Cypress Semiconductor announced its intention to divest Silicon Magnetic Systems (SMS), a subsidiary company founded to commercialize Magnetic Random Access Memories (MRAMs).
Cypress CEO T.J. Rodgers said, “After a three-year effort, Cypress sampled fully functional MRAMs to seven key OEM customers in January. Three of those customers are still in the validation phase of their assessment and four of them have already confirmed with us that they have found the product fully functional, as we announced in our quarterly earnings conference call on January 27.”
Rodgers continued, “It is seemingly contradictory that we would sell the MRAM business at its moment of first success. The fact is that a series of events and discoveries has led to our conclusion that this move is best for Cypress’s shareholders.
“The product Cypress has sampled is a 256-kbit MRAM that is pin-for-pin compatible with a Static Random Access Memory (SRAM) product Cypress sold by the tens of millions for over 15 years. We know that some of our 256-kbit SRAMs are purchased by companies that package them with batteries to provide a so-called battery-backup SRAM, which holds data during a power interruption. These battery-backup SRAMs– and related products with non-volatile SRAM properties–are used in equipment such as cellular basestations and mass-storage systems that must restart properly after a power interruption. The market for these non-volatile SRAMs is approximately $40 million per year. Our strategy was to commercialize our MRAM technology first in these niche, battery-backup MRAM markets, and then to grow by adding to our product portfolio.”
Rodgers continued, “The second phase of our MRAM plan was to create a family of high-density MRAMs, ranging from four to 64 megabits in density. This segment of the MRAM market is much larger than the battery-backup SRAM market, partly because it offers the potential to take market share from the multibillion-dollar standard SRAM market, if the MRAM bit cost can be reduced to parity with the SRAM bit cost. Our battery-backup MRAM cell utilizes three transistors and two magnetic tunnel junctions (3T-2MTJ) per bit. In higher-density MRAMs, economic viability can be achieved only by switching to the simpler and denser 1T-1MTJ cell. The 1T-1MTJ cell is more difficult to design and manufacture than the 3T-2MTJ cell, which was invented at Cypress to solve the design and manufacturing problems that have prevented the commercialization of MRAM, despite over a decade of work by some of the world’s most prominent semiconductor companies.
“Based on our latest calculations at Cypress, we no longer believe that the 1T-1MTJ MRAM technology will be able to successfully attack the SRAM market, leaving MRAM as a niche technology with higher bit pricing than that of SRAM. While a niche MRAM business could be a profitable addition to Cypress’s portfolio of products, we currently have more attractive places to invest than in the capital-intensive MRAM business. For example, our revenue from our SunPower solar cell operation this quarter is expected to be $10 million, with a growth rate far exceeding our best expectations for the MRAM business.”
Rodgers continued, “This decision has been particularly hard for me, because I have been deeply involved with the team and technology since we started working on MRAMs. Without exception, this is the finest technical team that I have worked with in my career. They have managed to bring a working product to the marketplace in three years with a team of only 28 people, including administration, marketing and finance.”
Rodgers concluded, “We therefore have made the tough choice to sell our SMS subsidiary and to remove it from Cypress’s books by the end of the first quarter.”
murdok | Breaking eBusiness News
Your source for investigative ebusiness reporting and breaking news.
