Aizuwakamatsu, Japan -- Unfazed by overcapacity and pricing pressures in the the tumultuous market for NOR flash memory, Spansion Inc. has begun limited production in the industry's first 300-mm NOR fab. During a kickoff event here last week, the world's largest NOR supplier provided a rare glimpse inside the fab.
The $1.2 billion plant, dubbed SP1, has begun making 65-nm NOR devices, with 45-nm products due out in late 2008. NOR is heating up at the 65-nm node as vendors ship a new class of 2- and 4-bit/cell system-level flash technologies.
With its 300-mm 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 Numonyx, that will merge the NOR operations of Intel Corp. and STMicroelectronics Inc. Intel, ST and Samsung respectively ranked second, third and fourth in NOR market share in the first half, according to market watcher 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 20-nm node," said Bertrand Cambou, president and CEO.
Such measures are in order as flash vendors confront a prolonged capacity glut and depressed average selling prices (ASPs) for NOR devices. The proposed Numonyx venture is saddled with a slew of unsettling capacity, including three 200-mm fabs and two 300-mm plants. (One 300-mm fab, ST's former M6 plant in
Catania, Italy, sits empty. The other 300-mm fab is part of a former STMicroelectrnoics NAND flash joint venture in China.)
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 (New York), 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 are expected to fall 15 percent sequentially in the third quarter from their second-quarter levels, Amir said. And according to Web-Feet Research Inc. (Monterey, Calif.), the NOR flash business is projected to hit $7.9 billion in revenues this year, down from $8.6 billion in 2006.
Spansion's Cambou said he's confident 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 in an interview with EE Times after the press event to celebrate the fab's grand opening. "We don't believe this erosion is sustainable."
Going forward, Cambou said, strong drivers are emerging for NOR flash devices, including a new class of 3G cellular phones. (NOR flash memory is mainly used for code storage in cellular phones, PCs and industrial gear.)
One upside for Spansion may be the uncertainly surrounding the integration of Intel's and ST's NOR operations as Numonyx--a process that has yet to be finalized. Last month, Intel received a request for additional information from the Federal Trade Commission (FTC) in connection with the proposed flash-memory venture.
Amid that uncertainty, Cambou said, 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 market research house Objective Analysis (Los Gatos, Calif.), said Spansion is "significantly" ahead of Numonyx in terms of ramping up NOR on 300-mm wafers. But he added, "I think they are on equal footing in process technology."