The charge loss mechanism of a two-bit wrapped-gate nitride storage nonvolatile memory is investigated. From retention measurements, it was shown that both vertical and lateral charge loss coexist. As a result of the misalignment of carriers, the lateral charge loss was caused by the hole accumulation near the junction and migrating toward the channel. By using a scaling of the word-gate length or a substrate-transient hot hole erase scheme, the charge loss in the lateral direction can be suppressed. Also, from the retention test, the latter scheme, substrate-transient hot hole (STHH), has a window independent of the word-gate length, which is better for the device scaling.