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Samsung has retained its dominant position as the leading NAND flash supplier in the second quarter with revenue of $1.4 billion - a 42.3 percent share of the market. According to iSuppli Corp., Samsung was the only profitable NAND supplier during the quarter.

The real interesting stuff is the battle emerging between the current third-largest supplier Hynix, and upstart Micron Technology, currently in fourth position. Micron generated $300 million in NAND sales in the last quarter, up 11.9 percent from $268 million in the first quarter. According to iSuppli, this is the largest percentage and revenue growth of the Top 7 suppliers ranked by the market research firm.

“In the memory world, process migrations and wafer scale are two crucial factors in driving down costs,” observed Nam Hyung Kim, Chief Analyst and Director at iSuppli. “Micron has rapidly increased its 300mm wafer capacity and the 32nm geometry will boost its profitability in the near future, as well as its productivity. Because of its aggressive production ramp, Micron now is challenging Hynix for the market’s No.-3 spot—and by the first half of 2009 likely will be in a position to vie with industry leaders Samsung Electronics Co. Ltd. and Toshiba Corp. in terms of profitability.”

The surge is happening at the wrong time for Hynix, as the company has been forced to shift much of its trailing-edge 200mm fabs back to DRAM production. The company cannot keep apace of the blistering node migrations of its key rivals that are now using 300mm fabs and immersion lithography for NAND production.

As a result, Micron is closing the gap on Hynix and is now only ahead by 4.5 percentage points, down from 7.2 percentage points in the first quarter. With a new 300mm NAND fab to ramp in Singapore, Micron looks destined to further move up the rankings.

Micron’s production partner Intel is not doing all that badly either, according to iSuppli.  Intel posted a 4.8 percent increase in revenue, giving it a market share of 5.2 percent, up from 4.8 percent in the first quarter and one of the few that posted sequential NAND memory revenue growth.

Not surprisingly, iSuppli thinks that the continued oversupply and weakening demand (excluding the hype regarding SSD) will result in zero revenue growth for the NAND market in 2008. Indeed, it is quite possible that there could be negative growth for the first time.

ASPs are expected to decline 60 percent once again, which is higher than iSuppli’s previous forecast of 56 percent. Should this become a reality, this would be the third year of 60 percent ASP declines.