Samsung and Toshiba this week have licensed to one another the rights to produce, market and sell each other’s main NAND flash memory designs, Samsung’s OneNAND and Toshiba’s LBA-NAND. Samsung and Toshiba have long been fighting it out for dominance of the NAND flash market and the deal is very surprising given the rampant competition between the two.
The deal is being ‘positioned’ as a second sourcing agreement, and it might be seen in some quarters as a way to ensure that there are no further shortages in NAND flash manufacture, a situation that was attributed to the huge amounts of NAND that Apple contracted for in the market over the past two years.
However Apple in November 2005 spread its NAND load across five companies, Hynix, Intel, Micron, Samsung Electronics and Toshiba, securing its supply through 2010, with up front prepayments of $1.25 billion. So perhaps bolstering two existing designs, when the shortage was caused across all the major players, is more about trying to create an irresistible power bloc within the NAND wars. Device makers can confidently build with either Samsung or Toshiba chips in mind, knowing they have a second source ‘ perhaps giving the two the edge they need to stay ahead. We would worry that any such collusion by the number 1 and 2 in the market would be seen as an act of anti-trust by rivals,
The Apple deal triggered something of a bidding war for NAND, and a massive transition of companies like Intel, previously only present in NOR flash memory technology. Intel cut a deal with Micron to work together on NAND flash, part of a company wide response to the fact that Samsung had overtaken Intel as the largest manufacturer of semiconductors in the world. Micron then went on and acquire Lexar, one of the leading Flash controller designers.
Today it is all about a race to the most effective, and cheapest next generation of chips, a race that a year ago Intel and Micron, through their joint venture IM Flash Technologies, looked to be winning, getting to 50 Nanometer geometry ahead of Samsung, temporarily stuck on 65 nm at the time and Toshiba at 70 nm, allowing Intel and Micron to take a large slice of the 4Gigabit device market, with a very small footprint chip.
Intel has now merged its NOR operation with that of ST Micro and is looking to perhaps sell off the merged entity, despite collapses in the NOR flash market. NAND memory is better at writing sequential files, such as music or video files, and NOR is better for completely random access memory, and handsets are in a transition between the two.
NAND is also being increasingly used as storage for cameras, video cameras, handsets, PCs and even in VoD servers.
Meanwhile Hynix Semiconductor is planning to start mass-producing flash chips in 48nm in the first quarter, a big step from its 57 nm prior process, once again putting pressure on Samsung and Toshiba. It will make 16 Gigabit chips in 48 nm while Samsung and Toshiba are still using 51 nm and 53 nm processes respectively.
To us it looks like this is a fight in large scale integration that Samsung and Toshiba would rather avoid, instead bringing a 50% chunk of global manufacturing to the table, as having momentum with or without a technological lead. We’re not sure that will be enough and look forward to the Intel riposte.
Under terms of the agreement, Samsung will license product specifications of its integrated OneNAND and Flex-OneNAND ‘fusion’ memory chips to Toshiba, while Toshiba will license product specifications of its single-package LBA-NAND and mobileLBA-NAND flash chips to Samsung. Both companies will develop and market products that are compatible with the respective original-source as of next year.