Mark LaPedus

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EE Times

(03/10/2006 6:47 PM EST)

SAN JOSE, Calif. — Seeking to make another big splash in the marketplace, the NAND flash-memory venture between Intel Corp. and Micron Technology Inc. is quietly readying a new line of devices based on multi-level cell (MLC) technology.

“We believe that IM Flash has been successful advancing the NAND roadmap, with 5-to-10 percent of production on 72-nm [technology],” said Doug Freedman, an analyst with American Technology Research Inc., in a report. “We also believe MLC devices are very close to sampling, with engineering devices available for evaluation.”

The 72-nm flash parts are said to be based on IM Flash’s current technology, dubbed single-level cell. The MLC technology is said to be more cost competitive and will vie more closely against rival devices from Hynix, Samsung and Toshiba.

Last year, Micron and Intel created a joint venture to manufacture NAND flash memory for use in consumer electronics, removable storage and handheld communications devices. The joint-venture company, called IM Flash Technologies LLC, is set to manufacture chips exclusively for Micron (Boise, Ida.) and Intel (Santa Clara, Calif.).

Even before the venture was announced, Micron had been shipping NAND flash memories, reportedly based on SLC technology. Most NAND-based flash vendors are moving towards MLC products, due to the cost and scaling advantages with the technology.

“Intel has a long and successful history using its MLC technology in NOR flash, dubbed StrataFlash,” said Mark DeVoss, an analyst with iSuppli Corp. “If StrataFlash can be adapted for use with IM Flash Technologies’ NAND flash products, it could prove to be potent competitive weapon in the density race, which is now being led by NAND stalwarts Samsung Electronics Co. Ltd., Toshiba Corp, and Hynix Semiconductor Inc.”

At the same time, Micron itself is making some big headlines. In a bold entry into the flash-memory card, USB drive and other end-user markets, Micron this week said that it has acquired Lexar Media Inc. The deal is valued at $688 million in stock.

The move propels Micron into the flash-card business and puts the memory chip maker in direct competition against SanDisk Corp. It also pits Micron and its flash-memory partner, Intel Corp., up against the formidable team of San Disk and its partner, Toshiba Corp.

Lexar (Fremont, Calif.) is a marketer and maker of NAND flash memory products, including memory cards, USB flash drives, card readers and ATA controller technology for the digital photography, consumer electronics, industrial and communications markets.

“This is an interesting development that looks very positive for both parties involved,” said Jim Handy, an analyst with Semico Research Corp., in a report. “Micron is about to launch into the NAND market in a big way and would do well to have an established channel to get their chips to the market.”

It’s also a big plus for Lexar. “Lexar is having trouble competing against SanDisk, who has so far been more profitable than Lexar mainly because of SanDisk`s captive NAND chip supply,” Handy said.

“This is one of SanDisk`s biggest strengths. SanDisk has explained to us that their manufacturing cost using internally-produced NAND is significantly lower than that using non-captive NAND,” he said.

“The manufacturing cost of a 1-GB SD card using internally-produced NAND is roughly 40 percent of the manufacturing cost of the same card manufactured using NAND from external sources,” he said. “This leads us to estimate that the cost difference between SanDisk`s captive NAND chips and external purchases is about 3:1. Lexar has been hindered by not having the same economies, but now that Micron and Lexar are one team they can compete against SanDisk on a much more level playing field.”

There are other wrinkles to the acquisition. “Lexar is currently locked in a court battle with Toshiba who used to sit on Lexar`s board, and supply NAND to Lexar, before this relationship went terribly sour,” he said. “Semico does not expect Micron to allow the Lexar suit against Toshiba to lose any steam.”

And there are some NAND supply issues as well. “Not only will SanDisk look hard at this acquisition, but so will Samsung. Lexar, after their falling-out with Toshiba, became wholly dependent upon Samsung for their NAND chips,” Handy said.

“Until recently Toshiba and Samsung were the only significant NAND chip suppliers. So far Lexar`s relationship with Samsung has been very tight. The question now is: Since Micron is one of Samsung`s fiercest competitors, will Samsung still supply NAND to Lexar, or will Samsung lose that important piece of the business to Micron`s new NAND output from IM Flash? Samsung could even walk away from Lexar in order to avoid supporting Micron. It`s hard to tell,” he added.