By J. Robert Lineback, Senior Technical Editor
Semiconductor forecasting has never been easy, but in the flash memory arena, market projections have become doubly difficult. Demand for nonvolatile NAND-based flash continues to exceed projections due to strong growth in digital photography and the emergence of high-volume consumer electronics applications — such as MP3 music players, which are now surging thanks to heavy promotion of Apple Computer Inc.’s new iPod Shuffle series. On top of that come new memory fab strategies, aimed at enabling 300mm fab lines to switch relatively quickly between DRAM and nonvolatile NAND flash.
“This is one of the strategies we are employing, and it will make forecasting more challenging because in the future wafers will largely go back and forth as one market turns soft and the other tightens up,” predicted Don Barnetson, associate director of marketing for flash memory at Samsung Semiconductor Inc. The San Jose, CA-based marketing manager for the Korean memory giant believes both DRAM and flash segments will become more stable “because we won’t have a fab that’s absolutely tied to one market.”
While similar “flexible” memory fabs also have been discussed by Micron, Hynix, and Infineon, full implementation of these strategies has not yet occurred, according to analyst George Burns, president of Strategic Marketing Associates. That could soon change, however, because investments for fabs dedicated to DRAMs are shooting through the roof as manufacturers battle for market share. “Last year, the industry started construction on $7.4 billion worth of DRAM fabs, and in 2005, it will rise to $11.4 billion,” Burns told WaferNews, projecting the value of new plants once they are fully utilized. “Looking ahead, it will get a bit fuzzy as to whether these fabs are DRAM or flash investments… In 2006, however, the industry is going to be awash in DRAM capacity.” The Santa Cruz, CA-based analyst said he has identified only one flash fab project this year, planned by Spansion LLC, the joint venture between Advanced Micro Devices Inc. (AMD) and Fujitsu Ltd. But with Spansion’s April 13 announcement of its intended IPO, Burns now believes the new fab project might not happen in 2005.
Spansion officials are unable to elaborate on immediate production plans because of the pending IPO, but the flash maker still aims to bring on 300mm capacity in 2007, said Tom Eby, chief marketing officer for Spansion in Sunnyvale, CA. Spansion has historically offered NOR flash products for wireless and embedded code storage applications, but it is preparing a new architecture, called ORNAND, to combine the benefits of NOR and NAND devices.
For the most part, flash chipmakers are attempting to keep pace with growth by adding capacity to existing fabs and introducing device shrinks as well as outsourcing more wafers to third-party foundries. “The growth in NAND flash has surprised everyone — even me,” confessed Jim Handy, who tracks nonvolatile memories at Semico Research Corp. The Silicon Valley-based analyst believes total flash bit shipments will increase at a 124% compound annual growth rate between 2004 and 2009. During that timeframe, flash revenues (for NOR- and NAND-based devices combined) will surpass DRAM sales for the first time.
NOR flash devices, which are mostly used in cell phones and embedded applications for code storage, have been clobbered by excess capacity and falling average selling prices (ASP), while strong megabit demand for NAND flash has offset lower ASPs, Handy said. “With Apple getting into the flash-based MP3 player arena, it is adding a lot of momentum, and other player manufacturers will ride Apple’s coattails,” predicted Handy, referring to the new iPod Shuffle products that use 512MB and 1GB of NAND flash storage to hold up to 250 songs.
The strong emergence of MP3 players underscores the fundamental difference between the flash and DRAM memory sectors, said Sudeep Sharma, VP of the solutions business unit at Renesas Technology America Inc. in San Jose. “DRAM is still primarily driven by the PC market, but flash storage is at the stage where multiple applications are driving growth.” Renesas Technology Corp. in Japan is serving the NAND flash segment with its assist-gate AND (AG-AND) technology and a 300mm fab that makes flash memories and system-on-chip products. The Naka 2 fab (formerly called Trecenti Technologies Inc.) is able to quickly change its flash and SoC product mix because all processing steps are performed one wafer at a time vs. batch processing. Renesas also has licensed its AG-AND flash technology to DRAM-maker Powerchip Semiconductor Corp. in Taiwan, which is acting as a foundry.
Samsung’s Barnetson doesn’t see supply catching up with demand during the next 12 months, partly due to the strong growth in flash-based MP3 players. “When Apple launched the iPod Shuffle, they spent a lot of money on advertising. This caused the aggregate unit forecast [for MP3 players] to double from 25 million to what most think will be 50-60 million in 2005,” Barnetson said. In addition, the new players double the average flash density in a unit. “As a result, the amount of flash going to MP3 is quadrupling this year and the supplies will be very tight.” — J.R.L.