What Next for 3D XPoint? Micron to Buy Intel's Share in 3D XPoint Fab
by Anton Shilov on October 18, 2018 5:20 PM EST
Micron on Thursday announced plans to acquire Intel’s stake in IM Flash Technologies, a joint venture between the two companies. IM Flash owns a fab near Lehi, Utah, which is the only producer of 3DXPoint memory that Intel uses for its premium Optane-branded solid-state storage products. Once the transaction is completed, Intel will have to ink a supply agreement with Micron to get 3D XPoint memory after the current agreement finishes at the end of 2019. This will have important ramifications for Intel's 3D XPoint-based portfolio.
Under the terms of the joint venture agreement between Intel and Micron signed in 2005, the latter controls 51% of company and has a right to acquire the remaining share under certain conditions. Intel already sold Micron its stakes in IM Flash fabs in Singapore and Virginia back in 2012, which left IM Flash with only one production facility near Lehi, Utah (pictured below). The fab is used exclusively to produce 3D XPoint memory right now.
Early this year the two companies decided to fold their NAND flash R&D partnership, which made a jointly owned production facility somewhat useless for the long term as Intel and Micron were going to develop their own process technologies and memory devices going forward. Then in July the two companies announced plans to discontinue their joint development of non-volatile 3D XPoint memory after completing design of 2nd generation 3D XPoint, further dissolving any need in joint manufacturing operations in the mid-term future. As it turns out, Micron is set to exercise its right to call Intel's interest in IM Flash and buyout its stake for about $1.5 billion starting from January 1, 2019, the company said on Thursday.
Under the terms of the original agreement, Intel has purchased chips from IM Flash under a special long-term supply agreement, essentially buying at manufacturing cost. Once Micron acquires Intel’s stake in IM Flash, which will take from six to twelve months after Micron exercises its right, the two companies will have to sign a new supply agreement if they need to. On the basis of previously signed contracts, Micron will still supply 3D XPoint memory wafers to Intel for up to a year after close, at pre-agreed prices. After that, Micron may continue to supply Intel with 3D XPoint memory on a foundry basis.
Given the 6-12 month lead time required after Micron hitting the button, if Micron puts its takeover plan in motion on January 1, 2019, it will need to come to new terms to sell Intel any of the Lehi manufactured 3D XPoint memory by mid-2020 or early-2021. While this is ongoing, Micron has previously stated that it is set to introduce its own 2nd Gen 3D XPoint-based products in late calendar 2019 and then ramp them in 2020 under the QuantX brand. Around the same time Micron will start pilot production of its post-3D XPoint "emerging memory products", the company indicated.
While Intel will continue to obtain 3D XPoint from IM Flash until at least mid-2020, there is a big catch. The two companies are set to finish development of their 2nd Gen 3D XPoint only sometimes in the second or the third quarter of calendar 2019. The joint development takes place in IM Flash R&D facilities and the design is tailored for the IM Flash fab and jointly-developed process technology. Therefore, the transaction may potentially affect Intel’s ramp up plans for the 2nd Gen 3D XPoint memory. In fact, Intel can manufacture 3D XPoint memory at Fab 68 in Dalian, China, the company said earlier this year. However, since the fab is busy making 3D NAND, Intel may have to adjust its production plans for both types of memory.
The announcement from Micron is the end of the whole IM Flash joint venture project. At this point, the two companies have very different priorities for their storage businesses in general: Intel might primarily wants to sell SSDs for client and server applications, whereas Micron’s interests also span to automotive, mobile, special-purpose use, and various emerging applications (in fact, Micron once planned to offer 3D Xpoint for mobile devices, according to a presentation).
In order to properly address different markets, memory suppliers need different products. Intel prefers larger dies for high-capacity SSDs, while Micron needs smaller dies for other devices, it can be counterproductive for the two to work together. This can be one reason why the two decided to dissolve the partnership and focus on individual goals both for volatile (NAND) and non-volatile (post-3D XPoint) types of memory.
What remains to be seen is how the two companies share their jointly-developed IP (actual technologies required for 3D NAND and 3D XPoint will be shared, but there are certain things beyond that). The most logical scenario would be to sign a broad cross-licensing agreement, but this is still to be determined.
Related Reading:
- Intel and Micron To Dissolve 3D XPoint Partnership After 2019
- Intel And Micron To Discontinue Flash Memory Partnership
- Micron Starts Construction of Its Third NAND Fab in Singapore
- Micron Discontinues Lexar Business, Plans to Focus on Higher-Margin Products
Sources: Micron's Webcast, Micron
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Eliadbu - Saturday, October 20, 2018 - link
Intel for long time is not just CPU companyAnd truth to be told their main focus today is not CPU at all, and it is a smart move since CPU improvement has reached a blockade you can't get much from IPC so you turn to small architectural optimization and the AMD METHOD of slapping more cores, Intel knowing that prefers to focus in fields like automotive, AI and GPUs for compute. Optane has a potential to access high market share in both storage and memory territory. Calling it niche is a shortsighted statement. NAND was in the same position that optane is today in the first generations. With time to come if the price would be able to come down enough it might push NAND aside and even might compete at the memory market.
Gondalf - Sunday, October 21, 2018 - link
I don't see signs about what you are claiming.The real story is pretty simple: Intel has right now finished to double the capacity of Fab 68 and it is plenty of clean room to utilize for XPoint manufaturing. In China the costs are far lower than in USA so this is a good move to increase the operative profit.
HStewart - Friday, October 19, 2018 - link
Total conjecture and guessing, but of course you would assume that all is wrong in Intel-land. Can't possibly be because they're doing something that would be good. They can't possibly be doing anything good, correct?Bob-o - Thursday, October 18, 2018 - link
Then you are not familiar with this situation. Intel had no choice in the matter. According to the agreement they signed years ago, Micron had the option of buying Intel out, the terms were completely spelled out. Micron has decided to exercise its option. That means they are bullish on their plans for 3D Xpoint, the price to buyout is dirt cheap. . . this is a positive for Micron, much less so for Intel.wumpus - Friday, October 19, 2018 - link
Interesting. Inexpensive memory is the last thing Intel wants. Obviously, Micron isn't necessarily keen on it themselves, but as long as they can rake in monopoly pricing on cheap to produce memory, all's well.The reason Intel hates cheap memory is that the cost of all the memory a server needs is so high it only justifies an expensive Intel processor (or possibly Epyc and on rare occasions an even more expensive IBM). With less expensive memory, ARM and AMD start to look far more attractive (although I wouldn't ignore the cases where AMD competes regardless of the cost of DRAM).
Yes, I just want 64GB for the price of 16GB (and ideally a HBM2 cache of DRAM). Maybe 2020.
Eliadbu - Saturday, October 20, 2018 - link
What your comment makes no sense. You don't buy processors by high expensive your memory is. you buy them by your budget and needs. And on contrary the more expensive ram is the organization would buy either cheaper processor or less CPUs to keep the cost down which is bad for sale in both cases. And the "HBM2 cache" is nonsense. if you knew how HBM2 works.Kamgusta - Friday, October 19, 2018 - link
You people have no idea how big companies work.The goal of the Micron/Intel joint-venture was to create 3D layers and ReRAM technologies.
They succeed.
They did such a great job they will work 12 more months in refining (second-generation products).
The joint-venture can be closed as it reached its goal.
Both Micron and Intel have the rights and fabs/equipments to create products based on these new standards - they did and they will do.
Today, Micron decided to buy the IMTF personal and equipment for 1,5B$ as Intel do not need them.
Micron and Intel are still friends, so they decided to not compete in the same market: Micron will take the automotive and mobile, Intel will take the high-end computing.
Is Optane a commercial flop? Maybe. Intel knew it as dind't expect more revenues than 10% of its NAND business.
Are the 3D layers and the resistive random access memory technologies a flop? Ehm... no.
By 10 years we'll use only products based on these tecnologies.
End of story.
Eliadbu - Saturday, October 20, 2018 - link
Remember it is just first gen what we have right now. Back when NAND was first gen it didn't fare well either vs HDD in sales. So you can't call it flop yet (and the brand name optane is not going anywhere soon) .Lord of the Bored - Friday, October 19, 2018 - link
In other words, Intel's entire Optane business was a complete fiasco and they have made grave mistakes over the past few years?Or in short... "Optane? More like Hypetane!"
PeachNCream - Friday, October 19, 2018 - link
Sure, sure, something better is coming from Intel like the shining light of the Sun as it falls gracefully upon a blooming meadow after breaking through the dispersing rain clouds. Only the purity of Intel working alone, not tainted by the filth of a partner corporation like Micron, could offer such a wonderful future to we mere huddled masses. Like you, HStewart, I am eager to cavort to the highest hilltop from which I shall cast my song of praise into the wind for all to hear once the wise marketing gurus see fit to lift their silken sheets of non-disclosure.