Flash memory patent litigation impacts bottom lines
June 9, 2009
The recent cross-license agreement with Samsung, noted in the article of interest, includes four-bit-per cell technology, which is a critical element for building enterprise servers using high density solid state disk drives and will keep SanDisk profitable over the next 7 years.
Analysis
SanDisk has reaped the fruits again of its pioneering in the field of NAND flash memory. This company has benefitted from remaining a fabless entity. The lack of a billion dollar price tag of a maintaining a fab operation has enabled them to create a highly talented legal team focused on protecting their critical IP and a product development team focused on innovative designs and new and advanced consumer applications.
The recent cross-license agreement with Samsung, noted in the article of interest, included four-bit-per cell technology, which is a critical element for building enterprise servers using high density solid state disk drives. Samsung has reportedly paid SanDisk ~450 million dollars annually for patent royalties, which have likely kept SanDisk in a stronger cash position than many of its rivals such as Micron, Hynix, STEC and Elpida.
Spansion is looking to defend itself from Samsung patent infringement as well in a new lawsuit. This company is seeking the exclusion from the US market of more than 100 million MP3 players, cell phones, digital cameras, and other consumer electronic devices containing Samsung's flash memory components, which the company claims violate 10 of its patents for floating gate technology. Also, the case in the US District Court in Delaware is focused on an injunction and treble damages for the alleged infringement relating to Samsung flash memory, which Spansion estimates has generated ~$30 billion in Samsung's global revenues since 2003.
Spansion is one of the leaders whom developed charge-trap flash as a replacement to the conventional floating gate in flash devices. However, Freescale recently announced they would be going into production for NOR flash products using an alternative nanocrystal-based gate design, as one of the first to do so commercially. It will be interesting to see how this plays out across the industry in patent litigation, as Samsung, Micron, Spansion and SanDisk have all explored this technology, which could be used for NAND flash as well.
