Memory Consolidation and its Impact on 450MM Fabs

The days of PC domination of memory trends for memory performance, function or usage is truly a business model of the 90’s.  While the PC technology delivered ever-higher productivity based on processor performance and memory capability, that was only remarkable for the period when individual business productivity drove the computing sector of the market.

But as the Internet connected users at a level that enabled the mobile consumer market, market conditions underwent a fundamental change.  The Internet relies on a broad range of servers to provide the communication, data, and information access; the consumer does not obsess on the hardware as long as it is functional, attractive, and delivers the requirements.  The computing functionality of the PC became relegated to secondary status as the target application for the development of new memory technologies broadened to provide equal priority between mobile and server applications. 

The impact is that OEMs and end-market applications now accept a higher degree of product differentiation among the memory suppliers.  Low-power mobile DRAM has already become an important element of the product differentiation that system designers demand for consumer mobile products.   LPDDR2 and LPDDR3 DRAM now use a different dedicated process than DRAMs used for PC and Servers. 

Additionally, volatile and non-volatile memory not only share the system memory space in an ever-growing number of end products, but they also share much of the capex in the remaining memory manufacturing companies.  An extended excess of DRAM supply has a quarter-to-quarter impact on NAND availability since Samsung, Micron, and SK hynix have all demonstrated the manufacturing flexibility to shift fab capacity between DRAM and NAND. 

But this shared manufacturing capability has a major downside—as a result of the general decline in DRAM demand, both Samsung and Toshiba have now announced plans to slow their capacity expansion in hope of also slowing any future excess NAND capacity.

During this attempt to balance the supply and demand, while the industry is impatiently awaiting the PC market’s resumed growth, NAND SSDs continue to thrive.  And in that application, system designers continue to support a degree of product differentiation among memory manufacturers’ SSDs that OEMs have never before been willing to accept. 

Other intelligence and insight into the NAND and DRAM market are available in our recently released quarterly update, OEM System Function Delineates Memory Types.

An interesting aspect of this weakness in the current memory market is the potential impact that it may have on another high-level industry topic—the 450mm fab.  The history of the memory manufacturers is one of constant consolidation from what was over 50 suppliers in 1995 down to the four major memory companies today with complete in-house services of design, fab R/D, production and test, and worldwide sales/marketing presence with branded parts.  Those four companies are of course; Samsung, Micron, SK hynix, and Toshiba. 

In the winnowing down process of the past among memory manufacturers, the race to the next fab level became a life-or-death struggle as any laggards were eventually priced out of the market.  Now we have reached the point that Samsung and Toshiba are contemplating a slowing in memory investments to preemptively correct for any potential oversupply, while Micron is completing its acquisition of Elpida and Hynix is adjusting from its own recent rescue by SK. 

The impact on 450mm fab introduction is that Samsung is one of the three companies (along with TSMC and Intel) widely expected to be early adopters of 450mm fab technology.  While we have no doubt that Samsung will be the first memory supplier to convert to 450mm, we believe that the economics are just not the same game for memory companies.  In the first place memory die—and die in support of the mobile markets in general—are usually much smaller than microprocessors with onboard cache that are designed for data processing applications.  Larger die of course result in a much less efficient usage of the circular wafer surface.  In addition, the trend in the past among memory suppliers was to rush to the next higher wafer size and lower the manufacturing costs in order to gain more market share from the competitors who were slower to make that transition. 

However the market dynamics have changed to reflect Samsung’s current position.  As high as Samsung’s market share in memory products is at the moment, rushing into 450mm in order to squeeze out another competitor at this point may in fact increase Samsung’s risk by creating too much exposure to the cyclical nature of the memory markets. 

In a recent discussion of Intel’s recent investment in ASML, one observer commented that, “ Intel realizes they need 450mm sooner than anyone can give it to them.” 

We therefore believe that the collapse of Elpida and the decisions of two other memory suppliers to delay their own fab expansion plans may allow Samsung to be more flexible in its timetable for 450mm.  If that is the case, a heavier burden in the pioneering of 450mm wafers may have now been shifted to Intel in order to support Intel’s larger die sizes. 

www.convergentsemiconductors.com - Global Analysis of Memory Strategies and Issues

SSDs – Showing the Way for New Memory Technologies

One of the most dynamic applications for memory technologies is that of server configurations. Driven by the massive amount of data being created and transported, servers have become the application known for design innovation and pushing the performance envelope. Enterprise SSDs based on NAND technology have clearly established a high volume niche between the traditional standbys of high performance DRAMs and lower cost per bit of hard disk drives.

However, we have felt that there was yet more to come from this application segment. The cost/performance pressures were increasing in a way that was creating a wider range of possible performance attributes rather than simply driving the cost downward in a relatively commoditized market. We believed that this application would be one of the primary market entry points for the range of new and emerging memory technologies.

A new paper from Chuo University in Tokyo supports describes a simulation of a hybrid SSD that contains 1Gbyte of non-volatile Resistive RAM as a buffer to a traditional 256 GByte of NAND storage capacity. The paper noted that the resulting performance would achieve switching times of 10ns (compared to 100,000ns of existing NAND SSDs), while still retaining the power consumption advantages of nonvolatile memory technologies over DRAMs. The controller algorithms could then store frequently-used data in the resistive RAM cache from which it could be gathered more quickly than from NAND, while the resistive RAM cache was large enough so that the data held there could be retained until the was a sufficient quantity to efficiently write it out to the NAND cells. This configuration eliminated much of the small random write sequences and data fragmentation issues inherent in the normal usage of NAND.

Additionally, due to the reduced number of erase/re-write sequences, the useful life of the NAND devices could be extended to more than seven times greater than in existing SSDs.

The team also concluded that up to 79% energy savings could be achieved due to a combination of the reduced number of erase/re-write cycles and anticipated advances in Thru Silicon Vias to support packaging configurations containing the controller, resistive RAM, and NAND in the same package.

We believe that the question of when the cost per bit of the new memory technologies will compete with DRAM or NAND is no longer a useful measurement. Following the example of system performance improvements based on integrating NAND SSD into Server applications, new memory technologies are not directly replacing older technologies but will enable new performance possibilities. The key question is when does the cost/performance of the new memory technologies trigger the next wave of Server re-designs—and that question should be posed to the OEM system designers. This issue and others are addressed in our upcoming report on Server Applications as the Market Entry Point for new and emerging memory technologies.

www.convergentsemiconductors.com - Global Analysis of Memory Strategies and Issues

Battery Makers Charge into New Markets

The Li-ion battery manufacturers have been such a reliable component of the supply chain that news of change does not often make headlines.  But Convergent Semiconductors has always recognized the battery market as a leading indicator for end product trends and the related memory market.  For example, battery manufacturers quickly discern demand changes for notebook PCs, desktop PCs, or Tablets.  A push-out by an OEM or a reduction in orders during traditionally high demand periods signals economic or market changes.  The sluggishness of the notebook/UltraBook market, because of retarded economic recovery and limited hiring, has caused battery manufacturers to adjust not just current production plans, but also long term manufacturing.

The mobile consumer high volume or high volume/high value markets such as Smartphones, Tablets, and eReaders scored a cumulative 71% growth rate between 2010 and 2011.  The high value automotive battery market for EV/HEV (electric vehicles/hybrid electric vehicles) is another growing market, with healthy ASPs (average selling prices).  These are the markets battery manufacturers are supporting with investments.  The notebook/UltraBook market will continue to be an important high volume consumer of batteries, but is not pushing the technology or stimulating higher ASPs.

Shifts in Demand

Manufacturing investment changes by battery makers indicate that the greatest current demand segment with continuing high growth is mobile consumer, specifically Smartphones, eReaders and Tablets.  The leading Li ion manufacturers are increasing output to support those growing consumer mobile markets.  Convergent Semiconductors sees those markets growing by a cumulative CAGR of 37% over five years.  Growth in the notebook/UltraBook segment is expected to be single digit.

There is optimism in the battery industry over demand for automotive products.  Automotive is finally a serious market to battery manufacturers with the acceptance of Electric Vehicle and growth of the market to millions of units sold.  After investing billions of dollars to provide batteries, demand is finally rising.  Government support for charging stations in larger cities around the world will further stimulate the popularity of EVs.

It is not just the volume issue that is driving battery manufacturers to modify production.  As in the memory segment, it is return on investment and higher ASPs.  Consumer batteries for products including mobile phones, Smartphones, camcorders, digital still cameras, digital audio players, portable game devices, notebooks, UltraBooks, etc. have an average selling price of around $2.50, while the average selling price of an EV (Electric Vehicle) battery was around $42.30 in February of this year.  EV batteries may be high volume, but the ASP is certainly more attractive.

Geographic Areas of Production

It is widely accepted that mobile consumer products demand a lot of batteries.  China has become the major source of low cost Li-ion batteries that serve a broad spectrum of the mobile consumer market.  Korea continues to grow in its influence in the battery market as it expands production for the high volume but higher priced mobile markets including Smartphones and Tablets.  Japan is expected to lead in the production of EV/HEV batteries.

What Does This Mean for Memory?

The semiconductor market tends to look inward for technology trends that impact all segments of hardware design and demand.  Memory depends upon the progression and availability of processors, controller and other semiconductors to support the mobile consumer market—just as those segments depend upon memory.  What Convergent Semiconductors recognizes is that the consumer mobile market is moving without the total semiconductor market participating in this post—PC era.  Subsystem design enables end system designers to easily offer new applications to users without the total redesign of the platform.  High volume commodity DRAM no longer dictates the memory systems.  Now the systems include NAND Flash in higher volume as manufacturing costs decline and higher density products become available.  It is the system ability to offer applications that drives this mobile consumer market.  It is the mobile aspect that drives the battery market.

The mobile consumer market is good for the memory market, just different.  Mobile DRAM, NAND Flash, and SSDs will all see double-digit growth in the coming years.  This will also force the development and adoption of stacked packages of 2.5D or 3D variety.  Hybrid packaging will develop to offer memory subsystems to OEM system designers in order to differentiate, make for a specific locale of application and accomplish this quickly and easily.

 www.convergentsemiconductors.com - Global Analysis of Memory Strategies and Issues 


Key words: Mobile phones, Smartphones, Tablets, eReaders, Electronic dictionaries, Camcorders, Digital still cameras, Digital audio players, Portable game devices, DRAM, Li-ion battery, Prismatic battery, Polymer battery, NAND Flash, hybrid packaging, 2.5D packaging, 3D packaging, TSV