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SanDisk’s Harari warns of major structural changes ahead for memory market |
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Apr 27, 2007 at 11:06 AM |
 A major shake-up in the NAND flash market is due soon, warned Eli Harari, SanDisk's Chairman and CEO, during a conference call to discuss first quarter financial results.
At the core of his reasoning is the reality that much of the current
production of NAND has historically been on 200mm wafers, which will
rapidly become obsolete due to rapid price declines and aggressive
technology node migrations, forcing a shift to 300mm wafers. That shift
could cause a period of sustained NAND flash shortages as 200mm
production becomes unviable, Harari noted.
"The NAND flash market may soon experience structural changes that could potentially bring about periods of considerable supply shortages over the next two to three years," stated Harari in the conference call. "Specifically, we believe that the drastic price declines for NAND flash in 2006 and 2007 will have the unintended consequence of accelerating the obsolescence of industry-wide 200mm NAND capacity. Currently it is estimated that more than 50 percent of the world's supply of NAND flash is manufactured on 200mm fabs. That capacity will not be viable by the end of 2008, except for low chip densities, which are a relatively small part of the market," said Harari.
The problem, according to Harari, is that several new 300mm ‘mega-fab' fabs will have to be built by memory manufacturers rather rapidly if they want to stay in the business below the 60nm node.
However, Harari also noted that the same issue was being faced in the DRAM business, which will experience the same viability challenges at the 78nm node and below using 200mm fabs for production. This would occur in 2009, only a year after problems arise for NAND, Harari said.
"The combined obsolescence of NAND and DRAM 200mm capacities on such a large scale is unprecedented," noted Harari. "This scenario in fact is the exact opposite of what the NAND industry experienced in the last two years, where ample 200mm DRAM capacity was thrown into the NAND supply equation."
Harari used this prognosis to explain SanDisk's continued investments with Toshiba in massive 300mm ‘megafabs' with capacities of 150,000wspm and above that generate not only the economies of scale required for commodity device production but the high yields required at the bleeding-edge of aggressive node shrinks.
The Sandisk CEO noted that its JV operations at Fab 3 would reach a capacity of 150,000wspm by year-end, ahead of previous targets of 135,000wspm. Interestingly, Harari said that the increase in wafer starts was due to improved manufacturing efficiencies rather than increased capital spending.
Due to better than expected yields at the 56nm node, Harari said that the majority of 300mm wafers would be processed at that node by year-end.
SanDisk also expects Fab 4 to start-up after September this year and be in initial production of a 43nm node in the first-half of 2008. Fab 4 has a capacity of 210,000wspm and is the largest single 300mm fab built to date.
200mm risks
Based on Harari's comments, the two major memory makers most at risk are Samsung and Hynix. Both have a considerable portfolio of 200mm fabs dedicated to NAND and DRAM production. Samsung, however, has more 300mm fabs in production and has been busy converting several 200mm fabs to 300mm to shorten the transition period.
However, only a small proportion of ‘newer' 200mm fabs can accommodate 300mm equipment, without major reconstruction work being carried out.
Hynix has already made conversions of 200mm fabs to 300mm, yet they would seem to be at a disadvantage with many 200mm fabs unable to be converted.
Interestingly, Hynix announced that construction had started on a new megafab that would cost the same as Toshiba's Fab 4. This is Hynix's first new build in many years and its first dedicated 300mm facility. Its potential size coupled to the aggressive production dates may highlight the urgency in transitioning to dedicated 300mm production that now faces Hynix.
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