Industry observers are already weighing in on the deal struck
between Hynix Semiconductor and SanDisk Corp., which plan to design and manufacture flash memories and NAND memory systems based on four-bit-per-cell x4 flash technology.
Objective Analysis' Jim Handy issued a point-by-point analysis of the deal, showing what it will mean to various companies in the memory supply chain. Here's his view:
Hynix today has two key disadvantages that increase their NAND cost structure: Low shipments of multi-level cell (MLC) technology and limited 300mm production. This relationship will provide the company valuable MLC know-how, and the dedicated production capacity (which is certain to be 300mm) will help bring the company's costs into competition with those of other NAND suppliers.
Toshiba has been a steadfast partner with SanDisk and its exclusive NAND fab partner until today. We do not see the Hynix relationship threatening the good position Toshiba enjoys, but there is now competition for this important supply relationship that will keep Toshiba on its toes.
STMicroelectronics has been Hynix' NAND partner to date, and is also locked in a patent infringement suit with SanDisk. Meanwhile ST is taking steps to spin off its flash (NAND and NOR) business. So far ST's NAND business has been small, constrained, we believe, by a cost-based transfer price from Hynix. Should this relationship continue, it is possible that Hynix' costs will decline to the point where ST can profitably expand this business, but we will wait to see how this develops.
SanDisk has taken a possibly confusing situation and has turned it around to the company's advantage. Before the purchase Hynix was ST's partner and ST was in a patent battle against SanDisk. Hynix was an important supplier to msystems and msystems promised IP to Hynix. With this move Hynix still gets the IP, SanDisk gets another supply relationship similar to the one that has worked so well with Toshiba, and ST may end up becoming an important customer, which may encourage them to settle on terms more favorable to SanDisk.
Samsung has enjoyed a fantastic position in the NAND market to date partly because the company's phenomenal resources allow it to grow costly 300mm capacity by itself as it needs it. As other companies pool resources to construct similar facilities, they chip away at the Samsung's advantage in this area. One difficulty that thwarted Samsung until recently has been the company's troubles getting its MLC NAND to yield, a problem which was solved without outside help in the second half of last year. Since Samsung is a key supplier to SanDisk, we will be watching to see whether Samsung becomes a licensee of the msystems x4 technology in the near future.
Intel, Micron, IMFT, and Lexar are on the outside of this relationship to their detriment. Lexar prevailed in their lawsuit against Toshiba and SanDisk and established strong ties to Samsung. Intel and Micron with their IM Flash Technologies venture are jointly investing in massive 300mm capacity and will be contenders on an equal footing from a capacity standpoint, but rumors indicate that there are still-unresolved IP issues that could get in the way of either or both of these companies shipping MLC NAND, and neither has announced a license for the x4 technology that promises to bring future costs to the next-lower level.
Independent Card Vendors may profit from the availability of very inexpensive x4 parts made by Hynix on a 300mm line, but this will occur at a later time, well after SanDisk has been able to reap the profits, similar to the way that MLC was adopted by the rest of Toshiba's customers well after SanDisk had converted the bulk of its cards to MLC.