshiba at the 2009 International Solid State Circuits Conference (ISSCC). The two companies will use 43-nanometer manufacturing process technology to make the chips.

X4 technology, which SanDisk got when it purchased M-Systems in 2006, will yield tiny Secure Digital (SD) flash cards that hold 64GB of data. Currently, mainstream SanDisk SD cards top out at 16GB, though pricey 32GB cards are also on the market.

"It is a 64-gigabit single die (chip), which is 8GB (per die), the highest capacity point in the industry," said Khandker Quader, senior vice president, memory technology & product development, SanDisk, in a phone interview Monday.

In addition to the memory chip, the die also includes an X4 controller--which manages the data flow. The memory and controller "will be sold as an integrated solution," Quader said. Controllers are the secret sauce used by flash card and solid-state drive suppliers to boost performance. The importance of controllers increases as flash chip densities increase because higher densities require increasingly sophisticated controllers to deliver the necessary performance.

The memory technology itself--the 4 bits per cell 64-gigabit memory--is co-developed and co-owned by SanDisk and Toshiba. The X4 controller technology is solely owned by SanDisk, Quader said. SanDisk and Toshiba also have joint manufacturing facilities in Japan.

The advancement is important because NAND flash--like all silicon chasing Moore's Law--is facing challenges to increase densities "even at two bits and three bits per cell," he said. (NAND is the type of memory used in flash cards and solid-state drives.)

A SanDisk paper at the ISSCC will discuss the performance of the X4 technology. Data speeds will hit 7.8 megabytes per second, Quader said. "This is comparable to what others are producing at lower bits per cell," he said.

X4 flash cards will be available commercially in the first half of 2009, according to Quader.

SanDisk will also present a paper on 32-nanometer X3 technology--three bits per cell--for use in thumbnail-size microSD cards (even smaller than SD cards) that boast capacities up to 16GB. X3 will also be used in solid-state drives, SanDisk said.

Despite these advancements, SanDisk is still a laggard in the emerging solid-state drive market, where companies like Samsung, Toshiba, Micron Technology, and Intel are the early leaders. SanDisk announced at CES in January that it would deliver a 240GB SSD by mid-year.

SanDisk reported a net loss of $1.86 billion, as it takes steps to reduce output and conserve cash amid a collapsing flash memory chip market and weak consumer demand.

The flash memory chip supplier's fourth-quarter net loss was $1.86 billion, or a loss of $8.25 per share, compared to GAAP net income of $106 million, or 45 cents per share, in the same period last year. (GAAP stands for Generally Accepted Accounting Principles.)

Charges, including a combined pre-tax goodwill and intangible asset impairment charge of $1.02 billion, due to a sustained decline in SanDisk's market capitalization, totaled $1.91 billion in the fourth quarter of fiscal 2008, the company said.

Fourth-quarter revenue fell 31 percent to $864 million on a year-over-year basis but rose 5 percent on a quarter-over-quarter basis. This beat Wall Street estimates of about $767 million.

Total revenue for fiscal 2008 of $3.35 billion declined 14 percent from $3.90 billion in fiscal 2007.

The GAAP net loss for fiscal 2008 was $2.07 billion, or a loss of $9.19 per share, compared to net income of $219 million, or 93 cents per share in fiscal 2007.

SanDisk, like its U.S. flash memory counterpart Micron Technology, has been reeling from a drop in consumer demand for products that use flash memory and from falling flash chip prices. The Milpitas, Calif.-based company has also been a laggard in the emerging market for solid-state drives, in which companies such as Samsung, Toshiba, and Intel have taken an early lead.

In its earnings reports, SanDisk cited "slower than expected growth in market demand for our products including, for example, our solid-state drives."

Last week, SanDisk said it will transfer 20 percent of its capacity to joint flash memory-manufacturing partner Toshiba for about $890 million. This follows a similar move in October.

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.

Both SanDisk and Samsung announced solid-state drives on Tuesday--though that's where the similarity ends. SanDisk's SSDs are aimed at Netbooks, while Samsung's new SSDs are for the high-performance server market.

SanDisk Gen 2 pSSD drives for Netbooks are available in capacities up to 64GB

(Credit: SanDisk)

SanDisk is debuting its new 8GB, 16GB, 32GB, and 64GB pSSD-P2 and pSSD-S2 solid-state drives at the Consumer Electronics Show in Las Vegas this week. Samsung's 100GB SS805 drive, on the other hand, is being introduced on Tuesday at the Storage Visions 2009 Conference, also in Las Vegas.

The second-generation SanDisk drives, designed as drop-in replacements for hard-disk drives, use the Serial-ATA or SATA interface. First-generation drives were based on a slower Parallel-ATA or PATA interface.

New Netbooks such as the Acer Aspire One and the HP Mini 2140 use the SATA interface. (Many ultraportable notebooks, like the first-generation MacBook Air and HP Compaq 2510p, however, used the slower PATA interface.)

"Netbooks represent the fastest growing PC segment in 2009 and 2010 yet widespread adoption of SSDs in netbooks has been limited by speed, capacity and cost constraints," Rich Heye, senior vice president and general manager for solid-state drives at SanDisk, said in a statement. "With the significant improvements in performance, capacity and low pricing, these SSDs are a perfect fit for the exploding Netbook market."

SSDs are generally faster than hard-disk drives, particularly at booting and launching applications, taking about half the time of an HDD, according to SanDisk.

SanDisk's drives, slated to be available in February, 2009, are built using the company's 43-nanometer Multi-Level Cell (MLC) flash memory. MLC technology generally yields lower-cost SSDs compared with more traditional Single-Level Cell or SLC technology. SanDisk manufactures the flash memory in Yokkaichi, Japan with its partner Toshiba.

SanDisk did not provide pricing information but said its 32GB modular SSD is "priced at parity" with 80GB 2.5-inch HDDs in OEM quantities. HDDs with this capacity range in price from about $50 to $100 (depending on speed) so this is rather vague pricing guidance.

Unlike SanDisk's consumer SSDs, Samsung's SSD is targeted at the very-high-end corporate enterprise market. Samsung uses more pricey (and faster) SLC technology since its drives are targeted as a replacement for the high-performance 15,000 rpm hard-disk drives that are the staple storage device of large corporations. These drives are typically used for applications such as video on demand, streaming media content delivery, internet data centers, virtualization, and on-line transaction processing.

Samsung claims its 100GB Enterprise SSD can process IOPS (input/output per second) more than 10 times faster than the fastest 15,000 rpm SAS (Serial Attached SCSI) HDD available for transactional data workloads.

The high-performance 2.5-inch enterprise drive reads data sequentially at 230 megabytes per second (MB/s) and writes sequentially at 180 MB/s, Samsung said. The 100GB SSD's performance is derived from an 8-channel controller, improved NAND flash and special drive firmware, all developed by Samsung.

The 2.5-inch drive will be available this quarter.

Samsung did not provide pricing information.

Toshiba plans to cut flash memory chip production starting in January, citing the global economic slowdown. SanDisk, which operates manufacturing lines jointly with Toshiba, said it will follow suit.

Toshiba announced on Monday that its Yokkaichi Operations plant in Japan's Mie prefecture will cut NAND flash memory production by approximately 30 percent, effective from January 2009.

"Recession in the global economy and the slowdown in consumer spending are having a significant impact on demand for semiconductors," Toshiba said in a statement. "This is particularly notable in NAND flash memories, where decreased demand for applications such as memory cards and MP3 players has generated excess supply."

The Yokkaichi facility has four fabs. Fab 3 and Fab 4 produce NAND flash memories on 300-millimeter wafers, Fab 1 and Fab 2 on 200mm wafers, Toshiba said. "Prior to the January production adjustment, the 300mm wafer lines will suspend operation for 13 days, and the 200mm wafer lines for four days, during the year-end and new-year period," the company said.

Milpitas, Calif.-based SanDisk, meanwhile, said it will halt production at the same joint-venture manufacturing facilities in Yokkaichi. "Production in Fab 3 and Fab 4 will be temporarily halted from December 31 to January 12. Following this shutdown, joint-venture production will resume at approximately 70 percent of current capacity," the company said in a statement.

"The duration and extent of this reduction in fab output will depend upon market conditions," SanDisk said.

SanDisk also said it is continuing to work with Toshiba on definitive agreements to restructure the manufacturing joint ventures and expects to sign these agreements in the first quarter of 2009. An agreement that covers selling a portion of the capacity from the joint ventures to Toshiba was originally announced on October 20.

SanDisk will provide additional details when it holds its fourth-quarter 2008 earnings conference call.

LOS ANGELES--Technology introduced at the Windows Hardware Engineering Conference by SanDisk could boost solid-state drive performance in Windows Vista by 100 times.

The largest supplier of flash memory cards unveiled an advanced flash file system for solid-state drives that "has the potential" to accelerate random write speeds by up to 100 times over existing systems.

Despite being generally faster than hard-disk drives (particularly at reading data), solid-state drives fall short of hard disks when they randomly write data. Random writes are generally considered to be the Achilles heel of solid-state drives.

To maximize random write performance, SanDisk developed the ExtremeFFS flash file management system that uses a "page-based algorithm" so when "a sector of data is written, the SSD puts it where it is most convenient and efficient," SanDisk said.

The result is an improvement in random write performance as well as in overall endurance.

"For SSDs to perform optimally in Windows Vista, and thus replicate or surpass the functionality of hard disk drives, a new flash management technology is needed to accelerate SSD write speed and endurance," said Rich Heye, senior vice president and general manager for SanDisk's solid-state drive business unit.

SanDisk will present this technology here at WinHEC 2008 on Wednesday. ExtremeFFS will ship in SanDisk products in 2009.

Heye also introduced two metrics that can help users evaluate solid-state drives.

One metric, vRPM, enables comparisons in performance between a solid-state drive and a hard-disk drive or another SSD. The other metric, LDE, calculates the lifespan of a solid-state drive.

Click here for more news on Windows and WinHEC.

Updated at 3:40 p.m.with additional comments and clarifications about solid state drives and ATA commands.

Will solid-state drives thrive on Windows 7? Microsoft is set to address that question at the Windows Hardware Engineering Conference this week.

Microsoft will speak to both overall support for solid-state drives and Windows 7 support for Netbooks in Los Angeles at WinHEC 2008, which kicks off Wednesday.

In a conference abstract titled "Windows 7 Enhancements for Solid-State Drives," Microsoft states that "PC systems that have solid-state drives are shipping in increasing volumes" and that it is planning "Windows enhancements that take advantage of the latest updates to standardized command sets, such as ATA."

"Windows7 will be able to identify a SSD uniquely," according to Gregory Wong of Forward Insights. Certain ATA commands will improve the speed that solid state drives write to disk, Wong said.

ATA is most commonly associated with Serial ATA, or SATA, technology, which is the most popular data transfer standard for PC storage devices. Most new hard drives use the SATA-2 standard, and the newest solid-state drives are based on this standard also.

Until recently, solid-state drives used an older--and theoretically slower--PATA (Parallel ATA) standard. But the newest drives shipping with, for example, the Dell Latitude E4200 and HP EliteBook 2530p ultraportable laptops, use SATA-2.

"It is pretty widely held that SSDs are unlikely to meet with much acceptance until Windows undergoes significant tuning to take advantge of all the speed that SSDs have to offer," according to Jim Handy of Los Gatos, Calif.-based Objective Analysis.

Topics covered in the Microsoft SSD talk will include "file system optimizations" and "thoughts on the future of SSDs and their role in Windows," according to a prepared statement by Frank Shu, a senior program manager on the Windows Storage Platform team.

Another session, titled "Designing Flash-Based Netbooks for Windows 7," will cover how to design flash-based Netbooks using Windows 7, according to a statement by Leon Braginski, a senior lead program manager in Microsoft's PC3 team. "We will explain how to calculate the lifetime of a flash-based netbook based on specific workload numbers," a summary states.

The session will also "introduce a revised version of the Flash-Based PC Design Guide, which has been updated for Windows 7."

Other solid-state drive related talks include one by Seagate, titled "Is Your Disk Drive Going Away?" Seagate will talk about solid-state drive platforms and hybrid hard-disk drives (HDDs), among other topics.

Retail flash memory drive giant SanDisk will talk about Multi-level Cell (MLC) NAND in PCs. MLC technology allows solid-state drive suppliers to build higher-capacity drives at lower cost. The latest high-capacity 128GB solid-state drives are based on MLC.

"Analysts uniformly agree that the key challenge to solid-state drive adoption is reducing cost, and the key to reducing cost is advancing to multi-level cell technology," SanDisk said in a statement.

"The PC pushes MLC flash like no other application with its high random write rate, small block size and long life expectations. SanDisk has...introduced the first metric for SSD endurance--Long-term Data Endurance (LDE). LDE allows customers to evaluate the lifespan of an SSD in their application," SanDisk said.