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Toshiba and Samsung both ponder opening new 3D flash fabs

One step forwards and one step back

+Comment Financially troubled Toshiba is building a new 3D flash fab while Samsung is delaying an expansion of its 3D NAND fab capabilities.

With 3D NAND, layers of non-3D, or planar, flash are built atop one another, to increase a flash chip’s capacity without increasing its footprint.

As the cost/bit of 3D NAND progresses to undercut planar NAND’s cost/bit, thanks to manufacturing process developments, flash fab owners are building more 3D NAND capacity.

It’s a complex calculation for them; working out when the cost of building 3D NAND fab facilities is justified by the resulting 3D NAND revenue stream being greater than continuing with planar NAND. Samsung was early in 3D NAND production while SanDisk and Toshiba have delayed to the point where the cost/bit cross-over between 2D and 3D NAND has progressed to the point where their revenue and profitability will increase by transitioning more and more to 3D.

Toshiba, according to analyst haus Stifel Nicolaus' MD, Aaron Rakers, acquired 500,000 square feet of land for $25m in Yokkaichi in Japan’s Mie Prefecture to build an additional 3D NAND fab, which is at present called New Fab 2. Construction is expected to start in March 2017 and SanDisk, being acquired by WD, has to pay for half the plant’s start-up cost as well as half of the initial production ramp costs, thought to be about $600m. SanDisk will pay this cash this year.

Samsung is delaying the second phase of investment in its 3D NAND fab in Xi’an, China, because of increased industry supply from new fabs built by Toshiba/SanDisk (WD) – New Fab 2, in other words – and Intel. Rakers references a Business Korea article that says Samsung only uses 20 per cent of the fab’s area at present.

Toshiba has also said its restructuring its disk drive operations, reducing mobile disk drive product types (SKUs) from ten to four and reducing its US 2.5-inch disk drive channel. The company is moving resources from mobile drives to enterprise disk drives, meaning 3.5-inch capacity tubs, and SSDs. Its enterprise disk drive shipments were in the region of 1.707 million units, down seven per cent year-on-year and two per cent quarter-on-quarter.

Rakers says that 5TB and 6TB units were less than 10 per cent of Toshiba’s circa. 580,000 enterprise disk drive shipments, meaning a sub-58,000 number, putting Toshiba a long way behind Seagate and WD/HGST in this space. WD said it shipped 1.5 million high-capacity helium drives in the same quarter.

To increase the development pressure on Toshiba, high-capacity drives are moving towards an 8TB-10TB sweet spot.

El Reg wonders if Toshiba and WD, already in agreement over WD's purchase of SanDisk, might come to some sort of accommodation over high-capacity disk drives. For example, if WD gets flash chips from a jointly owned/operated flash fab with Toshiba, might not a similar disk drive manufacturing output sharing deal come into being? ®

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