NOR vs. NAND

The supply chain in NOR is shaky--or a mess--at best. Spansion Inc. is scrambling to emerge from bankruptcy and is mainly focusing on the embedded space. Microchip Technology Inc. just acquired NOR maker Silicon Storage Technology Inc. (SST), but it's unclear if Microchip will continue to sell standalone NOR devices. Macronix International Co. Ltd. is a niche supplier, while Samsung is a relatively quiet player.

Now, Micron will swallow Numonyx, which could possibly disrupt the flow of supply if the execution is mishandled. And so there is no guarantee that Micron will succeed in NOR this time around.

The primarily motivation for Micron's interest in NOR is the handset. ''The NOR market is interesting. The NOR business will be around a long time. (It will expand our) share in the wireless space,'' Micron's Appleton said during the call.

Buyers of NOR parts are closely watching the space, as many wonder which vendor will be left standing if or when the dust settles. ''The Numonyx acquisition negotiation went to the last hour, with Micron's fundamental stance being that Numonyx (as a pure-play memory player) could not survive as a stand-alone entity over time. We would not be surprised if Spansion, as it emerges from bankruptcy, also gets consolidated,'' said Raymond James' Mosesmann.

''Micron itself participated in NOR starting in the late 1990s, but abandoned this effort in 2006,'' added Jim Handy, an analyst with Objective Analysis. ''The NOR flash market has been a difficult one for nearly all participants. Leaders Numonyx and Spansion have suffered losses for several years, with Spansion recently turning a profit through a strategy largely focused upon markets for low-density parts used by markets outside of cell handsets, the largest consumer of NOR flash.''

There are other issues for NOR. ''NOR flash has been a large market, but not a profitable one. High-density NOR competes against NAND for camera phone designs, and NAND prices have been depressed for the last three years, dragging NOR prices down with them,'' Handy said.

Indeed, there is a sea of change in flash. Flash memory is based on one of two architectures: NOR and NAND. ''NOR flash memory provides fast read times--useful for pulling data out of memory, but writes data relatively slowly. NAND, on the other hand, reads data slightly slower, but provides faster write speeds--desirable features for storing digital photos and for digital audio, navigation, and other multimedia products,'' according to a report from IC Insights.

''The traditional roles of, and applications for, NOR and NAND devices are blurring as many new and existing gadgets combine both types of flash devices onto a single platform,'' according to the report. ''The largest application for NOR flash is cell phones, where NOR is used as code storage. Cell phone shipments exceeded 1.1 billion units in 2009 and are forecast to top 1.2 billion units in 2010. However, NAND flash, which is used for data storage, is taking more board space in higher-end cell phones (i.e., smartphones), mostly at the expense of NOR flash.''

There are some that also believe that NOR--and NAND--are running out of gas, prompting the need for a next-generation memory type. FRAM, MRAM, PCM and RRAM are among the contenders in the arena.

Numonyx, which is a pioneer in PCM, is on course to provide customers with samples of its 1-Gbit PCM in the first quarter of 2010. The industry has talked about PCM for decades, but has failed to commercialize the technology.

Phase change memory has many of the advantages of NAND and NOR flash memory as well as other RAM memories--allowing data to be read at RAM speeds while lowering the cost and power consumption levels by reducing the large amounts of RAM often used in today's digital applications.

Last year, Samsung and Numonyx announced they are jointly developing market specifications for PCM products. Samsung and Numonyx are developing common specifications supporting the JEDEC LPDDR2 Low Power Memory Device Standard. The LPDDR2 standard offers advanced power management features, a shared interface for nonvolatile memory (NVM) and volatile memory (SDRAM), and a range of densities and speeds.

Phase-change: Fact or fiction?

One OEM, Nokia, is pushing hard for PCM based on this standard. It is unclear if Micron will continue the work with Samsung as a result of the deal with Numonyx.

But without a doubt, there is a race to bring PCM into the commercial markets. Numonyx' 1-Gbit PCRAM could allow it to recapture the lead in a race against Samsung. Numonyx was the first company to offer samples of the chalcogenide phase-change memory, which promises to replace DRAM and flash memory in certain applications. Numonyx has been shipping samples of a 128-Mbit PCRAM built on a 90-nm process since 2008.

In September 2009, Samsung leapfrogged into the lead when it announced that it had begun production of a 512-Mbit PCRAM implemented in a 60-nm manufacturing process. Samsung is aiming the memory at mobile phone handsets and other battery-operated applications where it claims the use of phase-change memory can extend the battery life by 20 percent.

Analysts are mixed about the fate of PCM within the Micron-Numonyx camp. ''Micron will put full backing on this technology so I expect Micron to facilitate the market adoption of this technology,'' said Gregory Wong, an analyst with Forward Insights.

''Off the top, PCM will be slowed down with the integration of Numonyx into the fold. Numonyx needed PCM to extend the R&D investment from ST and Intel, but PCM is a technology in search of a market,'' said Alan Niebel, president of Web-Feet Research.

''Even trying to use PCM into wireless it still needs the software rewritten since the PCM is slower than DRAM. When I talked to RIM they said that LPDDR2 is intriguing, but they are not sure if they want to allocate the manpower to write new code,'' he said.

''So, Micron will have to beef up the system solutions approach if they really want to get into wireless. On the other hand, how much investment will Micron want to put into a new company, new technology, and new manufacturing? I think they will keep PCM alive but on a slow track in hopes that the market will develop. Although there are better technologies than PCM, Micron may be forced to continue with PCM instead of RRAM or CMOx since the incumbent 'PCM' was inherited,'' he said. CMOx is a next-generation memory technology being pushed by Unity Semiconductor Corp.

PCM is not expected to be a major revenue generator for some time. The biggest concern for Micron is not PCM, but rather the integration of Numonyx.

Analysts also slightly different opinions on the integration process. ''Look for Micron to significantly reduce Numonyx's cost structure and reduce its capex requirements by 50-66 percent,'' said Raymond James' Mosesmann.

''The Numonyx acquisition will make sense for Micron if they can quickly integrate the business, support and grow the existing customer base and establish themselves in MCP. While the embedded business for Numonyx is stable, the wireless NOR business represents the majority of sales and will be under severe pressure as NAND makes greater inroads into the handset. Micron must counter this with its NAND/DRAM handset solutions which thus far have limited penetration,'' said Joseph Unsworth, an analyst with Gartner Inc.

''All in all Objective Analysis anticipates that this will be a good deal for both buyers and sellers. This is the kind of deal we expected to see more of during the current downturn, a kind of hallmark for Micron,'' said Objective Analysis' Handy.

DRAM, NAND rebound

Micron has been aggressive on other memory fronts, namely its more traditional DRAM and NAND markets. For example, Intel and Micron Technology recently regained the process technology lead in NAND flash, by rolling out the first in a family of 25-nm devices.

Micron is also selling 34-nm NAND and 50-nm DRAM parts. Micron and its DRAM partner, Nanya Technology Corp. (Taoyuan, Taiwan), this week unveiled a 42-nm DRAM process technology, and claimed to have a 30-something-nanometer process working in the lab. The 42-nm process uses copper metallization technology and produces a 2-Gbit DDR3 memory device.

The 42-nm process operates from 1.35-volts. The move from 1.5-volts to 1.35 volts produces power savings of up to 30-percent. The 2-Gbit 42-nm DDR3 device is capable of transferring data at up to 1866-Mbits per second. Sampling is scheduled to start in the second quarter of 2010, with the production ramp planned for the second half of the year, Micron said.

''Micron continues to be quite bullish,'' said Raymond James' Mosesmann. ''In DRAMs, it may be the first time in 30 years there are no new fabs being constructed in 2011. In terms of a near-term datapoint, we believe DRAM DDR3 pricing continues to move upward in February. Overall demand trends are consistent with bullish views on PC demand, the start of an enterprise upgrade cycle in 2H10, increasing content per box on a faster migration to Win7 64-bit, and industry supply dynamics.''

NAND is also on the rebound. ''The 25-nm (NAND) process node migration is coming along extremely well, which we believe gives Micron approximately a nine month advantage over Asian rivals,'' said Mosesmann. ''In terms of 3-bit per cell NAND or x3 technology, Micron views the opportunity as relatively modest as industry yields are O.K. but not driving gross margins.''

''For the better part of 2009, the NAND market stabilized. As we get into 2010, we're back into a stable environment. (There's appears to be) an under-supply of NAND for the remainder of this year. We are seeing signals of shortages in the second half of 2010,'' said Brian Shirley, vice president of Micron's memory group, in a recent interview. ''The DRAM market looks pretty good. The server market, in particular, has been very strong. Even the desktop and notebook markets have exceeded our expectations.''