Denali Memory Report--March 2003

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Denali Memory Report--March 2003

  1. 1. March 2003—Volume 2, Issue 3 Market Analysis and Trends in the Semiconductor Memory Industry Denali Memory Report The Denali Memory Report is produced and distributed by Denali Software, Inc. It is delivered free of charge to registrants on Denali’s web site, www.eMemory.com. This web site also contains back issues of DMR and other presentation materials from Denali MemCon Conferences, which were launched last year in Boston, Tokyo and San Jose. In the DMR, readers will find memory market news, discussions of market trends, products and product strategies of memory vendors, alliances and industry technical consortia, and corporate financial performance. In each issue, we have included an interview with an important industry spokesperson, commenting on his company’s status or corporate strategy, the outlook for the industry, or technical trends within his company’s markets. Denali Software, Inc. is the world’s leading provider of EDA tools and Semiconductor Intellectual Property (SIP) solutions for chip interface design, integration, and verification. PureSpec is the most robust interface verification solution for bus protocol interfaces. Denali’s Databahn product provides designers with the highest quality solution for producing memory controller cores for all of the new and emerging DRAM memory technologies. Denali’s MMAV product is the de facto industry standard for modeling and simulating memory during all phases of design and verification. Memory selection, memory controller configuration, and memory system performance analysis are supported through Denali’s online infrastructure at eMemory.com. More than 400 companies worldwide use Denali’s tools, technology, and services to design and verify complex chip interfaces for communication, consumer, and computer products. For more information, please visit Denali at www.denali.com or contact Denali directly at: 650/461-7200, or email: info@denali.com. In This Issue: MEMORY INDUSTRY UPDATE 2 Memory Industry Outlook 2 PC Market—The Gaping Hole in Semiconductor Demand 2 Networking—Even the Pessimists Were Optimists 2 Micron Reports Fiscal 2Q03 4 The Mummy’s Curse: Dominion Semiconductor’s Latest Victim 5 News and New Products 5 Flash Market News Abounds 6 ONO! Infineon Also Joins Flash Hunt—New Flash Memory Architecture Promises to Stir Up the Industry 7 Network Search Engines—A View of the Market and its Opportunity INTERVIEW 10 DMR Interviews Cypress’ Antonio (Tony) R. Alvarez Register now for MemCon Boston! www.memcon.com May 13, 2003—Westford Regency, Westford, MA Denali Software, Inc. info@denali.com • www.denali.com • www.eMemory.com Analyst: Lane Mason • Managing Editor: Jonah McLeod • Production Designer: Alissa Wyffels Publisher: Kevin Silver ©2003 Denali Software, Inc. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, transmitted, or used for any commercial purpose, without the prior written permission of Denali Software. This publication is based on information that Denali Software believes is generally reliable. However, Denali Software cannot guarantee the completeness or accuracy of this publication or the information on which it is based. *All third-party trademarks are the property of their respective owners.
  2. 2. Denali Memory Report • March 2003 MEMORY INDUSTRY UPDATE Networking—Even the Pessimists Denali Memory Report Were Optimists Memory Industry Outlook The recent write-off of about $35B in hard assets by WorldCom clearly shows that we We are sorry to say that the turnover are not at the bottom of telecom’s bursting of 2002 into 2003 has brought no bubble, but have more to fall before any prosperity to the memory market. New thought of a rebound and recovery can Year, New Hope? …Hardly! Indeed, the reasonably be entertained (“From WorldCom, lethargy in late 2002’s market has been an Amazing View of a Bloated Industry”, continued uninterrupted for computers see NY Times, 16 March 2003). The value and networking; those markets which of the network, which they had carried on were strong in 2002, as flash has been, their books for $44.8B, was now deemed now face renewed price competition even to have a value of only $10B. The fortunes with rapidly expanding markets. There of both networking system houses (Juniper, are not enough bright spots, however, and, Cisco, JDS Uniphase, etc.) and their silicon at least for the first half of 2003, it will be providers (Cypress, IDT, Micron, Broadcom, tough sledding for virtually all memories, et al.), being inextricably tied to the growth specialty memories included. and build-out of the networking world, must similarly be revisited, and likely reduced. PC Market—The Gaping Hole in We can thank Mary Meeker, Henry Boldgett, Semiconductor Demand Jack Grubman and a host of cheerleaders, PCs, depending on how broadly one self-interested promoters, ignorance and greed defines the term, to include laptops (only two of the seven deadly sins) for this and servers, are estimated to comprise transfer of perhaps $5Tr from someone’s bank between 20 percent and 25 percent of account to someone else’s from 1997-present. total semiconductor consumption. At How much lasting value from the internet the birth of the PC era, in about 1980, it bubble remains can be judged, in part, by this was essentially zero percent. It has been recent write-off from WorldCom. the single greatest driver of consumption. PCs today deliver perhaps a thousand- fold better price performance value only a Micron Reports Fiscal 2Q03 little worse than a decade ago. But the PC On 20 March, Micron Technology reported market is stalled, and the semiconductor its Fiscal 2Q03 financial results. Over the industry will have a hard time replacing past several months, Micron had made many its dynamic growth—in volume and adjustments to its business, had a layoff of 10 diversity—any time soon. PC sales have percent of its workforce (the first since the been about 135M-140M units annually 1985 downturn), departed from the SRAMs for three years, and even for 2003, no one and CAMs businesses (The CAMs business expects much unit growth. At the same was only purchased in 2002 from Music time, every chip that goes into a PC costs Semiconductor), and a rededication to being far less than it did last year, and far, far less the ‘low cost producer’ they once were by Steve than five years ago. The semiconductor Appleton at a recent Confab in Sun Valley. market, driven by its present mix of computer, consumer, telecom (telegone?), Micron reported a loss of $619M on sales and other markets, cannot grow without of $785M in the Dec-Jan-Feb quarter, with more stable component prices and a the pro forma loss of $386M, 22 percent resumption of PC unit growth. It is just greater than the $316M they had reported too large a revenue hole to try to fill with the preceding quarter. 2Q03 revenues rose smaller, nascent markets which drive only $100M from 1Q03’s $685M. Some of these a few thousand wafer starts, not the dozens one-time restructuring charges were included of total wafer fabs, as PCs do. in their 2Q03 report, including a $197M ©Denali Software, Inc. Page 2
  3. 3. Denali Memory Report • March 2003 inventory and WIP write-down and $116M March 2003, underscores the DRAM Denali Memory Report in restructuring charges, including a charge vendors’ problems of oversupply: for their layoff, and for shutting down the 200mm line at Dominion Semiconductor, Nanya DRAM Output to Grow by 21 purchased from Toshiba a year ago. Percent in March [vs. February] Yield reaches 80 percent in transition It is no wonder. The prices of most to 0.14um process; DDR400 to reach 8 species of high-performance DRAMs have percent of output in April; wafer starts rise declined steadily from November 2002, to 68,000 in March, and 70,000 in 2Q03. and even as Micron shifted its mix from SDR to DDR, they were not able to hold Admittedly, February was a short month, their mix ASP high enough. In matter of but the move from 0.17um to 0.14um fact, as SDR prices rose, Micron actually will give up to 45 percent more die/wafer, benefited from being a laggard in the move when yields come up—and it sounds like to DDR (DDR was 40 percent of output they are good, already. An extra 7 percent in 1Q03, and rose to only 60 percent in wafer starts/month since year-end 2002 2Q03 just completed). Had they been adds more output, and an 8 percent yield further along towards DDR, their loss to DDR400 is more than the market would have been much worse. needs today, and will eventually push price premiums down. For the DRAM DDR 256M DRAM prices are down by industry today, this is both the downside of more than 50 percent from their November productivity and the only way out. 2002 high-water mark. Since that time, on the other hand, SDR prices have risen Again, RDRAM is a winner for those ‘who by more than 100 percent—just in time preferred to fight in the market and not in to meet a rollback of SDR production the courts’. Though the RDRAM market at almost all producers. Performance is dwindling in size, and is now about 5 premiums for DDR333 and DDR400 percent of total MB shipped, there is more are fast being reduced or disappearing as profit there than in ALL of the commodity vendors’ yields are steadily improving. DRAM markets combined—SDR and DDR, all densities, all speeds. … And Now This There is a renewed interest in 512M This composite headline, collaged from DDR and SDR DRAMs, and their DigiTimes during just two days, 17-18 associated DIMMs for servers, and more Table 1. DRAM Prices, February and March 2003 (Dollars per unit) Week of: 17 March 10 March 3 March 24 February 17 February 128M SDRAM 2.68 2.61 2.40 2.28 2.21 256M SDRAM 3.56 3.65 3.48 3.27 3.37 128M DDR 1.77 1.73 1.68 1.72 1.88 256M DDR266 3.38 3.06 2.94 3.01 3.44 256M DDR333 3.34 3.16 3.11 3.42 4.18 256M DDR400 4.30 4.48 4.22 4.75 5.39 128MB Rambus RIMM 37.03 37.00 36.62 35.32 33.37 (equivalent 128M chip) 4.63 256MB Rambus RIMM 71.87 71.92 71.48 69.42 64.87 (equivalent 256M chip) 8.98 Source: DigiTimes, DRAM eXchange and Denali ©Denali Software, Inc. Page 3
  4. 4. Denali Memory Report • March 2003 interest in graphics DRAMs, both as they still had, ingratiate themselves with the Denali Memory Report places of somewhat elevated prices, and Virginia community they had devastated a few more protected than the commodity years earlier, plus expand their DRAM capacity PC DRAMs. DDRII is also showing and relationship with Toshiba. All this when some early life, but volumes compared to the DRAM market was minting money, with DDR266/333/400 are still miniscule. >50 percent gross margins and better. The coming 2Q03 really does not look Toshiba, for its part, did not want an East any better, on the demand side (still tepid Coast fab in the US, but did want the IBM JV growth) or on the supply side (still in excess). for IBM’s trench DRAM technology. They We would like to be pleasantly surprised, went along with the deal, but only reluctantly. but, two years into the business fall-off, layoffs are still happening, adjustments to a However, once the location decision had ‘new reality’ are still being made, companies been made, IBM and Toshiba did some are losing much money. Delusional in our engineering studies on the existing buildings, expectations in mid-2000, we have yet to and found them unsuitable for a then-state- realize how far off the mark we were, until we of-the-art 0.25um fab. One delay after started falling—and fell, and fell some more, another pushed the Dedication Ceremony and are still falling in many key markets. It into the spring of 1996, after the DRAM will probably take a few more quarters, a market was well on its way to oblivion. IBM clear vision of what happened in the Mideast, was getting cold feet on additional DRAM and an upturn in the overall semiconductor expansion (despite a miniscule 3 percent market and in investment spending, before share of the DRAM market, IBM had the ‘memory industry’ can pull itself out—or, three DRAM sites ramping concurrently, alternatively, the unconditional withdrawal in Manassas at DSC, Essex Junction, and of a few of the marginal DRAM players, or France, where they shared DRAM facilities their weakest fabs being decommissioned. with Siemens/Infineon). Budgets were cut back, and the DSC facility never was expanded past 300 wafer starts per day, about The Mummy’s Curse: Dominion 30 percent of the design capacity for the Semiconductor’s Latest Victim facility. There was even some defacilitization, as Dominion equipment was moved to other When IBM went through a major downsizing facilities or sold. The DSC wafer process in the early 1990s, it shut its Federal Systems costs were outrageous—more than $3200/ Division, laying off thousands from its plants wafer start when the competitive cost was in Manassas Virginia, and selling the business under $1700/wafer in 1997-98. This was to Loral. As in the Hudson River Valley, Excedrin Headache #7 for IBM and Toshiba. when they had similar layoffs about the same time, this layoff in Virginia deflated the local In 1999, IBM exited the DRAM business, real estate market, and made what once was and took a $171M pre-tax charge on its DSC a Good Corporate citizen into a pariah. But investment, which it sold to their JV partner, Big Blue did not forget its debt. Toshiba. In addition, IBM had lost tons of money, in operating losses, for the 3+ years In 1994, IBM looked for a place to locate a that they made 0.25um and 0.20um 64M, Joint Venture (JV) fab with its Triad Partner 128M, and 256M DRAMs at Dominion. Toshiba. IBM still had some real estate and buildings in Virginia, wanted to redeem Over time, Toshiba turned the fab over themselves with the Governor and the local to run NAND Flash as well as the IBM- community, and pushed hard to choose Toshiba trench cell DRAMs. In 2000, Manassas as the JV manufacturing site. It Toshiba brought in a partner, SanDisk, could relieve them of more real estate (to be to share the cost of flash capacity sold to the JV), make use of some buildings expansion (the FlashVision JV), taking ©Denali Software, Inc. Page 4
  5. 5. Denali Memory Report • March 2003 a $700M investment from SanDisk for $58M to buy back what is today about Denali Memory Report ‘technology rights’ and to pay for SanDisk’s $12M in Micron stock—which payments proportionate share of the fab. they have started setting aside cash for. In late 2001, Toshiba themselves exited the IBM lost money on Dominion DRAM business, and sold the fab to Micron. Semiconductor, Toshiba lost money on Toshiba and SanDisk regrouped, moving their DSC, Micron lost money on DSC, and NAND flash to Toshiba’s Yokkaichi Works in SanDisk may have lost money on DSC. a contract manufacturing line run by Toshiba, Maybe Toshiba and SanDisk made NAND and a JV line which they shared. With this flash money, but for sure, every DRAM shift, Toshiba, itself, probably took a loss made there since 1996 had a $5 bill on its investment in DSC, SanDisk traded wrapped around it as it passed through capacity in DSC for capacity in Yokkaichi. final test on its way to the market. Micron took over the fab in early 2002, but had trouble getting the trench design to yield News and New Products well. After months of trying, they decided to port their standard DRAM process to DSC. Cell Phones Grow Six Percent in 2002 But not for long did they work on this One piece of good news coming out of the plan. In this latest quarter, they announced disappointment of 2002 was the resumption abandonment of their technology transfer to of growth in the cell phone market. the 200mm line at DSC, and decided instead Although independent analysts do not to refit DSC as their lead 300mm line, with appear to have a firm grip on end customer their new 0.11um process. This write-off actual sales, or an assessment of inventory for abandoning the 200mm line is included levels, it was heartening to see Gartner in the $116M restructuring charge for this estimate a resumption of growth to 423M quarter. Did Micron make any DRAMs for units in 2002, up about 6 percent from a sale from DSC from late 2001 to present? two-year stall at about 400M units per year for 2000 and 2001. More important than In addition, as we have noted in last the sheer unit numbers, perhaps, is that month’s DMR, Micron has to buy back the 3G moves steadily forward and today’s cell 1.5M shares of Micron stock they gave to phone feature set and silicon content (sq Toshiba in payment for the DSC fab and mm) are about double what they were 3 Toshiba’s DRAM business. In October years ago. The bad news is that few people of this year, Micron has to come up with seem to utilize the 3G features, even if they Flash Market News Abounds: Source The New World Order in Flash; Samsung, Toshiba Rise... Silicon Strategies Flash Memory Vendors Ranked by 2002 Sales Silicon Strategies Semico Separates Flash Into NOR, NAND Segments Silicon Strategies Intel Says No Plans to Cut NOR Flash Prices DigiTimes NAND Prices to Stop Falling on Rising Demand DigiTimes Toshiba Unveils 2Gb Flash Memory EBN Online Flash Market Topped $7.7 Billion in 2002, Semico Says Silicon Strategies SanDisk 1GB Compact Flash Card for $169.99... SanDisk PR Loyalty Tested Amid Growing Price Gulf EBN Online Cellular Phone Makers Could Make Flash Switch EBN Online Links to the full articles for all of these headlines can be found on the Denali News web site, www.eMemory.com/news. Also, on www.eMemory.com can be found Denali SOMA simulation models for all flash memory products from all vendors, all architectures, all densities, and all speeds. ©Denali Software, Inc. Page 5
  6. 6. Denali Memory Report • March 2003 have the phones, and price competition from giants Samsung and Toshiba, ranked Denali Memory Report and different views of the ‘silicon second and third largest flash memory vendor solution’ for cell phones keeps the market respectively by IC Insights. Both currently competitive and at reduced margins. Nokia ship NAND flash predominantly. disappointed when they said they were unable to maintain their mix average cell NROM is a departure from the flash phone price, even by shipping a far richer architectures that are at the heart of the mix of full-featured phones than in 2001. two major flash products currently in mass But, no one can argue with a 37 percent production: NOR and NAND. The NOR market share for market leader Nokia, either. device, with its premier supplier Intel Corp., has been largely used for program storage in cell phones, for PC BIOS, etc. The NAND, ONO! Infineon Also Joins Flash with Samsung as the leading supplier—and Hunt—New Flash Memory Toshiba a major challenger, is widely used Architecture Promises to Stir Up for data storage in digital cameras, PCMCIA the Industry cards, etc. Both, NOR and NAND use a floating gate architecture, which stores On February 20th, the relatively unsung a single bit in two polysilicon layers memory market for NAND flash got a new sandwiched between two layers of oxide that voice. Infineon Technologies AG of Munich, isolates the source and drain of a transistor. Germany entered the market with a new form of flash device called the NROM. It The first unique element of the new NROM can function as either a NAND or NOR type device is that it contains two bits of data in a flash device but the company chose the former single storage element. To achieve comparable because this market had fewer competitors storage density the floating gate must resort to and was poised for significant growth in the variable levels of charge to represent different next several years. IC Insights Inc. predicts the stored values. Four levels of charge represent entire global flash memory market will grow the state of two locations for all combinations 36 percent this year to $10.6 billion from $7.8 possible in the two storage cells: 00, 01, 10, billion in 2002. In 2002, 30 percent of this and 11. To achieve two bits in a single level, total was NAND flash, up from 11 percent in the NROM architecture uses a dielectric 2001 says Scottsdale, AZ-based IC Insights. sandwich of oxide-nitride-oxide (ONO) separating source and drain of the transistor, Infineon entered the market by way of the vom Bauer explains. Individual bits are stored joint venture Infineon Technologies Flash at either end of the sandwich immediately GmbH & Co. KG, which it formed with above the transistor’s source and drain. To Saifun Semiconductors Ltd. of Netanya, read and write the two different bits, the Israel. This follows an earlier joint venture the transistor source and drain are reversed (see two formed in 2001 called Ingentix GmbH Figure 1 on page 7). & Co KG. The net result of the two ventures is the introduction of Saifun’s contribution to The NROM architecture also allows for a the partnership, the NROM flash memory smaller die area than existing flash devices, cell, which has several important functional thanks to a more compact transistor design advantages compared to alternatives. and a slightly smaller charge pump. To contain 512Mbs of data in an NROM Most importantly, say Ulrich vom Bauer, device requires 30-40 percent less area than a Product Marketing Flash, and Eugene L. floating gate flash devices implemented in the Chang, Senior Marketing Manager, NROM same process technology. Also contributing advantages include: greater storage capacity per to this smaller die area is the amount of cell, smaller die size, lower voltage operation control logic required to control the NROM and simpler manufacturing. Armed with these memory area. In a typical floating gate flash advantages, Infineon aims to take market share die, Chang says that control logic consumes ©Denali Software, Inc. Page 6
  7. 7. Denali Memory Report • March 2003 Denali Memory Report 40 percent of the area, but the NROM requires 15 percent fewer mask steps, on devices take only 30 percent. average, than competitive products. Said another way, the NROM device will take A third benefit of NROM technology is only two or three more mask steps than power. It takes on the order of 17V to a standard DRAM process. This plus for program a floating gate flash device, but an the memory maker should translate into a NROM memory takes about 9V. This ~50 lower cost to the memory consumer. percent savings is a major plus for portable applications using the memory. The NROM device requires less programming voltage Network Search Engines—A View due to its storing mechanism. Also it stores of the Market and its Opportunity a smaller charge, a mere 400 electrons, compared to about 8000-10000 electrons for a The Denali View, and Overview floating gate cell. A corollary benefit to lower One of the most needed functions within power is increased reliability, which is inherent Internet silicon is the Network Search Engine in the NROM ONO dielectric material. (NSE), which is fast becoming the jargon of Floating gate technology stores a bit in a choice, displacing the older term “Content polysilicon layer surrounded by two layers of Addressable Memory” (or CAM). NSEs oxide. Chang says a failure mechanism of this store vast arrays of data, locations, and terms structure is that the oxide can leak draining within their memories, and spew them forth the charge of electrons. The NROM ONO when addressed with a specified command structure stores electrons dispersed in the (search objective). Put in a word, ‘gold’; dielectric material. If one area of the dielectric get addresses where this term is found. leaks, the remaining areas are unaffected, thus Put in an alphabetic company address, maintaining the stored electrons. www.denali.com, out comes the site’s Internet address, 66.216.77.25, which tells Finally, the NROM device is easier to the location and pathway to the selected site. manufacture than the floating gate flash Search engines link common terminologies memory devices, vom Bauer declares. to precise internet locations, or sort through He estimates that the NROM memory millions of stored pages of information to ©Denali Software, Inc. Page 7
  8. 8. Denali Memory Report • March 2003 identify those most relevant to the search vantage point of mid-2000, to about ‘$300M Denali Memory Report criteria: vast and fast look–up tables that sort in 2005’, as today’s forecast for 2005. In through hundreds of millions of ‘locations’ 2002, the merchant NSE market was about each second, to find the ‘right one’ that $175M—BUT, BUT, as we have said in matches the input terms and selection criteria. an earlier DMR, Cisco alone, which makes proprietary NSEs to its own spec, is about The NSE market was to be a recognized $100M of consumption by itself. Adding to beneficiary of the Internet buildout from the the confusion of NSE market sizing is the fact early 1990s (Kawasaki LSI started looking at that the NSE ‘function’, which is addressed CAMs in 1992), and gave a push to a market by a host of alternate SRAM-based, DRAM- that had existed conceptually for a long time, based, and ASIC-plus-SRAM solutions, and but never had the volume or commonality is therefore, arguably 3-4 times as large. So of functionality to drive features, specs, high it is a hard market to define, and to size. volumes, and low prices. But the networking The system application for which NSEs are business was to be different. Sure, no ‘applications specific product solution’ is far standards were there to start, but with a greater than that which has adopted off-the faith that, after a few generations of product shelf (anybody’s shelf!) NSE solutions. development, standards would settle out, volumes would rise and prices drop. No one There are a number of reasons for this lack knew what the Holy Grail looked like, but of homogeneity in the NSE marketplace. few doubted it was out there. There is no second sourcing in NSEs— even the Micron-Netlogic ‘design to a In the late ‘90s, external and internal common spec’ is now kaput, with Micron’s funding kick-started a dozen NSE programs withdrawal from the NSE market. The NSE throughout the industry. The year 2001 market is dominated by small-ish suppliers and 2002 saw many of them disappear into whose futures are sometimes questionable larger, better-funded, companies. and uncertain, which is especially important when their NSEs are being designed into Date Action the market-leader’s high-end multi-million June 2001 Cypress bought Lara Technology for $225M dollar router. In addition, due to lack of February 2002 ISSI bought Purple Ray, a standards, lack of multi-sourcing and lack of privately-held CAM maker stable feature sets, NSE prices have remained March 2002 Micron bought ternary CAM relatively high. And they may not drop assets of Music Semi. for $4.5M January 2003 KLSI announces plans pull- over time, compared to solutions that use back from high-density CAMs blends of commodity DRAMs and SRAMs, plus an ASIC or a CPLD, to accomplish Other players in CAM/NSE market today the same application solution. Things are include market leader IDT, SiberCore, in a constant state of flux. What is needed NetLogic, CMOS Micro Devices, and and what the designers are capable of, are Mosaid. Music Semiconductor continues also changing quite fast. This makes the selling its binary CAMs. There is additional ‘ideal design choice’ a moving target. This market presence and interesting technology hurts vendors’ roadmaps and limits the time participation along the edges from Altera with in which a given NSE is the part-of-choice a CPLD CAM, Vitesse, and IBM, which has for new designs, limiting lifetime and ROI. an embedded CAM in its cell library. The problems are limitless, the promise of NSEs is much diminished, but many It is a very unsettled market, full of promise, NSE companies persevere, design and sell which to date, has been largely unfulfilled. product, and maybe even make profits. The earlier market, or vendors’ perceptions of Mosaid on CAMs the market, has steadily been dropping from Mosaid is a fabless semiconductor its peak of “about $1B in 2005”, from the manufacturer, with a long history of ©Denali Software, Inc. Page 8
  9. 9. Denali Memory Report • March 2003 memory design dating back more than 25 Although Mosaid does not have the ‘broad Denali Memory Report years. They designed, on a contract basis, networking product portfolio’ that Cypress many DRAMs that were brought to market and IDT do, they have designed parts which by various supplies over the years, and have have standard interfaces to higher volume a broad portfolio of memory IP, which they network processors, and QDR SRAMs, license to other memory designers. which enable them to lock-on to the products in other portfolios. They see some long-range They got their start in NSEs with the advantages in using a DRAM-based cell, as introduction of a 2M CAM in 2000. densities increase and power requirements Though that particular product introduction become more severe. They also consider their was difficult due to foundry and feature-rich NSE offerings to be a competitive manufacturing problems, they came back differentiator, including ‘user bits’ that can with a 9M CAM in 2001. Both of these be customized to the NSE application, high parts were general purpose, 100MHz bus, performance of 100M search/s for a 288-bit wide bus (72 bits) CAMs. Each of them word, auto-aging (which purges less often could be cascaded into a bus of up to 288- accessed entries, freeing up NSE memory bits. Variants of the basic designs can have space for most often sought-after addresses), 16- and 18-bit interfaces, and busses up to and their ‘multiple match output’. 200MHz. Presently, Mosaid’s CAMs are built with Fujitsu’s 0.18um eDRAM process. In a market in which ‘NSE feature set’ does not stay still for even a minute, much less Mosaid is one of the few NSE companies a generation, Mosaid appears to have a whose elemental bit cell is a DRAM cell; good fundamental NSE technology, and a almost all the others use a conventional forward plan to grow with the market. SRAM cell. Even though Mosaid’s NSEs do not use the fastest eDRAM processes, the IDT on NSEs DRAM performance has not been shown to IDT is acknowledged to be the leading be a performance limiter for the complete supplier of NSEs, with about a 45 percent CAM solution, and does save a considerable share of the world market. They do amount of silicon area due to the DRAMs standard designs, and custom products, smaller cell size. For their 9M CAM, this which they have designed for Cisco, which die size savings is estimated to be about 30- was their original customer. Their strengths 35 percent. By using DRAM technology, are (1) a wide-ranging networking and as well, they can build their CAMs on a communications chip portfolio (2) large more stable, back-from-the-hairy-edge market shares and reputation in FIFOs, process, which yields better than cutting multi-port SRAMs, bus switches, and other edge 0.13um or 0.11um designs that might related products, and corporate focus on be needed for an SRAM-based CAM of the comms. (3) offering total system integration same density. In addition, their DRAM- capability with enabling software and (4) based CAMs results in a smaller package strong relationship with NPU vendors (and footprint, and lower power utilization. Cisco). In a market where many have mis- stepped on bringing their designs forward, One can see from the Mosaid web page, IDT has executed rather well. www.mosaid.com, and promotional literature the diversity of requirement, About five years ago, IDT shifted its and the changing nature of the feature set corporate focus strongly away from for NSEs. It is no wonder, as customer standard SRAMs, to communications requirements for NSE functionality evolves so chips. Their broad NSE portfolio today rapidly, that there is no stable set of common allows them to offer many NPU-specific features. In addition, the needs in which interfaces that eliminate FPGA glue chips NSEs are used cover an extremely wide range that designs would otherwise be needed. of applications. One size does not fit all. ©Denali Software, Inc. Page 9
  10. 10. Denali Memory Report • March 2003 INTERVIEW Denali Memory Report DMR Interviews Cypress’ Antonio (Tony) R. Alvarez Tony R. Alvarez was appointed Senior Vice-President and General Manager of the Memory Products Division at Cypress in February 1998, reporting to CEO T.J. Rodgers. Under his tenure, Cypress’s SRAM market position has improved from number 7 to number 2 in the world. Tony joined Cypress in 1987 as BiCMOS Program Manager and was promoted to Senior Vice-President of Research and Development at Cypress, responsible for all technology platform development, in 1991. Prior to joining Cypress from 1979 – 1987, he worked on Analog and VLSI BiCMOS at Motorola’s Semiconductor Sector. His team was one of the early leaders in this field. Tony earned a Bachelor’s (1978) and Master’s (1979) degrees in Electrical Engineering million in Q402. The decline was mostly in from the Georgia Institute of Technology. memories where our MicroPower products He has published over 25 papers in the had a poor quarter. We’re seeing a recovery in Integrated Circuit process and technology business in Q103, however. Though we do sector and edited the book BiCMOS not think we will get completely back to $205 Technology & Applications. As a member million, we believe we will achieve modest of IEEE, Tony has served as the Chairman of growth this quarter and the next. the Symposium on VLSI Technology (2000). DMR: Your Q402 earnings release mentioned In recent quarters the slow down in the that the company was late with its 16Mb communications sector of the U.S. high SRAM, which impacted sales and earnings. technology industry has struck hard at So, is the recovery that you mention due to semiconductor companies, including the overall market coming back or due to Cypress, that supply components to system Cypress catching up with the SRAM pack? manufacturers. The Denali Memory Report spoke with Tony to learn how the TRA: It appears that the overall market might company was coping and what insight he be bouncing back. We’re seeing strength across might offer about a market recovery. all operating divisions, but it’s fairly early in the quarter—things can change. The first quarter Denali Memory Report (DMR): Can you is seasonally week in some areas, typically PCs provide our readers a business outlook and consumer products, so it could be a mix of and company overview of Cypress? factors. We’re being cautious in our forecast. There are no clear crystal balls today. Tony R. Alvarez (TRA): Cypress has just released its earnings and the fourth quarter was DMR: Taking a longer-term look, what pretty dismal for us. After increasing revenues are your expectations for 2003? several quarters in a row, we went backwards by roughly 15 percent. Our revenues TRA: We’re operating on a tactical day-to- went from $205 million in Q302 to $175 day basis. We don’t have much long-term ©Denali Software, Inc. Page 10
  11. 11. Denali Memory Report • March 2003 visibility. There are too many uncertainties TRA: Cypress has two process flows: fast and Denali Memory Report in the economy and in the world. If we slow. And over 95 percent of the process were to go to war in the Middle East, what’s steps of the two flows are common. The two going to happen? Assuming there are no flows also serve as the base process for all major changes in the world’s political scene, our other technologies. We make liberal use it’s reasonable to expect a modest recovery of foundries for non-commodity products. in the second half of 2003, based on We continue to ask what’s the best way to previous semiconductor cycles. Historically, leverage manufacturing to make money. we’ve had two to three years of increasing revenue followed by two to three years of DMR: I’ve not seen a public number on how decreasing revenue. Both 1999 and 2000 much foundry business Cypress does. Are were relatively strong years; 2001 and 2002 you prepared to provide the information? were extremely weak. If historical patterns hold, 2003 should be a transitional year. TRA: Today, roughly 15 to 20 percent of our It’s difficult to predict the turning point. revenue comes from foundry-manufactured Everybody I’ve spoken with feels more products. We even do some business with confident about 2004 and 2005 (laugh), but TSMC for specialty SRAM products. Logic no one feels that way about 2003. products provide Cypress a great opportunity to use foundries because logic is what drives DMR: Cypress is an $800-million-a-year a foundry’s process development. We don’t company and there has been increasing produce sufficient volumes of logic products talk about companies of this size having to justify the R&D investment to develop a a difficult time remaining competitive in leading-edge logic process. processing technology because they lack the business volume. How does Cypress DMR: Then you would use a foundry feel about this assessment? for some of your specialty SRAMs because they were low volume or had a TRA: The ability to afford the investment special process flow? in manufacturing depends on how efficient your process development R&D is, how you TRA: Yes, but it’s really a business issue. It makes leverage your equipment vendors, whether sense to use a foundry if the market is enough you’re able to strike partnerships with other of a niche, if it is proprietary enough, and it companies, and how focused your process requires specialized technologies. In the case technology group can be. I think Cypress of memories, there are very few situations that scores reasonably well in all four criteria. warrant us using a foundry. I want to emphasize that this is not a religious issue with Cypress. As to whether we can maintain a sufficient level of R&D, that’s a question we’ve been If you’re making commodity parts, especially asked since we were a start-up. How could memories, and you’re not making your own we afford the R&D investment when we silicon you don’t have a viable business model were at $15 million per quarter rather than because so much of the value of what you $200 million a quarter? We were always ship is in the base silicon. If you’re using a leading edge so if we could afford it then, we foundry, the value is captured entirely by the can afford it now. The percent of revenue foundry and you’ll be put out of business. we spend on process technology is lower Of all the fabless memory companies, none than it’s ever been, while the output of the have any degree of success. No one in the organization is higher than it’s ever been. It’s DRAM world has even attempted it. The not affordability so much as execution. successful fabless semiconductor companies are those with intellectual property in their DMR: Do you have many unique process end products or who are software-driven. flows for your SRAMs? For them, the value is not in the silicon so much as in the end product and/or ©Denali Software, Inc. Page 11
  12. 12. Denali Memory Report • March 2003 support—applications, etc. If you look at the networking market, we have high end Denali Memory Report successful companies such as Xilinx and QDRsTM (Quad Data RateTM). We’ve also Altera, their value is in the chip architecture, just gotten our first silicon on a 6T, 72Mb software, support, and macros—not so much synchronous NoBLTM (No Bus LatencyTM) the silicon. This is not true in the memory part. That’s a tremendous achievement since world. At Cypress, the memory contribution it comes on our 90nm technology node. In to the company’s revenue varies between 35 fact, it is our first product from the 90nm to 55 percent. That drives us to do our own line. It was built on our RAM9TM process. front-end and back-end manufacturing. It’s our sixth generation of 6T product. We started the 6T product on RAM3TM. Prior to DMR: Looking at Cypress’s quarterly that, we were offing a 4T, with two pull-up results, your gross margins tend to be resistors. Then, we introduced the 6T with higher, suggesting that you make your self-aligned contacts on RAM3 and have money more on the design and features continued shrinking the cell. The 6T cell than on sheer manufacturing prowess. size is extremely small, on the order of one square micron, comparable to—or better TRA: For memories, that’s not correct. My than—the rest of the industry. internal wafer cost is much less than what I can get from a foundry. And, my cell sizes and die DMR: You will have a 1T 72Mb NoBL sizes are always smaller. If I compare Cypress to PSRAM and a 72Mb 6T NoBL SRAM? anyone getting wafers from a foundry, I always win on raw manufacturing. My die sizes TRA: The 6T is a more full-featured part compete favorably with Samsung, Micron, or without the timing restrictions of the any Japanese competitor. That is how Cypress PSRAM. I think that kind of execution got to be number 2 in the world in SRAMs. has made us the number 2 player in the market. In memories, the rules for winning DMR: Can you position Cypress relative are not complicated. You have to make your to other major memory suppliers? product extremely cost-effective. You have to provide tremendous service to customers TRA: If you look at Cypress since 1998, in terms of delivery, quality, and application we’ve gone from number 6 or 7 in SRAMs support. And you need a roadmap that to number 2. In a very tough market we keeps you at the forefront of customer continue to increase the gap separating us requirement. There is not a lot of software to from the rest of the SRAM suppliers. At worry about. Architectures don’t change too this point, it’s Cypress and Samsung if you often. You have to do well at business basics. want to do business with a broad-based, significant-sized SRAM player. DMR: Can you discuss your on-going technology partnerships, in PSRAM DMR: When you say increase the gap are and any others in SRAM technology or you referring to technology or revenue? product development? TRA: I’m referring to revenue, but if you TRA: The ProMOS relationship is our didn’t have the manufacturing muscle, biggest. We’re also part of the CellularRAM technology, and product breadth to back it up, consortium and we’re one of the founders of that gap wouldn’t be increasing. If you look the QDR consortium. Micron and Infineon at our product line, we’re number 1 in fast initiated the CellularRAM consortium asynchronous SRAMs and have large market and we joined. Micron, IDT, and Cypress share. In the MicroPower SRAM product formed the QDR consortium. We brought line, we have four generations of mobile in Samsung and the other major SRAM SRAM, each with longer battery life and have players. We have a relationship with expanded beyond the original 6T cell to a NanoAmp Solutions, which is an R&D 1T cell pseudo SRAM (PSRAM). To serve cooperation on the PSRAM product. The ©Denali Software, Inc. Page 12
  13. 13. Denali Memory Report • March 2003 Enhanced Memories Systems relationship is TRA: Yes and no. Some customers building Denali Memory Report more of an R&D effort, looking at bringing cell phones in Japan and Korea are using to market a high-speed 1T product—a 72Mb triple-stack memories. The stack includes device. That product is sampling now. In flash, PSRAM, and a 6T SRAM. They use the some ways, it contains NoBL-like features. We stack to achieve extremely low standby power. call it a NoBL burst PSRAM. This may be a transient trend but I’m not sure. The 16Mb capacity is the low-end of where DMR: What kind of latency does the PSRAM has encroached on 6T. There doesn’t NoBL burst PSRAM have? Is this how it seem to be a strong desire in our cell phone resembles an FCRAM customers to proliferate PSRAM below this memory density. One reason: phone makers TRA: The NoBL burst PSRAM was intended conclude it’s not worth the large overhead to to provide low latency. There are many make PSRAMs SRAM-like at this density. variations to FCRAM. Some are low power, Also, the memory array efficiency worsens and others are high speed. That’s why I’m hesitant the relative advantages in cost between PSRAM to use the term FCRAM. The original and 6T narrows below the 16Mb-density. FCRAM was fast cycle, but the term now has become more generic. Many of these DMR: For the cell phone business, do products are going into cell phones to take you offer a multichip solution? Or do advantage of their low power characteristic. you sell your SRAM die to others who put them onto multichip packages? DMR: Can you talk about your PSRAM thrust: directions, target markets and TRA: I don’t want to get into building how you think the lower-performance multichip components, which is very asynchronous SRAM will fare against much a custom market. I’ll let the flash the PSRAM solution? manufacturers play in that space and I will sell them my die. I have three major customers, TRA: Our main PSRAM thrust is in the one each in Japan, the U.S., and Europe. low power, relatively modest-speed mobile market, of which the cell phone is the DMR: Many large systems in the largest segment right now. We’re sampling networking space take a long time to 16Mb, 32Mb and 64Mb at this time. design. Can you discuss the life cycle for a new class of memory product from DMR: Where will true 6T asynchronous the time of conception until the time it’s SRAMs find a home five years from now. designed in these systems and reaches Will they be an ultra low-power solution volume production? or do they have other markets where they will remain viable? TRA: It takes customer a long time to absorb a new architecture even though TRA: Today, besides the lower standby power there are obvious advantages to that of 6T, we are seeing that it also has a speed architecture in certain applications. Even advantage. I think that the total available in the networking market where NoBL and market for the 6T SRAM, which had been on ZBT offer an advantage in lower latency, it’s the decline before the cell phone market boom taken years. A life cycle can be as long as renewed its growth, will return to historically 18 years. For example, we introduced the lower growth rates because the largest part of NoBL SRAM at the 2Mb density. We went the 6T market will be taken over by PSRAMs. through 2, 4, 9 and 18Mb parts each with Nevertheless, the transition from 6T to 2 to 3 years per generation before NoBL PSRAM will take some time to complete. achieved parity with Synchronous SRAM in terms of unit volume. I expect our newest DMR: So you see PSRAM holding a lock QDR offering to follow a similar path. on the cell phone market in the long run? ©Denali Software, Inc. Page 13
  14. 14. Denali Memory Report • March 2003 DMR: Does that mean the time to profit TRA: The systems designed with 9Mb QDR Denali Memory Report is longer? Or are you able to price it will never ramp because they will have been so that you’re making money from first redesigned to take 18Mb and 36Mb. The product rollout? 9Mb generation that IDT, Micron, and Cypress introduced will never go into volume. TRA: It means that it takes a long time to That generation was an R&D investment, recoup your R&D investment for a new a foundation that the competitors coming architecture. In memories, customers tend into the market later offering the 18Mb and to purchase the lowest cost solution that 36Mb generation, derived the benefit from. meets their system requirements. That’s Those entering the market first may not what gets a product accepted. Pricing always have the advantage. the new technology higher can limit its acceptance, though there will always be DMR: Let’s talk about the CAM market. systems that require the highest-level of You made an acquisition of Lara and performance and are willing to pay for it. it seems to fit well with your thrust of selling to Juniper, Cisco, and the likes. DMR: You mentioned QDR. Has it won What’s your view of the CAM market? the QDR-SigmaRAM battle? TRA: Putting Cypress muscle behind the TRA: If you look at the market, all the major Lara acquisition, we’ve grown to number 1 players are backing QDR. Within the top ten or a close number 2 in the network search memory suppliers, Samsung, Cypress, Hitachi, engine market. We’ve gained tremendous NEC, IDT, and Micron are all QDR vendors. market share and we’re doing very well. The only top 10 supplier backing SigmaRAM is IBM and they are not a broad based DMR: Netlogic Microsystems and Micron memory supplier. They don’t have the cost recently announced a CAM license and structure to compete in a commodity market. alternate source agreement. Is that what it’s going to take to get the CAM DMR: Are there too many QDR market broadly accepted? (Note: Since DMR suppliers chasing too little market today? interviewed Tony, Micron has exited the CAM market.) TRA: That’s the way it is today. But the TRA: That was in the works for a while now. market is just emerging. The expectation For us, it was not a surprise. Certainly Micron is that QDR will be the next synchronous and Netlogic make a powerful partnership. It SRAM platform. The way NoBL and ZBT would be one more competitor besides Cypress achieved parity with the Synchronous SRAM, and IDT in this market. I think Samsung is QDR will over time come to parity with interested in getting into this market as well. the NoBL and ZBT. QDR offers better Any time there are competitors, it’s good for performance in the networking space. The customers and it broadens the market, but we downside is that it’s still a larger die and more may have more suppliers than customers. expensive for us to manufacture. So the cost per bit is higher. From a value creation point DMR: Cisco showed some data on their of view, the customer comes out ahead. I don’t CAM consumption at Semico and it looks think we will see volume in QDR for another like they buy half the world market in CAMs. 12 months or so. We’re seeing a lot of samples and design wins and lots of systems about to TRA: I worry more about the narrowness go into production. However, partly because of the customer base than about additional of the weakness in the overall networking competitors. market, the volumes are relatively low. DMR: We would like to thank Mr. Alvarez for DMR: When those systems start to ship, will taking time to share his knowledge of Cypress they be using the next higher capacity QDR? and the semiconductor memory market. ©Denali Software, Inc. Page 14
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