Memory Takes from SEMICON West

Bob Johnson, the Gartner Inc. semiconductor manufacturing analyst, seems to enjoy putting a sharp bite on his prognostications. At SEMICON West on the opening Monday, Johnson set the stage for what turned out to be a common thread at the show, strung around the question: how will the memory chip market fare over the next few years?

After telling a SEMI/Gartner market symposium that, overall, things are looking a “little bit better, with some fairly nice, steady growth in the second half of this year,” Johnson said the good times will be short-lived for the memory sector. After “barely returning to profitability” in 2010 and then making some money the following two years, the memory manufacturers will create another oversupply situation by late 2012 and pull back on investments again in 2013.

“I don’t think the memory companies are going to learn their lesson until the next cycle,” Johnson said, conjuring up the vision of the memory companies as a room full of bad boys sitting in the principal’s office.

Later that evening, at an outdoor party hosted by the public relations firm MCA, VLSI Research Inc president Risto Puhakka took a different view, saying that he believes consolidation is underway in the memory sector. Not only has the German government allowed Qimonda to go kaput, but Taiwan’s government is unlikely to bail out the weaker Taiwan-based DRAM makers, Puhakka said.

Tom Caulfield, executive vice president of sales and marketing at Novellus Systems Inc., also said he doesn’t see a Taiwan memory bailout developing. Asked about Taiwan Memory Corp. (TMC), the entity set up to rationalize Taiwan’s DRAM industry, Caulfield said, “TMC has everything but money.” Even the $1.7B which Japan’s government is providing to Elpida to tide it over didn’t impress Caulfield, who said Elpida needs “north of $10B” to remain competitive.

“We are looking at better days from the memory sector,” Caulfield said, pointing to a 27% improvement in memory prices over the first half of this year. Investments in new technology are necessary if memory companies want to stay in the game. The DRAM makers need to invest in 5X and 4X technology in order to mass produce the 2-Gbit DRAMs, he said, and NAND flash companies are transitioning to 3X nodes.

Caulfield’s bottom line: “Governments are not throwing money at memory companies.” Since they need to spend on both technology and upgraded capacity, only the strongest vendors will survive.

During another interview, at the SVTC booth at SEMICON West, CEO Joe Bronson said SVTC lost a fairly significant chunk of revenue when Taiwan’s ProMOS Technologies cut off its R&D project with SVTC. ProMOS is essentially bankrupt, Bronson said, though press reports from Taiwan indicate the company is trying to hold on by focusing on specialty memories. “We are now in the process of rebuilding that lost revenue” from ProMOS, Bronson said.

A week after the SEMI show in San Francisco, GlobalFoundries held its Fab 2 groundbreaking ceremony in Malta, N.Y. Again, the memory topic surfaced when Anand Lai Shimpi, the editor-in-chief of AnandTech, addressed a question about solid-state disk drives (SSDs).

Anand, now 27, founded his Web site at age 14. He and his staff tests and reports on PC and game-related hardware and software, and he fielded a question about the prospects for SSDs with a 15-minute exposition on SSD metrics. (He authored the detailed SSD Anthology recently.)

Anand said SSDs have had a checkered history thus far, with poor firmware restricting the performance gains of the early offerings from one SSD vendor (Samsung). The Intel SSDs, Anand said, offer boot-up and data throughput advantages that will make them a compelling buy. His own computer includes a SSD for mobile use and connects to RAID storage while in the office. Asked about bit reliability on the flash-based SSDs, Anand acknowledged that flash is subject to wearout mechanisms that need to be guarded against, but said his tests have not revealed any data loss problems with SSDs thus far.

Which takes us back to Gartner, where memory analyst Joseph Unsworth reports that Gartner has done “some rudimentary testing” on the new Intel 160 GB SSD, which is based on 34 nm NAND. The Gartner analyst focused on a performance comparison of the 34 nm flash-based SSD, and the earlier SSD based on 50 nm flash. The two SSDs were roughly comparable in speed.

“From power off, the 34 nm SSD achieved a boot-to-Windows login time of 24 seconds on average, and from Windows login to full application loading completion, it was another 23 seconds. While the performance and price points are encouraging, pricing still has to fall to at least sub-$200 end-user price points for capacities over 120 GB to stimulate mass adoption,” Unsworth wrote in Gartner’s most-recent Semiconductor DQ Monday Report.

Getting to those price points and densities for SSDs will require new equipment for 3X flash production, and for the 4X technology 2-Gbit DDR3 DRAMs that are at the leading edge now. With capital in short supply and governments hesitant to bail out trailing memory companies, perhaps a consolidation trend is underway for the memory vendors - reversing the bad boys trend of the last decade.