Intel’s NAND/ SSD Strategy

Intel has a NAND problem. Its IMFT NAND venture with Micron hasn’t lived up to expectations. IMFT has neither the scale nor cost structure to compete in these dark times.

The struggle for NAND market share is on. Stakes are high and the going is tough. Samsung is dug in at #1. Toshiba/SanDisk are making their move at #2- heads barely above water. Hynix is reeling at #3. IMFT is down a notch from there at #4.

Eli put it well on analyst day: It is tough to be number 4 in a rough neighborhood

Although NAND chips account for only a fraction of Intel’s business, NAND chips are having a big impact on Intel’s bottom line- and not in a good way. Intel’s NAND business is doing so poorly financially that Intel was recently forced to warn that the company’s Q1’s gross margins would be down a couple of percentage points due to NAND alone.

This is not the kind of drama that Intel wants or needs as its stock price bumps along at multi-year lows.

Intel’s CEO Paul Otellini has vowed to fix the problem. His solution- SSDs:

“We’re going to move aggressively into solid state devices and out of the commodity market.”

What is Mr. Otellini thinking? SSDs look really really tough. Hardly a high margin market segment. Competition is going to be fierce, with margins suffering accordingly.

Sure, SSDs are going to be big. This is an open secret. Samsung, Toshiba and SanDisk have been getting ready for this one for years. 2009 appears to be the year when their best efforts will be revealed.

Intel appears to believe it has a technical edge over these NAND heavyweights, that will set its SSDs above and beyond the competition. Time will tell. Personally, am not convinced.

That said, Intel appears ready to roll out its product line in the next few months and the specs look pretty good. A friend passed along an Intel marketing presentation on its NAND/ SSD strategy containing lots of interesting stuff that hasn’t hit the mainstream media yet.

Intel plans to “rapidly achieve and maintain technology leadership; Ramp capacity to achieve scale and efficiency; and Deliver value to Intel Computing Platforms via innovative NAND SSD and Caching solutions.” Intel plans to “ waterfall these SSD solutions into embedded applications.”

In very general terms, Intel divides the SSD market into three segments: Removable Drives such as USB/ SD and CF cards which have “lowest cost, lower density, MLC, limited reliability testing” and are “disposable”; Value Solid State Drives which offer greater “reliability over removable, strong performance, low power”, and “higher density”; and Performance Solid State Drives which offer “ultimate performance” and “assured reliability and compute validation.”

Removable Drives are deemed the lowest in cost and performance. Value Solid State Drives are next up the food chain. Performance SSDs are considered to have both best performance and highest cost. Although Intel appears to be planning on offering at least some products in each segment, clearly Intel is most excited about Performance SSDs, or SSDs as HDD replacements.

Intel High Performance SSDs- Code Name “Ephraim”

Intel SATA SSDs are scheduled to go into production in Q3 2008 using 50nm NAND in both 1.8” & 2.5 form factors. These High Performance SSDs purportedly will be available using both SLC and MLC. SLC SSDs will be available in capacities up to 64GB and MLC SSDs will reach 160 GB.

Intel SLC SSDs are advertised as having 250/130 MB/s sustained R/W throughput. Intel MLC SSDs purportedly will have sustained R/W of 250/50 MB/s. Power for both Intel SLC and MLC SSDs is rated as 1.7W in active and 0.095W in standby.

Intel brags on its drives’ performances vs both a Samsung 32GB SLC SSD and a SanDisk 32 GB SLC SSD. Feels like marketing hype- comparing products not yet in production to products already in the marketplace. We’ll have a better sense of how Intel stacks up towards the end of this year when SanDisk delivers its next-gen 43nm MLC SSDs.

For perspective, current Toshiba MLC SSDs (most likely 56nm) are already rated at 100/40 MB/s R/W. And its worth keeping in mind that independent third party testing have yet to run all these drives through their paces.

Last, but not least, Intel makes no mention of SSD price points in its presentation. Price is going to the huge deal once performance points are reached. SanDisk, Toshiba and Samsung will be happy with SSD product GMs @ 35%. For gaining market share, 20 to 25% GMs will probably suffice for these companies. I have my doubts whether Intel shareholders used to the 55%± for GMs will have the stomach to for this SSD battle ahead.

Intel’s SSD roadmap for 2009 shows <40nm NAND for 2009.

IMFT’s transition to 3Xnm promises to be an interesting story to watch. Their strategy appears to be to jump a generation (40nm) entirely and move from 50nm to 3Xnm. If IMFT can pull this one off smoothly and profitably, they will justly deserve a tip of the hat. If not, trouble looms. Personally I don’t find it auspicious that production from their Singapore state-of-the-art fab was recently pushed back.

SanDisk/Toshiba, probably the current leader in process geometry technology, is taking what appears to be the safer path. From 56nm San-shiba is moving to 43nm for 2008/2009 and then on to 3Xnm for 2009/2010.

My guess is that a key to these technology transitions will be lithography and related equipment. At analyst day, Eli took time to explain that SanDisk/Toshiba made the move to immersion scanners at 56nm while the competition, including IMFT, has continued to use dry scanners. In Eli’s mind, SanDisk/Toshiba has the advantage for the next leg down to 4Xnm, in that they already understand this proven technology.

Moving below 4Xnm appears to require next generation lithographic technology. Double-patterning appears to be the consensus pick. Extreme ultravoilet (EUV) lithography appears promising. This next-gen equipment is both expensive and unproven and there-in appears to be the risk for IMFT.

SSD performance appears related to both system and chip expertise. I suspect a subplot will emerge as ONFI competes with SanDisk/Toshiba’s All-Bit-Line Architecture. I’m going to leave that for another post.

IP for SSDs is another related angle best left for later. I have posted in the past about Solid State Storage Solutions, LLC. FWIW, for those following this obscure angle, SSSS LLC looks to be a Renesas IP angle that SanDisk has acquired. (Thanks DanR)

Another wild card is Rambus which is clearly working with at least one (big) flash company. Given recent litigious events, it seems a safe bet that Micron, Samsung and Hynix can be eliminated. That leaves Intel, and SanDisk/Toshiba. Intel, partnered with Micron, would seem the less likely.

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7 Responses to Intel’s NAND/ SSD Strategy

  1. Poofypuppy says:

    Hi Savo,

    Thanks for your posts as always. The war for market share and margins in SSD will do more than almost anything else, IMO, in determining the winners in the NAND game. Cell phones are great, of course, but they they only soak up 8GB or 16GB per unit sold, while SSD’s are the only product that that will use flash 128GB or 256GB at a time. Whoever can get and maintain a performance/cost edge in SSD will need all the fab capacity that they can muster. On the other hand, any manufacturer whose SSDs are behind the performance/cost curve will have lots of unsold inventory, unprofitable factories, and/or lousy financial results. I don’t know whether Intel’s SSD is (supposedly) superior because of its controllers or the NAND chips themselves, but hopefully SanDisk will answer with some decisive leaps forward soon. I will be very disappointed if SanDisk, with all of the IP that it has acquired from M-Systems, Matrix, etc. in recent years, remains stuck in the middle of the NAND pack in 2010.

    Regards,
    Poofy

  2. KirkH says:

    Great writeup. I was hoping for better write speeds than 150MB/s but that is better than the rest. I do wonder if they’ve solved the random write flash issues which is a dealbreaker for OLTP applications.

    It’s nice to see SATAII as a bottleneck for once. A good RAID card and some 32GB Intel drives would be a nice combo.

  3. Hello Savo

    STEC -SSD’s

    Thanks again for this website and posts from all

    What are your thoughts relevant to the announcement by STEC – 4/21/08
    Very fast 1″ SSD drive (8Gb – 32Gb) with 90Mb write speeds etc.
    8Gb OEM price at US $45
    Link and text below
    Many Thanks
    b9
    ——————
    http://biz.yahoo.com/pz/080421/140466.html
    ——————
    STEC Announces Industry’s Smallest and Highest Reliability SSDs; Unveils MACH4 1-Inch Solid State Drives
    Monday April 21, 8:30 am ET
    Compact 1-Inch Design Ideal for Small Form Factor Systems Needing High Performance, High Reliability in a Single Integrated Storage Device

    SANTA ANA, Calif., April 21, 2008 (PRIME NEWSWIRE) — STEC, Inc. (NasdaqGS:STEC – News), a designer, manufacturer and marketer of high performance solid state drives (SSDs), today announced the MACH4 1-inch SSD — the industry’s smallest, highest reliability and lowest power-consuming SSD. STEC’s new MACH4 platform enables system designers to reduce the footprint and power requirements of designs, providing unprecedented design flexibility and enabling new product categories.

    “For the numerous applications which were historically challenged by the severe limitations of 1-inch hard disk drives (HDD), STEC is now offering a much more cost-effective, higher capacity and higher reliability alternative in an easy-to-implement solution,” said Patrick Wilkison, vice president of marketing and business development. “The MACH4 1-inch SSD family offers a compelling combination of speed, reliability and form factor, all in an integrated storage device, thus enabling an entirely new wave of applications. The drive’s unique blend of attributes makes it an ideal solution for applications ranging from blade servers to ultra-mobile PCs to various other small format devices which require the highest throughput in the smallest package.”

    Leveraging STEC’s proprietary controller technology, the MACH4 utilizes multiple Flash channels enabling throughput speeds faster than 90MB/s, making it the fastest, highest capacity, and most reliable compact storage solution on the market. The drive supports widely utilized interfaces, both native SATA and PATA, allowing OEMs to easily integrate the drive within systems. The MACH4 was designed to address a massive void in available storage technologies, due to the inability of HDDs to scale capacity in the 1-inch form factor in a cost effective manner.

    Ultra-Compact Footprint

    Optimized for embedded OEM applications, the MACH4 1-inch SSD’s ultra-compact footprint and small form factor meet the needs of highly space-constrained applications. Ideal applications include GPS/navigation solutions, automotive entertainment systems, interactive kiosks, and ultra-portable notebooks which require the smallest possible storage solutions that, until now, lacked the right levels of performance, capacity and cost.

    Cohesive Design Enables Broad Usage

    The MACH4 1-inch SSD helps OEMs embrace NAND as a replacement for small form factor HDD as it comes as a cohesive unit (reliability and performance are all built-in). The drive enables wider usage of solid state storage by removing the difficulties associated with designing-in NAND-based memory and delivers unprecedented speed, with unrivaled reliability, ease of integration all in small form factor. As the HDD manufacturers focus only on increasing capacity on the 2.5-inch and 3.5-inch HDD form factors, the ultra-small form factor category of drives is not evolving. The MACH4 is ideally suited to meet the needs of this blossoming category.

    MACH4 Features

    * Speed: The MACH4 boasts four independent flash channels for ultra-
    fast speeds with sustained sequential 90MB/s reads and 55MB/s
    writes
    * Reliability: The industry’s most elaborate and effective Flash
    management capabilities ensuring long product life through built-in
    wear leveling and bad block management, full data-path protection
    with built-in 8-bit ECC engine, and built-in power-down data
    protection
    * Security: AES encryption in hardware, write-protect, and data purge
    * Standard Interfaces: SATA and ATA

    The drive has Commercial and Industrial Operating Temperature Range and provides lower power, reduced latency, and faster boot times compared to traditional hard disks.

    Pricing and Availability

    The MACH4 SSD is expected to be available in mass production at the end of April in capacities up to 32GB. Projected OEM pricing for the 8GB capacity point is $45; full pricing is available upon request. Sales information is available at http://www.stec-inc.com, via email at info@stec-inc.com or by calling (949) 476-1180.

  4. savolainen says:

    STEC

    Hey b9,

    I don’t follow STEC all that closely, but recently with Seagate’s STEC lawsuit, have started paying more attention. The Seagate lawsuit against STEC seems rather dubious. When all is said and done wouldn’t be at all surprised if Seagate were to acquire STEC. Beat them up with a dubious lawsuit and and then buy them on the cheap- might be the cunning plan.

    As far as STEC as a threat to SNDK goes, personally am not all that worried, but time will tell. For perspective, I think it is important to note that STEC is a small fab-less company. Their market cap is a bit under $400M. Total STEC revenue in the last quarter (Q4) was $53M, of which $32.7M was flash related. Most of the remainder was DRAM related. These guys are not heavyweights on the order of Samsung, Toshiba or SanDisk for that matter.

    STEC is run by a couple of brothers- Moshayedi. They seem to have done pretty well for themselves. My sense is that they have gotten this far through self promotion, guile and opportunistic acquisition.

    STEC incorporated in 1990 as Simple Technology and originally was focused on DRAM memory modules for PCs. Pretty generic stuff. STEC’s first good buy seems to have been a division of Cirrus Logic. STEC went public in 2000 around the same stock price as today.

    In 2005 STEC acquired an SSD company MemTech, and ICSI – a controller design company. In 2006 they acquired another SSD company- Gnutek. Given the EMC connection and their published SSD performance specs, seems pretty clear STEC has some talented SSD engineers.

    All that said, to my mind, STEC doesn’t have the resources to compete in the next round. Its gonna take deep pockets, a tough stomach/nerves and most importantly in-house optimized NAND.

    STEC apparently buys their NAND from Samsung and seems to have been trying (unsuccessfully) to nail down guaranteed supply at best (or at least good) prices.

    Again for perspective, STEC Q4 R&D was a shade over $4M. Q4 STEC enterprise SSD sales were something like $7M.

    STEC SSDs seem to be primarily high end (highest of the high end) and high performance (ZeusIOPS). In the last conference call, STEC talks about an average cost of $5000/drive down from $10,000/drive last year. STEC is modeling 10,000 units (ZeusIOPS) being sold this year. It seems STEC is a big believer in SLC.

    I recommend reading the STEC Q4 transcript from March 5, 2008 available on Seeking Alpha.

    FWIW, found the following article’s comments interesting:

    “SSDs in PCs — where cost is king — are much different than SSDs used in enterprise storage — data center applications where performance matters — Unsworth [Gartner analyst] explained.

    “The market is emerging, with SanDisk and Samsung the current leaders, in PC SSD, and STEC and SanDisk leaders in the enterprise storage segment. Intel (Nasdaq: INTC), Micron, Seagate, now Toshiba are capable of being tier 1, and the market is being inundated with new vendors like PNY, Ritek, PQI, Transcend, A-Data, etc.”

    http://www.technewsworld.com/story/60700.html?welcome=1209077060

    One of the critical challenges facing all the SSD vendors is the random write problem. STEC/EMC seem to be successfully addressing this in enterprise via SLC and generous RAM caches and “extra” NAND capacity. All this comes as a cost, literally.

    It will be interesting to see how SNDK addresses this challenge with their next gen 43nm ABL MLC SSDs targeting the cost-sensitive consumer market.

    Hopefully Sunday I will finally finish a follow-on INTC SSD post that has been hanging around.

    Regards,
    Savo

  5. bob77977 says:

    the danger from STEC is the quality of it’s technology not it’s size. owning a good technology they can make a deal with samsung, the Msystem style, licence in return for a guaranteed chip supply.

    don’t you think seagate is our partner?

  6. Hello Savo

    Many thanks for your reply and commentary on STEC

    It brings me to what I see as a Sandisk “mystery”

    During the 2008 CES show SanDisk featured a product-technology called Vaulter.
    I understand SanDisk decided to pre-announce Vaulter just prior to the show when they learned CES had awarded Vaulter “Best Of Innovations 2008”

    Eli later commented; (I paraphrase) …Vaulter had not been on any road map and was such a compelling opportunity that they reassigned resources to develop the product…

    I was encouraged by Vaulter technology and felt this would be a bridge to a time when SSD implementation was fully realized on MLC, 3X, 4X and in full production with expected cost savings realized.

    In essence it would “Vault” across the HDD to SDD chasm

    I could not believe that Vaulter would have been built in a vacuum without close target-customer design involvement

    Then I awaited the expected announcement of Vaulter adoption by Dell, HP, Toshiba etc
    perhaps even a retail vaulter product for performance improvement of existing machines with Vista…or;;;Why not a co-market deal with MSFT… a version of vaulter preloaded with Vista upgrade (I can dream)

    but alas…not a word has been written…no announcement of any kind (unless I missed something)

    Did Vaulter leap into oblivion??…what is the Vaulter story?
    Many Thanks
    b9

    In essence this product would…vault across the SLC high cost chasm realized

  7. Hello Savo

    Many thanks for your reply and commentary on STEC

    It brings me to what I see as a Sandisk “mystery”

    During the 2008 CES show SanDisk featured a product-technology called Vaulter.
    I understand SanDisk decided to pre-announce Vaulter just prior to the show when they learned CES had awarded Vaulter “Best Of Innovations 2008”

    Eli later commented; (I paraphrase) …Vaulter had not been on any road map and was such a compelling opportunity that they reassigned resources to develop the product…

    I was encouraged by Vaulter technology and felt this would be a bridge to a time when SSD implementation was fully realized on MLC, 3X, 4X and in full production with expected cost savings realized.

    In essence it would “Vault” across the HDD to SSD chasm

    I could not believe that Vaulter would have been built in a vacuum without close target-customer design involvement

    Then I awaited the expected announcement of Vaulter adoption by Dell, HP, Toshiba etc
    perhaps even a retail vaulter product for performance improvement of existing machines with Vista…or…Why not a co-market deal with MSFT… a version of vaulter preloaded with Vista upgrade (I can dream)

    but alas…not a word has been written…no announcement of any kind (unless I missed something)

    Did Vaulter leap into oblivion??…what is the Vaulter story?
    Many Thanks
    b9

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