September 27, 2004
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Jack Horgan - Contributing Editor

by Jack Horgan - Contributing Editor
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A key player in OUM is Ovonyx, Inc. This company was formed in 1999 with a charter to commercialize the proprietary phase-change semiconductor memory technology developed by and exclusively licensed from Energy Conversion Devices, Inc. who has a significant (~40%) equity position in the firm. Ovonyx is focusing its efforts on the development and optimization of manufacturing processes and OUM device structures that are compatible with existing commercial memory products. Tyler Lowrey, company CEO/President, was formerly vice president and CTO and vice president COO of Micron. The company has strategic partnerships with Intel, BAE Systems and STMicroelectronics. ST has licensed the
technology and the two companies have set up a joint-development team near Milan, Italy. In 1999 Intel invested in Ovonyx and also entered into a non-exclusive royalty-bearing license agreement and is jointly developing with Ovonyx the OUM technology at one of Intel's wafer fabrication facilities.

MRAM (Magnetoresistive Random Access Memory) technology combines a magnetoresistive device with standard silicon-based microelectronics. The basis for MRAM is "magnetic-tunnel junction" or MJT, a method of switching memory cells on and off quickly originally developed by IBM in the 1970s. The junction is an insulating layer only a few nanometers thick sandwiched between two ferromagnetic electrodes. Tunneling of electrons occurs when the magnetized directions in both layers are parallel and resistance is low. There is no tunneling when the directions are opposite and resistance is high. In practice one electrode is a fixed ferromagnetic layer that creates a strong pinning field
to hold the magnetic polarization of the layer in one specific direction. The other ferromagnetic layer is free to rotate and hold polarization in one of two directions. MRAM is characterized by non-volatility, low voltage operation, unlimited read/write endurance and high-speed read and write operation. MRAM can potentially have the speed of SRAM, the storage capacity of DRAM, and the nonvolatility of flash memory. This means MRAM could potentially replace all of these memory architectures becoming a universal memory solution.

NVE Corporation develops and sells devices using "spintronics," a nanotechnology they helped pioneer, which utilizes electron spin rather than electron charge to acquire, store and transmit information. NVE was founded in 1989 primarily as a government contract research company. The firm is a licensor of spintronic MRAM to Freescale (the semiconductor products sector of Motorola, Inc), Honeywell and Cypress Semiconductor. The firm also manufactures spintronic sensors and couplers which are sold through a worldwide network of manufacturers' representatives and distributors. Revenues for the last two fiscal years ending March 31 were $12 million in F2004 and $9.5 million in F2003. The firm
had profits of $2.1 million and $647 thousand respectively. For the quarter ending June 30th the firm has profit of $484 thousand on revenue of $2.9 million.

PMCm (Programmable Metallization Cell memory) utilizes solid state electrochemistry to attain large non-volatile resistance changes in a simple, highly scalable structure. PMCm uses a thin amorphous film with 2 metal contacts. It makes use of a little-known feature of some amorphous materials that they can incorporate relatively large amounts of metal and behave as solid electrolytes. Under appropriate bias conditions, the metal ions in the electrolyte can be reduced to form a conducting pathway through the material but the process can easily be reversed to recreate the insulating amorphous layer.

Axon Technologies Corporation is a technology creation and licensing company. It was founded in 1996 to develop and commercialize its revolutionary and proprietary PMCm technology. On September 22 Infineon became the second company after Micron to license the advanced memory and switching technology from Axon.

Memory Market

DRAM Marketing in $ and Megabits

The chart above shows the exponential growth in the consumption of DRAM memory measured in Magabits. It also shows the erratic revenue generated by this market. The underlying reason is the significant swings in memory pricing. There are even daily newsletters on the spot prices of memory, i.e. the sales price of fixed volumes for delivery in a single shipment at a specified time in the near future. I discussed the situation with Lane Mason, Memory Market Analyst with Denali. His firm publishes the Denali Memory Report (DMR), a monthly publication that contains trends, analysis, and news for the semiconductor memory industry. They also sponsor the MemCom conference series. He
explained that the normal laws of supply and demand have not been allowed to work. Several major players in the memory business have lost billions of dollars. Normally, this would force consolidation and contraction in an industry. The survivors would be able to command reasonable prices for their products. Since this has not happened, there is an artificial oversupply of product. Firms are forced to lower price to get or retain business. This plays against the shifts on the demand side.

The memory market is a very difficult one as described by Micron in the following excerpt from its 10K filing.

"The semiconductor memory industry is characterized by volatile market conditions, declining average selling prices, rapid technological change, frequent product introductions and enhancements, difficult product transitions and relatively short product life cycles. Technology transitions, resulting from changing market demand, can make it very difficult to optimize product mix. In addition, diversification of the DRAM market continues, with diverse memory needs being driven by the different requirements of desktop and notebook PCs, servers, workstations, handheld devices, and communications, industrial and other applications that demand specific memory solutions."

US$M 2003 2004 2005 2006
Sales 32,506 46,934 49,098 47,552
Growth 20.2% 44.4% 4.6% -3.1%
% Semi 19.5% 22.0% 21.2% 20.7%
% IC 23.2% 26.1% 25.3% 24.8%
Memory Market Performance

Source WSTS

According to the June 4th press release from the World Semiconductor Trade Statistics the memory market is a fairly stable percentage of the overall semiconductor and IC markets. However, the WSTS forecasts significant drop-off in growth in 2005 and 2006.

2005 Revenue by Memory Type

During 2003 DRAM accounted for 51% of the revenue and 81% of the Megabytes, while Flash accounted for 36% of the revenue and 18% of the Megabytes. SRAM, a distant third, had 8% of the revenue and less than 1% of the Megabytes.

Major Vendors (abbreviated list)

The table below shows the rankings of the top four players in the overall semiconductor market and three memory submarkets.

Rank Semi DRAM SRAM Flash
1 Intel Samsung Samsung Samsung
2 Samsung Micron Cypress Spansion
3 Renesas Infineon NEC Intel
4 Toshiba Hynix Renesas Toshiba
% Total 30% 78% 53% 65%
Market Share Rankings

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-- Jack Horgan, Contributing Editor.


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