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Infineon Joins Flash Memory Melee

Hedging its bets in the semiconductor sector, Infineon Technologies on Wednesday launched its first sever NAND compatible flash memory chip.

Best known for its DRAM products, the Munich-based chipmaker said its introductory 512Mbit flash chip gives it some benefits such as a short-term spike in sales. NAND flash memory is used in consumer devices like digital cameras, cell phones, USB flash drives and MP3 players. NAND flash chips are able to transfer data with high speed, which allows recording and the replay of sound and video in real time. PCs use a variation called NOR flash especially in the BIOS layer.

"Infineon has expanded its memory product portfolio significantly by including flash and can now allocate its memory production capacities flexibly between DRAM and flash," explained Dr. Harald Eggers, CEO of Infineon's Memory Products Business Group.

The new 512Mbit flash chip is based on TwinFlash technology and was developed by Infineon Technologies Flash GmbH & Co. KG, a joint venture between Infineon and Saifun Semiconductors. Initial production has started in Infineon's 200mm DRAM Dresden facility. The company aims to be among the top 3 players in the NAND market by 2007.

But the goal may be lofty and full of pitfalls, according to In-Stat/MDR director and principal analyst Steve Cullen.

"Infineon's choice to produce NAND flash puts them up against some hefty competition like Samsung and Toshiba and in the overall flash memory sector, they now have to compete with Intel and the AMD-Fujitsu partnership," Cullen told internetnews.com. "Those two companies make NOR flash, which is the more stable market."

In the short-term Infineon's strategy is foolproof. The worldwide market for NAND flash memory is expected to grow by 30.8 per cent from $3.36 billion in 2003 to $4.4 billion in 2004, according Gartner Dataquest. The Semiconductor Industry Association (SIA), recently reported sales of Flash memory are up 11.2 percent over previous years for the month of November.

But Cullen warns that the flash memory market may take the same path of the DRAM market -- a sector with a reputation of unpredictability.

"Eventually it will be as volatile as DRAM. Not in the next year or so but maybe in three to five years," Cullen said. "The reason is that flash memory is price elastic, which means if the price goes down, vendors will use more of it in their devices."

Cullen said Infineon may be willing to take the plunge because they've been successful in the DRAM market.

"If they didn't like the DRAM market they could get out of it and stay with flash," he said.

The 512Mbit flash chip comes in a TSOP (thin small outline package) and is targeting the removable solid state storage market with products like SD-, MMC-, Compact-Flash-Cards or memory sticks mainly used for digital still cameras and PDAs.

The company said TwinFlash is perfect for its NAND offerings as it stores two (Twin) locally separated bits in one transistor cell. Compared to competing single-bit-per-cell floating gate technologies with equivalent process structures TwinFlash offers 40 percent smaller die sizes due to its two-bit-per-cell approach and less mask levels resulting in a competitive production cost position.

By end of 2004 more than 10,000 wafer starts per month on 170nm technology are planned. The next TwinFlash technology node with feature sizes of only 110nm is being developed to further improve cost position and to enable larger densities of up to 2Gbit.