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Impacts of lateral charge diffusion on the retention characteristics of charge-trapping (CT) 3-D NAND flash memory are comprehensively studied in this paper. Atomistic study through ab initio calculation is carried out to understand the correlations between P/E stress induced shallow trap generations and pre-existing traps in Si₃N₄. It is shown that more shallow traps will be generated with a combination of electron/hole injections and free hydrogen (H) during P/E cycling. Our results strongly suggest that process optimizations to control free H in Si₃N₄ CT layer could be a key point for robust retention characteristics.