Flash Seeks Four-Bit Harmony

Combine higher storage capacity with lower prices, and it becomes viable to put flash memory into all sorts of new places.

Digital camcorders, for instance, could use flash memory rather than tape to store video footage, and personal computers could be equipped with flash chips instead of today's mechanical hard drives.

There is even speculation that record labels might one day distribute albums on flash chips rather than on CDs, and that textbook publishers could stop printing on paper.

All this is prompting some bullish predictions. M-Systems CEO Dov Moran has declared that the company's x4 technology will make up the majority of the flash market by 2010.

M-Systems' plan of conquest involves licensing the technology to other flash makers in exchange for manufacturing capacity at their chip-fabrication facilities -- an arrangement designed to grow the company's revenue and the market share of its proprietary x4 technology.

Saifun, which went public last year, focuses exclusively on licensing its technology, a variant of flash memory that it calls NROM. The company has seven licensees, including Infineon(IFX Quote), Spansion(SPSN Quote) and Sony(SNE Quote).

The modest $79 million in revenue that Saifun generated in 2005 represented a 156% increase from the year before.

If Saifun's so-called quad NROM technology takes off, the company's revenue and its roster of licensees might see a good deal more upside.

But Saifun's spotty track record with its current generation of 2-bit technology suggests that the road to 4-bit flash could be bumpy.

German chipmaker Quimonda (the recently spun off memory division of Infineon), for example, has been working with Saifun's 2-bit flash technology since 2003. This effort yielded a paltry $167 million in flash sales last year for Infineon, roughly 1.4% of the market, according to industry research firm Gartner.