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A Swissbit interview from the Flash Memory Summit – 2012

Swissbit Readies Next Growth Phase

Firm expands DRAM module and storage lines.

By Mark LaPedus, Contributing Editor

With its strategy in place, Switzerland’s Swissbit AG is moving towards its next growth phase.

Swissbit - Europe’s largest independent producer of industrial DRAM modules and flash storage products - is expanding its

production capabilities, moving into new product markets, and boosting its distribution channels.

As part of its product efforts, the company is expanding its traditional DRAM module and flash storage portfolios. It is also

developing a new solid-state drive (SSD) line, as well as pushing a flash-storage product based on the new and emerging CFast

standard.

Within its product markets, Swissbit is sticking with its current strategy. Generally, the company focuses on the embedded and

industrial markets, which require high-quality solutions and various levels of customization. “We specialize in the low-volume, high-

mix environment,” said Vincenzo Esposito, co-founder of Swissbit and president of Swissbit North America. “I believe many of our

competitors are not set up this way. They have difficulties in handling the variations and the customization of the products.”

The company is

also bucking a

trend. Many

electronics firms

have moved their

production to low-

cost labor sites in

China. In contrast,

Swissbit

differentiates itself

by combining the

design precision of

Switzerland with

the manufacturing

expertise of

Germany.

“Everything is

designed in

Switzerland and

manufactured in

Germany,” said

Esposito, who is also the director of strategic procurement of DRAM/Flash at Swissbit. “This has a good ring to it if you are in the

high-reliability embedded and industrial markets.”

Jim Handy, an analyst with Objective-Analysis, a research firm, said that Swissbit is well positioned in the market. “The industrial

market has lower volumes than the commercial market,” Handy said. “On the other hand, the margins are higher and there is less

competition.”

Privately held Swissbit also faces some challenges. It competes in a large but fragmented market against Smart Modular, Viking,

Western Digital and others. In addition, there is a slowdown in the overall electronics and memory markets right now. But with its

focus in the relatively stable industrial sector, Swissbit is somewhat insulated from the current cycle.

Swissbit’s origins

Swissbit’s roots can be traced back to German industrial giant Siemens. At one time, Siemens competed in the IC and DRAM

markets. In 1991, a unit within Siemens’ DRAM business began to sell memory modules.

Swissbit’s chip-on-board (COB) technology enables cost-effective solutions (Source: Company)

Then, in 1999, Siemens spun off its

DRAM components group into a new

company called Infineon. (In 2006,

Infineon spun off the DRAM unit into an

entity called Qimonda, which went under

in 2009.)

Then, from 1999 to 2000, the separate

DRAM module unit within Siemens opted

for a management buyout, thereby

forming a new and independent company

called Swissbit.

Shortly after its official formation in 2001,

Swissbit acquired Optosys, based in

Berlin, Germany. With Optosys, Swissbit

entered the CompactFlash card market.

At the time, Optosys also competed in

the retail channels against Lexar,

SanDisk and others.

In 2006, Swissbit changed its strategy

amid competitive pressures in the retail

sector. At the time, the company exited

the retail and consumer markets and

decided to focus on embedded and

industrial, recalled Esposito, who

originally joined Siemens’ former DRAM

unit in 1989.

Swissbit’s move to focus on the industrial markets has paid off. The company, which has 150 employees, has emerged as a major

supplier of DRAM modules and flash storage products. It sells products in various and diverse markets, such as automotive,

embedded, industrial, medical, military and networking.

“The industrial businesses are growing and the markets are steady,” said Greg Wong, an analyst with Forward Insights, a research

firm. The challenge in industrial is to meet the stringent reliability requirements from a diverse customer base, Wong said.

With that in mind, Swissbit has put the infrastructure in place to not only meet those rigid demands, but also to deliver custom and

semi-custom solutions. “We’ve been a success story,” Esposito said. “But it’s different than the consumer market. There are so

many vertical markets. And our market is low-volume but high mix. For instance, a typical customer is buying maybe 5,000 to

10,000 products a year. It’s not one big customer who wants a million pieces.”

New growth phase

The industrial sector is still growing, thanks to demand in Asia, Europe and the U.S. As a result, Swissbit is preparing for its next

growth phase on several fronts. For example, within its two production facilities in Germany, Swissbit is capable of producing

500,000 products per month. To meet future demand, the company is putting the infrastructure in place to produce over 1 million

products per month.

One of the company’s key production capabilities is a chip-on-board (COB) technology. COB involves mounting DRAM or flash dies

directly on a substrate and connecting them by bond wires to the PCB without the need of a packaged component. COB technology

enables more compact and energy efficient modules and cards, according to Swissbit.

On the sales front, meanwhile, Swissbit over the last year has signed separate distribution agreements with Arrow, Digi-Key and

Redtree. The deals will enable Swissbit to expand its presence in Europe and the U.S.

And in another part of its strategy, Swissbit continues to expand its product portfolio in two basic categories: flash storage and

DRAM modules. In flash storage, it sells cards based on the CompactFlash, SD and CFast standards. “Our CompactFlash card

business is growing, because other vendors are getting out of it. There is also growth with the other form factors,” Esposito said.

The company sells SSDs for the embedded and industrial markets. It is also currently developing a new SSD line with 256- and 512-

GB capacities, based on single-level-cell (SLC) NAND and the SATA-2 interface. There is also an option for multi-level-cell (MLC)

NAND.

In addition, the company is also making a major push in CFast, mainly for the industrial markets. In May, it rolled out the F-200

series, a CFast flash card line with capacities up to 64GB.

The relatively new CFast interface standard is based on the SATA bus, rather than the Parallel ATA/IDE bus used in CompactFlash.

SATA supports transfer rates up to 600MB/s, while PATA is limited to 133MB/s. In April, the CompactFlash Association (CFA) rolled

out a faster version of CFast, dubbed CFast 2.0, which supports the SATA-3 specification.

Swissbit will mainly focus on selling CFast products based on SATA-2. “CFast is a good alternative to CompactFlash. It's faster and

has more of a future,” Objective-Analysis’ Handy said.

Swissbit’s headquarters in Bronschhofen, Switzerland (Source: Company)

Still, CFast is in its infancy and the technology has just begun to gain traction. “We think it will capture market share, but everything

moves slow in my markets,” Esposito said. “One of the big obstacles for CFast is that the ecosystem isn’t mature. But companies

like JST and 3M are building connectors for CFast. Once the ecosystem starts to mature, the acceptance for CFast will grow.”

Meanwhile, Swissbit has not forgotten its roots in the DRAM module business. It recently rolled out new DDR2 and DDR3 DRAM

modules for industrial and related applications.

“We concentrate on specialized applications,” Esposito said. “The majority of our business is legacy products. We still sell a lot of

DDR1, DDR2 and even SDRAM.”

Over the next year or two, Swissbit expects to see more demand for DDR3 modules in industrial applications, he said. In modules,

Swissbit sources DRAMs from various memory vendors.

And as before, Swissbit does not compete in the commercial PC and tablet segments. “That market belongs to Samsung, Micron

and Hynix. I don’t want to compete with my memory vendors. That’s the golden rule,” he added.

Mark LaPedus has covered the semiconductor industry since 1986, including five years in Asia when he was based in Taiwan. He

has held senior editorial positions at Electronic News, EBN and Silicon Strategies. In Asia, he was a contributing writer for Byte

Magazine. Most recently, he worked as the semiconductor editor at EE Times.