Intel (INTC) - Get Report flexed its flash memory muscle during its meeting with analysts Thursday, reinforcing a symbolic victory in the wake of rival Advanced Micro Devices' (AMD) - Get Report decision last month to spin out its own flash memory unit.
The flash sector where Intel and AMD have done battle is a typical commodity market subject to wild price swings that are contingent on supply-and-demand dynamics. AMD had improved its technology and strengthened its flash capabilities two years ago, but Intel mounted a
strong comeback in the flash market last year.
Intel's re-emergence in flash resulted in unexpected losses in the sector for AMD during its fourth and first quarters and a subsequent
decision by AMD to sell its flash memory unit via an initial public offering.
That choice marked a major shift for AMD, which had increased its commitment to flash only two years ago by incorporating its own operations along with
into a single company. AMD held the No. 1 ranking from Intel for NOR flash at the start of last year.
AMD executives have said its weak flash results were caused by brutal pricing conditions and severe oversupply. Intel, a holding in Richard Suttmeier's
, now commands the top spot and executives said Thursday that their recent success is not as simple as merely reducing prices.
"We believed we could recover market position, and that we have clearly done," said Sean Maloney, executive vice president of Intel's mobility group, which oversees flash sales. "This was not a consequence of mad price-cutting. This is a technology game. We've clearly re-engaged with customers and refreshed our technology."
Still, flash sales represent a loss producer for Intel, which means it isn't exactly trying to push through price increases, although CFO Andy Bryant said Thursday that margins were improving for flash. Memory only makes up about 10% of Intel's overall sales, while flash consisted of 40% of AMD's first-quarter sales.
Flash memory chips, which retain data when power is off, are used in handheld electronic devices such as cell phones, digital cameras and digital music players. The two types of flash -- dubbed "NOR" and "NAND" after the mathematical actions they perform -- do the same thing in different ways. AMD and Intel are the two largest makers of NOR.
Maloney said moving flash memory chips into smaller and more efficient designs is a more important sign of success than price gouging. "This stuff isn't easy to do. What is critical, whether talking about NOR or NAND, is the ability to get the product working on the leading edge."
NAND is less expensive than NOR, and writes data more quickly, so it's popular in devices such as digital cameras and music players. The NOR variety is more expensive, but it can read data more quickly and therefore is often used in cell phones and to boot up personal computers. The capabilities of the two flash types are increasingly overlapping, though, creating new markets for each.
Maloney noted the increasing encroachment into the cell-phone market by NAND makers, such as
. "NAND has grown substantially over the last few years," he said, "but NOR remains the memory technology of choice, particularly when running operating systems on phones."
Now that AMD is seemingly out of the way, Intel appears to be focused on protecting its NOR turf in cell phones. Intel does not make NAND, so any ceded ground in the sector to that flash type will result in lost market share.
Intel may soon have to prove its readiness to take on another contender.