By Ted Greenwald 

Intel Corp. is starting to ship the first products based on new technology it hopes will reshape the market for computer memory and help it profit more from the tech world's data explosion.

The new storage drives, which Intel is making widely available on Sunday, are based on technology called 3D XPoint. The company bills the technology, which it says it spent more than a decade developing, as a new memory category, bridging the gap between speedy conventional memory where computers hold data for immediate use and the flash memory used for longer-term storage.

"It blurs the line between system memory and storage," said Diane Bryant, an executive vice president who oversees Intel's Data Center Group. She said 3D XPoint, pronounced "three-dee cross point," can help accelerate tasks such as fraud detection, retail purchase recommendations, and autonomous driving.

Intel claims the raw 3D XPoint technology is 1,000 times faster than the NAND flash commonly used in storage drives, though still about 1% the speed of temporary memory called DRAM, or dynamic random-access memory. The storage drives Intel is initially shipping can't take full advantage of the new technology's speed because of the way they connect to computers.

Intel, facing challenges in its core business making processors for personal computers and servers, hopes the new technology can expand its memory business, which reported revenue of $2.6 billion in the past year. That is 3% of total global memory sales, which amount to roughly $80 billion a year, according to Jim Handy, an analyst with Objective Analysis, a semiconductor-market-research firm.

Intel expects 3D XPoint to account for 10% of the memory division's revenue in 2017, "ramping much more into 2018," Intel Chief Executive Brian Krzanich told investors in January.

Intel also hopes 3D XPoint will spur growth throughout its portfolio. The company is looking to data-intensive tasks such as artificial intelligence to drive sales of processor chips and other products, and it is betting on 3D XPoint to make those products more attractive.

Realizing Intel's goals, though, will mean manufacturing the new technology profitably at an attractive price.

Intel has said 3D XPoint chips can be made in conventional chip fabrication plants. But doing so in volumes high enough to make the technology affordable will be "a herculean effort," Mr. Handy said. Intel has said that 3D XPoint requires new materials and involves putting down materials in layers, both of which are challenging in high-volume production, he said.

The less expensive of Intel's new drives offers 375 gigabytes for $1,520, around $4 a gigabyte. That is below the cost of DRAM, which according to Mr. Handy runs $4.50 to $5 a gigabyte, though well above the 20 cents to 25 cents a gigabyte for NAND flash.

Mr. Handy, speaking before Intel disclosed its pricing, said he thinks Intel will have to sell 3D XPoint at a loss until production ramps up substantially. Intel said it expects the cost structure to be closer to that of NAND than of DRAM.

Although Intel touts 3D XPoint as orders of magnitude faster than NAND, it said the new storage drives it is shipping are five-to-eight times faster than NAND-based solid-state drives, because they are constrained by the conventional interface used to connect storage to computers. It plans other 3D XPoint-based products later this year that will connect more directly to processors, allowing the technology to work at top speed.

Ultimately, Ms. Bryant said, Intel expects the technology to drive innovations in computing systems, because new hardware and software designs are needed to take full advantage of it.

Dell Technologies Inc. is testing the technology, according to a person familiar with the matter. Alibaba Group is using it using it to help execute internet searches and Harvard University in cloud computing, according to Intel.

Intel developed the technology, which it is marketing under the name Optane, with Micron Technology Inc., a longtime partner. Micron, which will market 3D XPoint under the brand name QuantX, plans to sell products based on technology this year. It hasn't announced its plans for specific products.

How the technology works is a closely held secret that has given rise to much speculation. While DRAM and NAND use transistors etched in silicon to store electrical charges representing digital 1s and 0s, the new technology uses no transistors and stores no charge, Intel has said. Instead, it uses electricity to make a physical change -- like shifting between crystalline and amorphous states -- in a proprietary material that Intel and Micron haven't named publicly.

Write to Ted Greenwald at Ted.Greenwald@wsj.com

 

(END) Dow Jones Newswires

March 19, 2017 06:14 ET (10:14 GMT)

Copyright (c) 2017 Dow Jones & Company, Inc.
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