Aug. 27, 2003 — In what could be the first of many buyouts of small-tech memory makers, Advanced Micro Devices (AMD) purchased molecular memory maker Coatue in June.
Neil Gordon, nanotechnology partner at Sygertech and president of the Canadian NanoBusiness Alliance, speculated the Coatue acquisition could be the first of many such purchases by the semiconductor industry as it searches for new technologies to power the products of tomorrow.
“For them to get into certain enabling technologies, early stage, it’s just part of good business practices,” he said. “Here’s a perfect example where AMD is a major player in memory and there is a new technology … which could substitute and potentially disrupt silicon in certain industry niches with a cheaper offering.”
The purchase came as no surprise to Stephen Empedocles, director of Business Development at nano-startup Nanosys, which has molecular and nano-wire memory projects in the works at its founder’s labs at Caltech and Harvard. Empedocles believes the purchase to be a logical step for AMD, which does business in a market where margins are slim and cutting-edge technology can define a company’s future.
“My guess is AMD is looking at this and saying, ‘We’re a major player. We want to make sure we are at the front of the next generation of memory systems’,” he said.
Coatue’s memory fits this description. By sandwiching a sheet of conductive organic polymer just a few molecules thick between a grid of perpendicular electrodes (wires) that resemble a street map, Coatue is able to create a memory cell where these wires intersect. When the power is turned off, the bits stay put making it non-volatile.
According to John Nation, FASL’s Marketing manager, AMD bought Coatue because its memory technology paralleled work going on at AMD. Additionally, AMD already was an investor and technology development partner with the company.
But, instead of taking Coatue in-house, AMD sold it to FASL LLC, a joint venture with Japan’s Fujitsu, said Nation. FASL started as a joint-venture company aimed at wafer manufacturing. In June, it officially became its own entity, expanding beyond manufacturing to focus on the nonvolatile memory market, which is where Coatue’s memory technology fits in. (FASL originally stood for Fujitsu-AMD Semiconductor Limited, but now it simply means FASL.)
To form FASL, a $3 billion global company, AMD and Fujitsu integrated all of their flash memory assets under the FASL banner, said Tim Martin, an AMD spokesperson.
Don’t expect a polymer-based memory product from FASL anytime soon, however. Contrary to previous articles in MIT’s Technology Review and NanoelectronicsPlanet.com about having product out in 2004, Coatue’s technology has a long way to go before it gets to market, said Nation.
“This technology has a lot of promise but, as with any other advanced technology, there is a lot of development work to do before it would actually yield a product to take to market,” he said.
This is why Nanosys is not pursuing its nano- and molecular-based products just yet, said Empedocles. There are too many bridges to cross before either type of memory will begin to show up in the marketplace.
“The issues in transitioning that kind of technology into a commercial product; there’s still too much risk and development time required to really put the emphasis of a small startup company on that kind of product,” he said.
That’s where AMD, which can afford long product time horizons, comes in, said Nation. Since AMD had been working on complimentary technology to Coatue’s as well as collaborating with the company on R&D, purchasing Coatue made sense. And AMD has the pockets and reach to get products to market; something few startups can do without big partners — especially in the chip business.
So far, AMD has no plans for further nano-memory purchases, but Nation didn’t rule them out, either, saying it just depends on whether the technology is a good fit for the company.
“It’s always a strategic option for a company in our position,” he said. “But we don’t go out on the acquisition trail for the sake of it. In this particular case, really this was a complementing technology to what we had developed internally.”
It’s a bit early yet to discern a trend from the deal, said Empedocles, but more such acquisitions wouldn’t surprise him, especially in a cutthroat industry such as semiconductor manufacturing.
“If we suddenly start seeing AMD start buying up all the companies that are doing something similar to … Coatue then that would certainly be an indication the semiconductor industry has made the decision that organics have reached a point that it’s not just something they want to keep their finger on but something they’ll want to actively start pushing,” he said. “I don’t think we’ve seen that yet but it will be exciting when we do.”