The formation of Ni-Si and Ni-N nanocrystals by sputtering a Ni0.3Si0.7 target in argon and nitrogen environment were proposed in this paper. A transmission electron microscope analysis shows the nanocrystals embedded in the nitride layer. X-ray photoelectron spectroscopy and x-ray diffraction also offer the chemical material analysis of nanocrystals with surrounding dielectric and the crystallization of nanocrystals for different thermal annealing treatments. Nonvolatile Ni-Si nanocrystal memories reveal superior electrical characteristics for charge storage capacity and reliability due to the improvement of thermal annealing treatment. In addition, we used energy band diagrams to explain the significance of surrounding dielectric for reliability. (c) 2008 American Institute of Physics.