After the worst downturn ever in flash memories, chip makers are starting to talk about significant revenue growth in the segment during the months ahead, and they are telling nonvolatile storage customers about the risk of allocation at the end of this year. Analysts are also raising their forecasts for flash sales.

This week, for example, puzzled financial analysts quizzed the CEO of Advanced Micro Devices Inc. about his bullish outlook for flash revenue growth in the second quarter after more than a year of shrinking sales and falling average selling prices. W.J. (Jerry) Sanders III said a "substantial increase" in Q2 flash sales would be driven by a "mixed brew" of higher unit shipments and higher ASPs. No specific numbers were issued, but Sanders' prediction is an about-face for AMD's struggling flash business.

But industry memory analysts are also seeing a sudden turnaround the troubled flash market. "Flash had its worst year ever in 2001, and the segment saw a little bit of recovery in Q1, but we are seeing a lot of demand right now," observed analyst Alan Niebel, managing director for Web-Feet Research Inc. in Monterey, Calif.

"I've heard that Toshiba and SanDisk are telling customers to place orders or they are not going to get anything memories. This is mainly for NAND-based memory, but I have also heard that in NOR memories--from Sharp, Intel, AMD and others--that demand is heating up, and it is possible that by the end of the year the high-density parts will be in allocation as well.

"And this portends--unfortunately--to another boom/bust cycle, but we are now having a little bit of a boom," said Niebel, who is forecasting a 14.8% increase in flash revenues to $9.3 billion in 2002 from $8.1 billion in 2001. Flash sales dropped 28% last year from $11.3 billion, he said.

AMD's memory business--primarily flash devices--continued to be weak in the first quarter of 2002, totaling $160 million in the period--down 18.4% decline from $196 million in Q4 of 2002. The drop was a key contributor to AMD's net loss of $9.2 million on sales of $902.1 million in the first quarter (see April 17 story).

Flash unit shipments at AMD were up 12% sequentially in the first quarter, but revenues fell more than 18%. "Pricing was grim," lamented Sanders, during a conference call with analysts on Wednesday.

"We like to make money, and memory has been a money maker for AMD for almost always except recently," said Sanders, who would not release information on the flash losses in Q1, but he said it was easy to surmise that memory wasn't contributing to profitability. "We expect that will change soon," he said.

Attacking Intel in wireless arena

Now, AMD is banking on taking market share in wireless handsets from its long-time rival in flash and microprocessors--Intel Corp. A key weapon in its fight with Intel will be the launch of the MirrorBit flash technology, which will pack multiple bits in a single cell for higher densities at lower cost and smaller die size. The multi-level bit technology was disclosed a year ago (see May 16, 2001, story), and now AMD is preparing to move it into production for revenue in the second half of 2002.

AMD's MirrorBit technology will go up against Intel's two-bit-per cell Strataflash devices, which were introduced in 1997. Other flash suppliers, such as Micron Technology Inc. and STMicroelectronics, are also pursuing multi-level flash cell products.

The MirrorBit series will come in the second half of 2002 with chip densities of 64 and 128 megabits, said Sanders. "We think we have a competitive lineup with Intel, which is the only real competitor," added the CEO and chairman, referring to the wireless NOR-based flash applications. "Going forward, we should have a lower cost-per-bit than Intel. At one time, Intel had virtually 100% of Nokia's cell-phone business, and now we've got some," Sanders told analysts while fielding questions about market share.

But one analyst asked: "What about STMicroelectronics, which gained market share against AMD last year? Sanders dismissed the Franco-Italian chip maker, insisting that STMicroelectronics did not have have a "follow-on product to compete with Strataflash or MirroBit. Without that, they are last year's news," he quipped in the conference call.

STMicro's answer

Ah, but STMicroelectronics does have multi-level bit flash technology, and it is planning to begin volume production of a new 32-Mbit chip in the second quarter of 2002. When the chip was announced in February, ST said it has developed a multibit-cell compatible technology for flash devices up to 256 Mbits. In quantities of 10,000, the new 32-Mbit M58LW032A flash chip will sell for $8 each, the company said.

Intel is also beefing up its flash memory lineup for wireless devices. This week, for example, the company rolled out its 0.13-micron version of a low-voltage "Wireless Flash" series that operates on 1.8 volts. The series offers 32-, 64-, and 128-Mbit densities, said the company at the Intel Developer Forum in Japan.

The new Intel flash series is up to four times faster than existing products on the market, said company officials (see April 17 story).

Intel remains the biggest flash supplier in the world and it increased its market share in the downturn, according to Web-Feet analyst Niebel. He said Intel's flash revenues grew to 25.6% of the world's sales in 2001 compared to 23.6% in 2000. AMD was up slightly to 13.8% in 2001 from 13.5% in 2000 (see table below).

Flash memory scorecard

Supplier	2001 share	2000 share
1. Intel	25.6%	23.6%
2. AMD	13.8%	13.5%
3. Sharp	10.1%	7.8%
4. Fujitsu	9.1%	10.3%
5. Toshiba	8.8%	7.9%
6. STMicro	8.4%	5.7%
Market sales	$11.3 billion	$8.1 billion
Web-Feet Research