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NOR market heats up despite tumultuous times

Posted: 01 Nov 2007 ?? ?Print Version ?Bookmark and Share

Keywords:NOR flash market? Numonyx? flash memory? 65nm? MirrorBit NOR?

Cambou: We don't believe this erosion is sustainable.

Unfazed by overcapacity and pricing pressures in the tumultuous market for NOR flash memory, Spansion Inc. has begun limited production in the industry's first 300mm NOR fab.

The $1.2 billion plant, dubbed SP1, has begun making 65nm NOR devices in September, with 45nm products due out in late 2008. NOR is heating up at the 65nm node as vendors ship a new class of 2- and 4bit/cell system-level flash technologies.

With its 300mm fab ramp, Spansion hopes to gain a manufacturing edge over its two main NOR rivals: Samsung Electronics Co. Ltd, which has stated its intention to take the NOR lead by the end of the decade, and a nascent joint venture dubbed Numonyxthat will merge the NOR operations of Intel Corp. and STMicroelectronics. Intel, ST and Samsung respectively ranked second, third and fourth in NOR market share in the first half, according to iSuppli Corp.

Spansion's new fab is part of its so-called triple-attack strategy, through which it plans to shave production costs, propel new products and extend its MirrorBit NOR technology "down to the 20nm node," said Bertrand Cambou, president and CEO.

Such measures are in order as flash vendors confront a prolonged capacity glut and depressed ASPs for NOR devices. The proposed Numonyx venture is saddled with a slew of unsettling capacity, including three 200mm fabs and two 300mm plants.

Memory giant Samsung, meanwhile, has its sights set on becoming the world's largest NOR supplier by 2009 or 2010, and it could flood the market with NOR devices to get there.

"The NOR cycle remains challenging," Daniel Amir, an analyst with Lazard Capital Markets LLC, stated in a recent report. "Spansion management has said that while handset demand remains solid, ASP pressure remains challenging as Intel/ST and Samsung continue to dump pricing."

NOR flash ASPs were expected to fall 15 percent sequentially in Q3 from their Q2 levels, Amir said. According to Web-Feet Research Inc., the NOR flash business is projected to hit $7.9 billion in revenues this year, down from $8.6 billion in 2006.

Cambou is confident that the NOR market has touched bottom in what has been a tough business cycle. The anemic ASPs seen in the first half "were abnormal," he said. "We don't believe this erosion is sustainable."

NOR drivers
Going forward, Cambou said, strong drivers are emerging for NOR flash devices, including a new class of 3G cellular phones.

One upside for Spansion may be the uncertainty surrounding the integration of Intel's and ST's NOR operations as Numonyxa process that has yet to be finalized. Intel in August received a request for additional information from the Federal Trade Commission in connection with the proposed flash-memory venture.

Amid that uncertainty, Cambou said that some existing customers of Intel and ST "have welcomed" Spansion as a potential NOR supplier.

But Spansion has challenges of its own. Conceived as a joint venture between Advanced Micro Devices Inc. and Fujitsu Ltd, it has failed to earn a profit since its reorganization as an independent company in June 2003.

Meanwhile, questions abound about who is really leading the NOR race. Jim Handy, principal analyst with Objective Analysis, said Spansion is "significantly" ahead of Numonyx in terms of ramping up NOR on 300mm wafers. But he added, "I think they are on equal footing in process technology."

The dark horse is Samsung. The South Korean company is the leading supplier of DRAMs, SRAMs and NAND flash, and it has the potential to "steamroll everybody" in NOR if it is determined to do so, Handy said.

Spansion leads the NOR market share in 1H 2007, but joint NOR venture looms.

Flash market dominance is purely a manufacturing contest, and "the low-cost producer always wins," said James Doran, chief operating officer for Spansion. Moving to gain a competitive edge, Spansion outlined its triple-attack strategy: Expand its core MirrorBit NOR product lines, scale its technology and manufacture the devices in volume.

Spansion has scaled MirrorBit, based on technology licensed from Saifun Semiconductors Ltd, much further than most had expected. Other licensees have struggled to bring Saifun's nitrided ROM-based technology to production, analysts said.

MirrorBit is said to double the intrinsic density of a flash memory array by storing two physically distinct bits on opposite sides of a memory cell. Each bit within a cell serves as a binary unit of data that is mapped directly to the memory array.

Spansion also recently rolled out its MirrorBit Quad technology. While 2bit/cell MirrorBit technology stores 1bit per storage location, MirrorBit Quad stores 2bits per location.

Scalable to 20nm
On the scaling front, Cambou predicted that traditional floating-gate technologies from Intel and others would soon hit a wall but that MirrorBit would prove scalable down to 20nm. MirrorBit requires 40 percent fewer manufacturing steps than rival technologies, he said.

To reduce test costs, he said, Spansion has deployed full built-in self-test. Each device on a wafer embeds BIST technology, enabling the company to test "the entire wafer at once," Cambou said.

Still to be seen is whether Spansion can move into production at the 65nm node without a hitch. Rival Intel claims to be shipping 65nm NOR devices based on multilevel-cell technology.

Spansion is attempting to ramp several products simultaneously at the 65nm node, including MirrorBit, ORNAND and Eclipse. With its three fabs, Spansion believes it has hit upon the right manufacturing formula. The SP1 fab is situated next to JV3, its Japan 200mm plant in, which is the primary producer of 110nm MirrorBit chips. Fab 25, in the United States, manufactures MirrorBit products on a 90nm process. The 200mm fab will produce 65nm parts by year's end.

Spansion also has a foundry agreement with Taiwan Semiconductor Manufacturing Co. Ltd.

But the key for Spansion is SP1, an automated fab that will be ramped up in stages. Initially, SP1 will produce some 2,000 wafers per month. Total capacity for the first module is 15,000 to 20,000 wafers a month. When fully ramped, the fab could produce 30,000 to 40,000 wafers a month.

- Mark LaPedus
EE Times

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