Intel, Micron Set Stage for More Flash Collaboration

The expansion of an alliance between Intel Corp. (Nasdaq: INTC) and Micron Technology Inc. (Nasdaq: MU) to mass produce 34-nanometer NAND Flash memory chips will likely inspire more collaborative ventures between traditional industry competitors. This is good news for the ultimate enterprise purchasers of solid-state disks (SSDs) and other NAND-inclusive devices who are interested in the highest quality of service for a proven product that comes with competitive price points.

The main reasons rivals are likely to work together is "the cost of a new chip fabrication facility is around three to four billion dollars today," says Dave Baglee, co-executive officer for IM Flash Technologies LLC, the current joint venture between Intel and Micron. "It is an enormous capital outlay to put upfront, before you have developed the product. You also have to worry whether the product you produce from the facility gets consumed by the market."

These are not small worries in today's troubled economic times, which have many tech firms and enterprises treading water before making purchases for performance-improving NAND memory chips and SSDs.

By sharing a fabrication facility, as they currently do in Utah, Intel and Micron eliminate the need to build their own separate fabrication facilities. The synergy goes further, because partnership combines Intel's expertise in computer processing and flash memory with Micron's expertise in DRAM and memory manufacturing.

The challenge, of course, is how to maintain a brand and line of products in the market without sharing too much information with a partner that is going to end up as a competitor."In research and development, engineering, manufacturing, and quality assurance, the two companies closely team with each other throughout the entire process," says David Klein, vice president of memory systems development at Micron. "However, once the product is produced, we go our own ways. Intel determines how it is going to package and market its resulting products, and we do the same. We remain competitors in the marketplace."

The collaborative, yet competitive, model (once tagged with the ungainly name "co-opetition") bodes well for enterprises and technology firms, the ultimate recipients of the technology.

"The NAND market is always on a race toward the next lithography," says Troy Winslow, an Intel marketing manager. "As this happens, prices trend downward on a linear path to where there is a 30 percent to 40 percent cost reduction for production on an annual basis. With a lithography reduction occurring every 12 to 15 months, you have the ability to pass on some of these savings to end customers."

Winslow says the other benefit customers receive from new generations of lithography is expanded capacity -- meaning more bang for the buck. "A couple of years ago, you were seeing 64-MByte USB keys in the market," Winslow notes. "Now, NAND capacity is measured in the 8 GByte to 16 GByte range. In the consumer market, an iPod MP3 player's total capacity can be captured in a single chip. In the SSD market, we are also delivering cost effectiveness by improving SSD capacities."

By improving capacities, 34nm NAND could accelerate enterprise adoption of SSDs, which excel in random I/O-per-second environments, which exist 80 percent of the time in most computer operating systems. "Right now, we are seeing high replacement levels for 15,000 RPM drives," Winslow says. "These drives can process random IOPS, but not like SATA drives and SSDs. That having been said, SSDs are not going to replace all hard drives in the future, and we will likely see IT environments where both coexist."The breakthroughs in NAND flash technology that Intel and Micron have been able to achieve in their joint efforts go well beyond shrinking the geometries of NAND. The 34nm Intel-Micron NAND is also a potential game changer for the market.

"This is because Flash technology runs counter to other technologies like computer processors," Winslow says. "As you shrink the geometries and the process lithography for Flash, it actually becomes more difficult to develop. In fact, what is unique about Flash is that you don't immediately get the performance improvements as you do with computer processors. In the lower geometries, Flash becomes more unreliable and slower. Our engineering team was able to stabilize the technology, and this is why we feel the 34nm technology we have been able to achieve with Micron is so impactful."

This isn't Intel's only partnership in the SSD market. Earlier this month, Intel announced a partnership with Hitachi Global Storage Technologies (Hitachi GST) to develop and deliver Serial Attached SCSI (SAS) and Fibre Channel (FC), enterprise-class, solid-state drives (SSDs) for servers, workstations, and storage systems. The move is likely to raise the level of performance, capacity, and power efficiency to new heights for enterprise SSDs.

The Hitachi-Intel SSD venture combines best-of-class core competencies from two organizations, with Hitachi bringing SAS and FC interface technology and a customer base, and Intel furnishing 34nm NAND flash memory engineering and manufacturing.

"This deal is an important indicator of things to come," says Arun Taneja, founder of industry analysis and research firm Taneja Group . "The next five years will see use of Flash SSDs that is barely imaginable today."The Intel-Hitachi partnership allows both companies to share the risks of the fluctuating price points of a highly volatile NAND market that is now characterized by oversupply and depressed prices. In a co-development environment, the two organizations also share the costs and risks that are inherent in new product development.

Products resulting from that partnership will be released for early sampling and testing in December of 2009. It will undergo customer qualifications in early 2010 and will appear in the market in late 2010, they said.