It seems the end of Intel’s ailing Optane memory business is in sight. Hidden within a brutal second-quarter 2022 earnings release for the company (more on that a bit later today) is a very odd statement in a section that talks about non-GAAP adjustments: In the second quarter of 2022, we initiated the winding down of our Intel Optane memory business. Also, Intel’s earnings report notes that the company charged a $559 million “impairment of Optane inventory” this quarter.
Aside from those two points, there is no other information on Optane in Intel’s earnings release or accompanying presentation deck. We have reached out to company representatives for more information and are awaiting a response.
Taking these things at face value, it appears that Intel is preparing to exit its Optane memory business and development of the associated 3D XPoint technology. Certainly there is a great deal of nuance here surrounding the Optane name and the product lines here – which is why we are asking for clarification from Intel – as Intel has multiple Optane products including “Optane Memory”, “Optane Persistent Memory”. and “Optane SSDs”. Nonetheless, Intel’s previous earnings releases and other financial documents have traditionally referred to the entire Optane business unit as its “Optane memory business,” making it appear that Intel is actually winding up the Optane business unit, and not just the Optane memory product.
To update: 6:40 p.m. ET
In response to our request, Intel sent out a brief statement on Optane’s resolution. While it doesn’t offer many more details on Intel’s exit, it does confirm that Intel is indeed exiting the entire Optane business.
We continue to streamline our portfolio in support of our IDM 2.0 strategy. This also includes evaluating the disposal of business areas that are either not sufficiently profitable or are not part of our strategic goals. After careful consideration, Intel plans to discontinue future product development within its Optane business. We’re committed to supporting Optane customers during the transition.
Intel, in turn, used 3D XPoint as the basis for two product lines. For its data center customers, it offered Optane Persistent Memory, which 3D XPoint packaged in DIMMs as a partial replacement for traditional DRAMs. Optane DIMMs offered a higher bit density than DRAM and combined with their persistent, non-volatile nature, presented an interesting proposition for systems that required massive memory sets and could benefit from their non-volatile nature, such as B. Database server. Meanwhile, Intel also uses 3D XPoint as the basis for several storage products, including high-performance SSDs for the server and client markets, and as a smaller, high-speed cache for use with slower NAND SSDs.
However, the unique properties of 3D XPoint have also been a challenge for Intel since the technology’s inception. Although 3D XPoint is designed for scalability through layer stacking, the cost of manufacturing 3D XPoint on a bit basis is still higher than NAND, making the technology significantly more expensive than even higher performing SSDs. Meanwhile, Optane DIMMs, while uniquely niche, were just as expensive and offered slower transfer rates than DRAM. Despite Intel’s efforts to offer a product that could bridge the two product ranges, 3D XPoint hasn’t performed as well as DRAM for workloads that don’t benefit from the technology’s unique capabilities at their respective jobs — making Optane products nor NAND a hard sell.
As a result, Intel has been losing money on its Optane business for most (if not all) of its life, including Hundreds of millions of dollars in 2020. Intel doesn’t regularly release Optane sales information, but on the one-off occasions they’ve released those numbers, they’ve been well in line on an operating income basis. Reports from Blocks & Files have also claimed this Intel is sitting on a clear oversupply of 3D XPoint chips – in the order of two years of existence earlier this year. All of this underscores the difficulties Intel has encountered in selling Optane products and adds to the cost of a write-down/write-down that Intel is taking on its $559 million Optane depreciation fee today.
Consequently, a possible settlement of Optane/3D XPoint has been in the tea leaves for some time, and Intel has taken steps to change or curtail the deal. Above all, the dissolution of the Intel/Micron IMFT joint venture left Micron ownership of the only 3D XPoint manufacturing facilitythe whole time Micron has abandoned its own 3D XPoint plans. And after production of 3D XPoint memory by 2021, Micron eventually sold the factory to Texas Instruments for other uses. Since then, Intel hasn’t had access to a high-volume factory for 3D XPoint – although if inventory reports are correct, they haven’t had to produce memory for quite some time.
On the product side, the winding-up of the Optane deal follows Intel’s earlier exit from the client storage market. While the company has released two generations of Optane products for the data center market, it has never released a second generation of consumer products (e.g. Optane 905P). And after Intel sold its NAND business to SK Hynix (now trading as Solidigm), Intel no longer produces other types of client memory. Therefore, phase out of the remaining data center products is the logical next step, albeit an unfortunate one.
Overall, Intel has decided to exit the Optane/3D XPoint business at a critical juncture for the company. With the launch of Sapphire Rapids Xeon CPUs this year, Intel had previously planned to launch a third generation of Optane products, most notably their “Crow Pass” 3approx Generation Persistent DIMMs that, among other things, would upgrade Optane DIMM technology to use a DDR5 interface. While development of Crow Pass is believed to be complete or near completion at this point (given Intel’s development schedule and Sapphire Rapids’ delays), actually launching and supporting the product would still incur significant upfront and long-term costs, forcing Intel to adopt the technology would have to support for another generation.
Instead of Optane persistent memory, Intel’s official strategy is to turn to CXL memory technology (CXL.mem), which allows volatile and non-volatile memory to be attached to a CPU via a CXL-capable PCIe bus. This would achieve many of the same goals as Optane (persistent memory, large capacities) without the expense of developing an entirely separate memory technology. Sapphire Rapids, in turn, will be Intel’s first CPU to support CXL, and the overall technology has much broader industry support.
Still, Intel’s withdrawal from Optane/3D XPoint marks an unfortunate end to an interesting lineup. 3D-XPoint DIMMs were a novel idea, even if they didn’t quite work, and 3D-XPoint made for ridiculously fast SSDs thanks to its massive random I/O advantage – and that’s a feature not found in any other SSD Providers will soon be able to fully replicate. So this marks the end of an era for the solid-state storage market.