Intel and Micron have announced they have updated the terms of their 3D XPoint joint development partnership and will cease joint development after the second generation of 3D XPoint is completed in the first half of 2019. The two companies also recently announced they would cease joint development of NAND through their Intel-Micron Flash Technologies (IMFT) partnership after the third generation of flash technology, but the storied IMFT franchise will apparently soldier on through shared production facilities.
Intel and Micron will continue to develop new generations of 3D XPoint independently "in order to optimize the technology for their respective product and business needs." Intel representatives confirmed to us that the company will still produce 3D XPoint out of the jointly-operated IMFT fab in Lehi, Utah even after the companies develop their respective third-generation products, but Intel still has the option to produce the memory at other facilities if needed.
Intel and Micron announced 3D XPoint in July 2015. The companies designed the new memory to bridge the performance gap between NAND and DRAM, and because of 3D XPoint's persistence (it retains data after power is removed), it can serve in both memory and storage roles.
Micron announced its 3D XPoint-based QuantX products in 2016, and we even tracked down the finer details of the design, but the SSDs did not make it to market. As a result, Intel is the only company selling 3D XPoint-based products and Micron has relied on Intel to purchase its excess 3D XPoint production capacity.
However, during a recent earnings call, Micron CEO Sanjay Mehrotra revealed that 3D XPoint sales to Intel were flagging, thus incurring under-utilization charges that impacted Micron's bottom line. Micron even indicated that it was possible that the company wouldn't sell any 3D XPoint to Intel in the future. As such, Mehrotra announced that Micron would re-negotiate the terms of future 3D XPoint development with Intel. That means the split in product development is likely the outcome of the renegotiation.
Sales of 3D XPoint have obviously been under expectations. Intel has brought the new memory to market in various SSD form factors, but pricing has been a concern as prices for traditional flash-based SSDs have continued to plummet. Intel has even taken to offering "Core+" processors that come bundled with 3D XPoint drives in an apparent effort to spur sales.
Analysts have long predicted that the debut of Optane DC Persistent Memory DIMMs, which bring the speedy memory to the DIMM form factor to enable explosive memory capacity increases, would mark the true turning point for 3D XPoint adoption. Unfortunately, Intel's 3D XPoint DIMMs have been plagued by delays, which ultimately has led to lower-than-expected sales.
Intel is currently ramping production of its long-overdue DIMMs and claims that several hyperscalers and cloud service providers are committed to deploying its products. Micron says that it will bring its first 3D XPoint-based products to market by the end of 2019, with meaningful revenue occurring in 2020.
Both Intel and Micron have sunk a tremendous amount of R&D into the skunkworks-class project over the course of a decade, so it is unlikely that either will cease development and production. Intel and Micron have repeatedly stated that 3D XPoint is an inherently scalable design: the companies can either add more layers, shrink lithography, or store more bits per cell to boost capacity and performance. That leaves plenty of room for improvements in the future. Given the announced timeline for the second-gen products in early 2019, we could see faster, cheaper, and more capacious 3D XPoint products soon.
