DRAM partnering trend continues with Qimonda, Elpida joint development agreement

The collaboration comes as Infineon continues with plans to sell off its stake in Qimonda and follows a DRAM partnership between Micron and Nanya earlier this week.

By Suzanne Deffree, Managing Editor, News -- Electronic News, 4/24/2008

Qimonda AG and Elpida Memory Inc today announced a planned DRAM partnership and a signed memorandum of understanding that will see the two memory makers jointly develop technology platforms and design rules to allow exchange of products and potential manufacturing joint ventures.

In doing so, Germany-based Qimonda and Japan-based Elpida plan to align their development activities at their respective sites in Hiroshima, and Dresden, including the exchange of engineers. Additionally, the companies also have agreed to explore joint development opportunities in the areas of through silicon via technology and future memories.

Today’s agreement is the latest announced in marked change at Qimonda. Infineon Technologies AG, which spun out its memory operations in 2006 to form Qimonda, Monday announced plans to sell off its investment in the company. Infineon currently owns a 77.5% stake in Qimonda and has repeatedly stated its intention to reduce its investment in Qimonda below 50% by no later than its 2009 annual shareholders meeting.  

Infineon has said that it is currently evaluating its different alternatives for the Qimonda stake, but has not firmly stated what those alternatives are.  However, according to reports out of Germany earlier this week, Infineon has been negotiating with Idaho-based Micron, Korea's Hynix, and Elpida, as well as financial investors over the past three weeks. In separate reports out of Germany this morning, Elpida CEO Yukio Samamoto said he has not spoken with Infineon CEO Wolfgang Ziebart about buying the Qimonda stake, but did not rule out the possibility of such a deal.

Infineon’s decision to sell its Qimonda stake came as it reported fiscal Q2 results with a net loss from discontinued operations of $2.18 billion (1.39 billion Euro), including its share in Qimonda’s net loss of $758 million (482 million Euro), as well as a charge of just more than $1.57 billion (1 billion Euro) from the write-down of the carrying value of Infineon’s interest in Qimonda to its estimated fair value.

The Infineon decision and Qimonda-Elpida partnership also come during a period of change in the DRAM industry, one that has seen the major players working more cooperatively. Indeed, earlier this week, Micron and Taiwan-based Nanya announced joint technology development and a new joint venture for the DRAM memory market dubbed MeiYa Technology. MeiYa will leverage both companies’ manufacturing technology and will be located in a 200-mm Nanya manufacturing facility in Taiwan that will be upgraded to 300-mm manufacturing process technology later this year. The facility is expected to begin volume production in 2009.

For today’s Qimonda-Elpida planned collaboration, Qimonda will provide its know-how on Buried Wordline technology, which allows the wordline of a chip design to be built into the silicon substrate, while the bitline is built on top of the substrate.  Elpida, meanwhile, will offer its stack capacitor technology.

The companies believe the technology cooperation will allow the acceleration of their roadmap to DRAM products featuring cell sizes of 4F². The companies said they will introduce the jointly developed innovative 4F² cell concept in the 40-nm generation in 2010 and to subsequently scale it to the 30-nm generation.

“Qimonda will leverage this partnership to significantly accelerate the introduction of small 4F²cell sizes,” Kin Wah Loh, president and CEO of Qimonda, said in a statement. “This technology alignment of two major DRAM innovators creates excellent opportunities for greater economies of scale in R&D and future joint manufacturing activities.”

The partnership also comes during a period of low DRAM ASPs (average selling prices) and general pressure from capex cutbacks on the DRAM industry. Indeed, analysts have stated that the DRAM market lacks the stimulation and activity needed to bring immediate change.

“Our R&D effort has given us the lead in DRAM technology. In the tough, competitive industry that we are in, however, faster and more efficient development of new process technologies is becoming critically important,” Elpida’s Sakamoto said in the statement. “We believe this joint development agreement with Qimonda will further accelerate and strengthen our technology leadership, putting us on a path to the top position in the DRAM market.”

Qimonda and Elpida said they expect to conclude their negotiations and finalize definitive agreements in “due course,” but did not provide further detail.