Intel shrinks flash memory for phones

The company on Tuesday will announce technology that will shrink the size of its flash memory chips by roughly 50 percent in 2002, giving it more leverage to undercut competitors.

Intel on Tuesday will announce technology that will shrink the size of its flash memory chips by roughly 50 percent in the first half of 2002, a move that will give the company more leverage for undercutting competitors.

The Santa Clara, Calif.-based chipmaker will announce that it will begin to ship flash memory--which is used in cell phones, handheld computers, music players and other consumer devices--made with the 130-nanometer (0.13-micron) manufacturing process. Currently, the most advanced flash memory is made on the 180-nanometer process, which means that the average features measure 180 nanometers in length.

The smaller chips, dubbed 3-Volt Advanced+ Boot Block flash memory, will provide the company and cell phone makers with a number of advantages. For one, Intel will be able to produce far more chips with roughly the same amount of effort, which will give the company the ability to raise volumes or, more importantly, lower prices rapidly.

"From a manufacturing point of view, it is...much more effective," said Rich Wawrzyniak, an analyst at Semico Research. "This is positioning for longer-term gains."

Rival AMD manufactures flash memory on the 250-nanometer process and will next move to 180-nanometer manufacturing.

By shrinking the size of the chips, handheld or phone makers will be able to pack twice as much memory in the same space as they do today, said Scott McCormack, product marketing manager for flash memory at Intel. With cell phones becoming more like Internet-connected computers, more memory is becoming essential.

Last year, cell phones on average contained 16 megabits of memory. The average has risen to 32 megabits this year and will go to 64 megabits next year. In Japan, the averages are even higher.

"We're seeing stacks of 128 megabits or more" on some phones, McCormack said.

Intel's first chips made with the new process will be 32- and 64-megabit models. Chips built on this process, though, will eventually be capable of holding 512 megabits. These smaller chips will also consume less electricity.

Boot Block is Intel's generic line of flash memory chips. By the end of 2002, the company will also make its more dense StrataFlash chips and performance-minded Wireless flash on the 130-nanometer process.

Although the industry suffered through a severe flash memory shortage in 2000, the downturn in the economy has led to excess supplies this year. Analysts have speculated that the component glut may last through 2002.

Still, signs of stability have recently appeared. In its third-quarter earnings conference call, AMD said flash memory revenue, after dropping by 34 percent from the second quarter to $210 million, could recover slightly in the fourth quarter with year-end consumer spending.

Despite the glut, though, companies continue to tweak manufacturing plans to either cut costs or position themselves for the eventual upturn.

Flash memory differs from standard memory in that the data held by the memory chips doesn't disappear when the device containing the chips is turned off. In that sense, flash functions more like a hard drive than standard PC memory. The secret behind the technology is that flash chips retain electrons after the devices go dark, Wawrzyniak said.

When it comes out, the 32-bit Boot Block flash will sell for $11 in quantities of 10,000, while the 64-bit model will sell for $19.