Use of nano‐crystals of silicon in close proximity (1.5–4.5 nm) of a transistor channel lead to structures with pronounced memory where effects due to discrete number of electrons, confinement‐induced subbands in inversion layers and discrete energy states in quantum dots, random charge distribution in quantum dots, and transmission through a strong barrier are very important. Experimental results show plateaus in threshold voltage at low temperatures, spaced nearly equally apart, and indicative of single electron effects. Varying the oxide thickness shows strong influence on speed and charge retention. We confirm the strength of confinement effects and discuss the underlying considerations in the operation of the memory that are related to the reduced volume, strength of the barrier, and random distribution of the trapped charge in nano‐crystals.