Hynix and Numonyx are throwing their weight behind NAND flash memory in an extended five-year deal to beef up development of the cash-starved sector.
Together the companies will produce the memory technology that is used in high-end mobile phones including Apple's iPhone, MP3 players and other digital devices. It offers higher storage capacity than NOR memory, used in older mobile phones.
Hynix has been having a rough time in the past few months. In July it posted its third consecutive loss of $700m for Q2, largely because of weakness in the DRAM and NAND markets following a glut in 2007 pushing down prices in the sector this year.
Meanwhile, Numonyx - a flash venture between Intel and STMicroelectronics NV, which finally got off the ground in April following a delay attributed to "significant turmoil" in the financial markets - will be hoping the deal with Hynix will strengthen its NAND position in the wireless segment.
NAND memory production is proving to be much trickier for vendors as the technology scales, or moves to smaller and smaller manufacturing lithography nodes, said Numonyx.
In April chip analyst iSuppli revised down its growth forecast for the NAND market this year to nine per cent. It said it will reach more than $15.2bn, from a previous estimate of 27 per cent growth. It also said signs showed that buyers were scaling back expectations for products using NAND-based chips.®