Intel and Micron will part ways on 3D Xpoint development

Intel and Micron work together to develop and produce not only NAND flash (at least, until recently), but also the lower-latency non-volatile 3D Xpoint memory. The companies jointly announced that next-generation non-volatile media three years ago, and they've produced 3D Xpoint chips at the joint IM Flash fab in Lehi, Utah.

Despite that long history of working together on the technology, Intel and Micron will be calling it quits on the idea side of 3D Xpoint after the memory's second-generation design is completed in the first half of 2019. Past that point, the two companies will develop 3D Xpoint independently "in order to optimize the technology for their respective product and business needs," according to Intel's press release.

Intel has introduced a range of Optane products with 3D Xpoint memory inside, but we have yet to see Micron introduce any of its planned QuantX products using 3D Xpoint. On its most recent earnings call, Micron CEO Sanjay Merohtra projected the company would begin introducing QuantX products in late 2019 and would obtain "meaningful revenue" from those products in 2020.

That leaves Intel as the sole seller of 3D Xpoint products right now, and while the technology undoubtedly performs well, consumer Optane products have remained expensive and hamstrung by market-segmentation decisions. Intel's Optane DC Persistent Memory, also known as Optane DIMMs, could open up a new and higher-volume market for 3D Xpoint media, but that product has been delayed to 2019 after being slated for launch this year.

In its earnings call, Micron noted that it has 3D Xpoint fab capacity sitting idle, possibly as a result of Intel not buying any of its production. That capacity costs it money whether it's being used to make chips or not. Micron admits as much in its recent earnings, where the company said its underused capacity cost it 1% of gross margin for the quarter as a result of one-time charges related to that unused machinery and fab time.

The company's execs did note that the 1% hit is about as bad as it can be. The company said to expect a similar hit to margins next quarter, and the 1% figure assumes Micron won't sell any 3D Xpoint media to Intel at all next quarter.

Still, that idle or mostly-idle fab capacity suggests 3D Xpoint might not be as hot a ticket as the two companies had hoped it might be by this point. We'll have to see whether going their own ways can help Micron and Intel make more of 3D Xpoint than they have together thus far.

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