Alexei Oreskovic
Flash memory prices may not pick up anytime soon.
But SanDisk(SNDK Quote - Cramer on SNDK - Stock Picks) is stepping up its efforts to drive down costs. The chipmaker announced a couple of important engineering feats Wednesday, including plans to ship flash chips that increase the amount of data stored in each memory cell. SanDisk said it will ship its so-called x3 memory in March or April, after two years developing the technology in-house. Unlike existing NAND flash chips, which store 1 or 2 bits of data per memory cell, x3 stores 3 bits of data per cell. That extra capacity drives down SanDisk's manufacturing costs, since it allows the company to produce more chips with a given amount of storage from each silicon wafer. Joseph Unsworth, a flash memory analyst at industry research firm Gartner, says that x3 memory has the potential to lower costs by 20% to 25%. But he says he's skeptical that SanDisk would see those savings right away since the company isn't manufacturing the chips with its most advanced manufacturing process. "This a good start, they're the first to market with 3-bit," says Unsworth. "But we won't see any meaningful impact until they're able to mesh x3 with the leading-edge process geometries," he says. SanDisk said the width of the circuits in its x3 chips will measure 56-nanometers. That's one-generation behind its standard 2-bit chips, which SanDisk said in a separate announcement Wednesday will soon be produced with circuits measuring 43-nanometers. Shrinking the size of a chip's circuits, of course, is the typical way of reducing production costs in the chip industry. In other words, whatever gains SanDisk made by developing x3 will be offset by the cost-savings it is simultaneously achieving in 2-bit chips. The real cost savings will come when 2-bit flash and 3-bit flash are both being produced with the same size circuits. Gregory Wong, an analyst at Web-Feet Research, predicts it will be another two or three years before that happens. The current iteration of the product is more as a learning vehicle for SanDisk, says Wong. SanDisk shares were off 2.7%, or 72 cents, at $26.36 in recent trading Wednesday. It's been a rough year for flash makers, which have seen their financial results and stock prices crushed by the freefalling prices of NAND flash. Given the volatile nature of the NAND flash market, memory makers are all hunting for cost-cutting tricks, like moving to 3-bit- and even 4-bit-per-cell memory. Samsung, the world's No.1 maker of flash memory, is reportedly developing its own 3-bit flash technology. And analysts believe Intel(INTC Quote - Cramer on INTC - Stock Picks) and Micron(MU Quote - Cramer on MU - Stock Picks), which have a NAND flash joint venture, are also likely toiling away to produce 3-bit chips. On Thursday, Micron is scheduled to hold its financial and technology briefing with analysts. Meanwhile, Intel and ST Microelectronics(STM Quote - Cramer on STM - Stock Picks), which have a separate planned flash joint venture, announced Wednesday that they have begun shipping samples of phase change memory chips, a different flavor of memory which combines the best attributes of flash memory and DRAM. SanDisk characterized x3 as a "major commercial breakthrough" for flash memory. And the company touted the fact that the performance of x3 is on par with that of its 2-bit flash chips. The company said it intends to use x3 across many of its product lines, particularly for products that require high storage capacity, although it did not specify which products. The most significant new flash application on the horizon are solid-state drives, which flash makers hope will replace the magnetic hard drives found in PCs today.
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