Mannerisms

In the Wild West days of the semiconductor industry, you’d get fifteen manufacturers investing in enough capacity to each achieve fifteen per cent market share in a particular product area, and think nothing of it.

If, they argued, the resultant over-capacity resulted in driving down prices, then that would work to expand the market. The thinking was that, as prices fell, new applications were found for the chips, so the market grew, so the over-capacity got absorbed, and everyone went away happy.
It hasn’t quite worked like that for sometime as end markets have become saturated, and fewer suppliers has meant there is more control over end prices.

However, with NAND flash, there is, once again, a feeling that this is a product with such infinite promise, such wide potential application and with such a rapid current ability to scale, that it’s worth building apparently massive over-capacity.

After all, non-volatile chip storage is so much more attractive a proposition than disc storage, bringing with it visions of totally solid state, lightweight, instant-on, low power, laptops, tiny camcorders with hours of storage, massive USB dives to store video, computer-like storage capabilities for mobile phones and the like.

These, it is hoped, will be the sort of new applications for NAND flash memory which will be driven by a substantial price fall.

On the capacity side, the build-up is awesome. The Intel/Micron joint venture, IM Flash, is currently bringing up three 300mm fabs for NAND flash at Utah, Virginia and Boise, Idaho. It says it will start building a new fab next year in Singapore and will add others, on a yearly basis, thereafter.

The STMicroelectronics/Hynix joint venture NAND fab in Wuxi, China produces its first wafers this quarter; the new SanDisk/Toshiba fab plans to kick off with 2,500 wafers a month next year; SMIC the Chinese foundry, has started sampling NAND flash, while Samsung remorselessly pursues its $33bn fab-building plan to build eight 300mm fabs between 2005 and 2011.

A wild card in the NAND line-up is Spansion which has announced it is producing a 4-bit-per-cell NAND memory based on the NROM technology it licenses from the Israeli firm Saifun.
Spansion is reluctant to disclose its plans, performance specs, reliability and manufacturing yield for the technology, which it calls Quad-Bit.

“I’m sceptical.”, says Joe Unsworth, principal analyst at Gartner Dataquest, “you have to give Spansion some credit for achieving better output than any of the other licensees of Saifun’s NROM technology. But can they get it into volume production with decent performance and reliability? If they can only do it in 90nm, then who cares, with the rest of the NAND flash industry on 50nm and 60nm?”

Obviously 50nm 2-bits-per-cell is going to be just as dense and just as cheap as 90nm 4bits-per-cell with, very likely, better read and write speeds.

With or without Spansion, the capacity being put on in the NAND business is worrying a lot of people.

“It’s very concerning that pricing is down 66 per cent this year and folks are still adding massive amounts of capacity. We think this could impact both the DRAM and the flash businesses”, says Unsworth.