Micron's Clever Subterfuge (NASDAQ:MU)

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Summary

In October of 2019, Micron called Intel's share of IMFT / 3D Xpoint.
In March, Micron announced that they will discontinue IMFT & 3D Xpoint.
I believe that this is an obfuscation. Don the tinfoil hats.

Sunrise in spring at Micron Technology — Photo by knowlesgallery/iStock Editorial via Getty Images

Last March, Micron (NASDAQ:MU) perplexed everyone by announcing that they "will cease development of 3D XPoint™ ["3DXP"] and shift resources to focus on accelerating market introduction of CXL-enabled memory products".

This statement is completely nonsensical because CXL ("Compute Express Link") is agnostic of the underlying memory technology - DRAM, 3DXP, MRAM, or anything else as long as it is byte-addressable (i.e. - not NAND). 3DXP's claim to fame is its byte addressability and would therefore work fine on CXL with the appropriate controller.

Why would Micron assume that nobody would see this conflict in their logic? I believe that this announcement is simply a clever ruse, the impetus for which may not be apparent to most investors who aren't aware of what has been happening behind the scenes.

Wait. What?

An abbreviated recap is required for those who haven't read my previous six years' worth of focus on the topic. My 2015 article "Purple Swan" predated - by a month - the hastily-prepared announcement of 3DXP by Micron and Intel (INTC). If you need more background on 3DXP, its origins, and the ongoing lawsuit surrounding it, "Purple Swan" is a good reference along with a more recent summary by Computer Business Review.

Just know that a Metro Detroit company known as Energy Conversion Devices ("ECD") and its founder, Stanford Ovshinsky, had been working with the technologies since the 1950s. Without explanation, ECD replaced their CEO in late 2011 in order to make a single critical decision: unnecessarily put ECD into bankruptcy and sell all of the assets - including phase change memory ("PCM"), as well as non von Neumann compute and AI - at fire sale prices.

This was way back in 2012. Because the technologies are so complex, it smelled funny only to a handful of ECD shareholders, including myself. Subsequently, we coordinated with the bankruptcy trust in order to reveal the true value of the assets - especially the intellectual property which now provides the basis for 3DXP. Eventually, the ECD bankruptcy brought a lawsuit to Micron, Intel, and other associated parties.

Deeper Dive: Micron and Intel - Fishy?

After many years in the court, last October, the judge issued a 146 page opinion and decided to allow the suit to proceed, kicking the close date out to June of next year with hopes that the parties can settle. At stake are damages for royalties, fraudulent transfer, and patent rights.

Among those patent rights are those which leverage the "phase change" and "transistor-replacement OTS" technologies for both memory as well as what we broadly know as artificial intelligence, which includes such topics that span "machine learning", "deep learning", "neuromorphic computing", "cognitive computing", "spiking neural network", "compute-in-memory", "non-von Neumann", and more.

I've written about the non-memory applications of PCM technology (see: Micron And Intel: The AI And Security Play Of The Century for a good example) and I believe that this will ultimately result in more value (i.e. revenue and profit) than standalone nonvolatile memory such as 3DXP and its successors. I also believe that Micron's Natural Intelligence and Intel's Loihi neuromorphic technologies are based on ECD's intellectual property.

Deeper Dive: Intel - Beyond Today’s AI: Neuromorphic Computing

This would explain the many years of delay from both companies on these new technologies. It is important to note that IBM (IBM) hasn't been shy with their progress on ECD's PCM and OTS technologies as the basis for their focus on bringing AI to a broad variety of markets. But IBM isn't implicated in the ECD suit.

They don't care about pursing standalone PCM because they have the vision to understand that a swath of compute and AI functions will be embedded into memory. Standalone memory - such as 3DXP - will be commoditized. Just ask the memory for answers instead of relying on transferring data to the processor (CPU, GPU, FPGA, etc.) for the requisite, expensive, and perpetually-increasing need for bandwidth.

Today's huge AI industry is furnished largely through GPUs from Nvidia (NVDA) and AMD (AMD) as well as FPGAs from Xilinx (XLNX) and Altera (owned by Intel). These are all digital, von Neumann computing devices, which are characterized by the abhorred von Neumann Bottleneck that has become an ever-increasing limitation on computing power. But this will change with non von Neumann devices such as those based on PCM.

It is important to note that an ECD subsidiary known as Ovonic Cognitive Computer, Inc. is party to the suit, claiming rights to over 300 of the patents that were sold to Micron.

A Rose by any Other Name

In 2019, Kioxia pointed out that 3DXP isn't scalable - and they're correct. It isn't scalable in that the cost per bit decreases as more of those 3D layers are added to each chip. If you double the layers, you double the cost. Not good but not the end of the underlying PCM technology.

Back in 2013 when the Micron and Intel PCM patents were just beginning to pepper the patent offices, a scalable implementation of the technology was outlined, as pictured below.

Source: US Patent Application 20140361239; Micron; filed June 2013

Not coincidentally, Micron had just commissioned Intermolecular, Inc. in order to bring this technology to market. More recently, last August, Intermolecular announced the fruit of this R&D:

Intermolecular Inc., a wholly-owned subsidiary of Merck KGaA, Darmstadt, Germany, recently announced it has developed what it believes is the first quaternary atomic layer deposition ("ALD") GeAsSeTe OTS device for 3D vertical memory arrays. This device overcomes the inability to stack tens of layers in a 3D structure, which limits memory density and results in higher costs, said Intermolecular device engineer Mario Laudato. The company’s new material combination can help to realize these architectures, which would support emerging use cases such as artificial intelligence ("AI") and neuromorphic computing, and other semiconductor designs necessary for faster and more affordable digital applications. [...]

Intermolecular’s new approach involves the use of ALD chalcogenides in lieu of the current PVD process for 3D Xpoint, which limits film conformality and homogeneity on a large scale, he said, and as a result, precludes the integration of tens of decks in a 3D Xpoint architecture. By employing ALD chalcogenides, Intermolecular’s process enables future 3D vertical integration with higher density.

Intermolecular characterizes PCM as follows:

Phase change memory ("PCM") is a type of advanced non-volatile memory where the information is encoded in the phase (i.e. the atomic arrangement) of a material. Phase change materials are usually based on chalcogenides (they contain elements in group 16 on the periodic table, typically those below oxygen). Their atomic structure can be reversibly changed between crystalline and amorphous states by using an external electrical field or optical pulse to heat and cool the material over a specific time scale. This rapid amorphous to crystalline transition leads to change in electrical resistance up to several hundred orders of magnitude, and these low- and high-resistance states define the digital 1s and 0s of stored data. The amorphous-crystalline phase change can be triggered repeatedly with minimal electrical power in a nanosecond, so novel information storage memory built from chalcogenide materials is anticipated to out-perform some other advanced memory technologies with lower power consumption, faster switching, and higher endurance for storage class memory applications.

Call it what you will, here's a layout of the technology from Intermolecular's release video:

Source: Intermolecular ALD Chalcogenide NVM; youtube.com

Looks a lot like the oh-so-scalable 3D NAND architecture, yes? The bonus to this technology is two-fold. First, unlike 3D NAND, which has reached its 2D scaling limit and is nearing its 3D limit, the Intermolecular/Micron architecture will provide much smaller 2D cell sizes.

Deeper Dive: 3D NAND’s Vertical Scaling Race

Unlike planar NAND, which reduced the [2D] cell size at each node, 3D NAND uses a more relaxed process, somewhere between 30nm to 50nm. “Scaling in 3D NAND memory capacity is achieved in a different way: by adding vertical layers,” [...]

A PCM product based on a new scalable architecture will be able to reach much higher 2D densities. Therefore, fewer 3D layers will be required in order to match the bit density of 3D NAND chips. We also know that multiple bits per cell (MLC, TLC, QLC, or more) is definitely possible and probable. Here are a couple of choice quotes from related Intel patent applications:

MULTI-LEVEL MEMORY WITH DIRECT ACCESS

[0003] Phase-Change Memory and Switch (PCMS) is a non-volatile storage technology under development as a successor to the NAND non-volatile storage ubiquitous in today's solid state storage devices. PCMS offers much higher performance than NAND flash and in fact begins to approach the performance points of the Dynamic Random Access Memory (DRAM) currently used as primary dynamic storage in most client computing devices. While PCMS storage may initially be more expensive per-bit than NAND storage, that relationship is forecasted to change over time until, eventually, PCMS is less expensive than NAND.

AUTONOMOUS INITIALIZATION OF NON-VOLATILE RANDOM ACCESS MEMORY IN A COMPUTER SYSTEM

Recent versions of PCM can achieve two additional distinct states, effectively doubling memory storage capacity. PCM is one of a number of new memory technologies competing in the non-volatile role with flash memory (also referred to as "flash").

I am writing another article in order to expose the onslaught of memory patents that Intel has been filing. This is very uncharacteristic of them, typically leaving the memory fabrication stuff to Micron. It seems undeniable that Intel likely has plans to go-it-alone on both PCM as well as a new technology to replace DRAM. It also seems likely that they will introduce more layers into the memory system (e.g. - MRAM, CBRAM, PCM - all nonvolatile).

But more on that soon. Why is Intel selling their NAND business?

Observations

To me, with Micron relegating their next-gen nonvolatile memory to the CXL bus, and Intel dumping money on memory R&D, it seems probable that Micron and Intel are having more than a spat but, rather, a full-on divorce. Realize that 3DXP is just a trade name for the current implementation of ECD's PCM technologies. At this point, Micron and Intel are just burning out the expiration dates on the patents so that they can ship the fruits of ECD's labor.

In 2015, after Intel purchased Altera for their FPGA technology, I fully expected that Micron would move to Altera from Xilinx (XLNX) FPGAs, which comprise the basis for their Advanced Computing Group. But Micron has remained with Xilinx, which was subsequently purchased by AMD. This seems like a coordinated, amicable plan between the two given Micron's inability to front that sort of purchase as well as the mutual "enemy of my enemy" situation.

Micron is free to change the PCM architecture and trade name as they see fit. The current 3D XPoint™ implementation will be rearchitected as a denser, cheaper, and more capable memory. But it sounds like they're not going to be selling raw chips to Intel to use on proprietary DC Persistent Memory ("DCPMM"), as described in my article, Intel's Huge Lead in Persistent Memory.

Source: Intel

In the diagram above, the third level in the memory pool is "Intel Optane SSDs". This level is block-addressable storage - not byte-addressable memory like the DCPMM level.

Deeper Dive: Intel Touts Optane Performance, Teases Next-gen "Crow Pass"

The industry is eager to replace this storage level with the open standard CXL memory interconnect, which will not only encroach into Intel's proprietary DCPMM space, but also allow other processor manufacturers to make use of persistent memory.

If the speed and latency of CXL is good enough, this will kill Intel's DCPMM strategy and the industry will largely collapse back to open standards, which will be good for consumers in the form of lower-than-Intel persistent memory prices for all but the most demanding applications.

Conclusion - It's On

It feels that Micron is bundling their next-gen persistent, byte-addressable memory (remember, flash is block storage - not memory) on fully-completed, direct-to-market, CXL-based products in order to add the value required to recoup their investment. It also sounds like they are cutting off Intel's supply of raw chips for use as DCPMM once their extended supply agreement expires. It is not clear whether Intel's go-it-alone memory strategy provoked Micron or vice versa.

Remember, as I have pointed out in a previous article, with every day, Intel DCPMM is displacing increasingly larger amounts of DRAM, Micron's current bread and butter.

AMD and Xilinx are going to become increasingly more important to Micron at this point. Nvidia's $40bn ARM acquisition is indicative of the looming requirement for tighter integration between the variety of compute elements at both hardware and software level, although they are attempting to forgo any dependence on FPGAs.

Intel has the lead with persistent memory on the DRAM bus and will maintain that lead for many years if they can obtain a supply of persistent memory that is required for their proprietary DCPMMs. Again, it Micron's announcement makes it clear that any next-gen memory will only be provided in CXL form, which Intel intends to support, albeit perhaps at the third level after DCPMM. Both Intel and Samsung (OTC:SSNLF) patent applications reveal that they are working hard on such DCPMM-capable memory technology.

I believe that the wildcard here is ECD and their suit - we're dead in the water until it is settled or the relevant patents dry up. Then, we'll likely see Micron's next-gen 3DXP and its newly-unleashed AI capabilities under some new name.

I'm predicting "QuantX".

This article was written by

Stephen Breezy Research

4K Followers

With sadness and heavy heart we inform the loss of Darren Ginter aka Stephen Breezy Research. Darren suffered with prolonged illness in recent years and departed on April 21, 2023. He started his journey with Seeking Alpha in 2012. Deepest condolences to his family and loved ones. We'll miss his valuable contributions to our platform.--------------------------------------------------------------------------------------------------------“I shall be obliged to write just as if I were considering a topic that no one had dealt with before me” (AT XI 328, CSM I 328).

Analyst’s Disclosure: I am/we are long MU, INTC, IBM. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

I do not recommend any investment until the S&P PE ratio comes down from the stratospheric levels where it is now. I do own shares in the bankrupt ECD with hopes that there will be a distribution to shareholders after any potential settlement. I have not communicated with the ECD bankruptcy trust since the suit began.

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