Global demand for DRAM and NAND flash is to take a dive in 2008 that will seriously impact memory manufacturers’ revenues, according to iSuppli Corp. analyst Nam Hyung Kim. The weak US economy is to blame, as is significant purchasing cuts at Apple due to falling iPod sales. Apple was the world's third largest OEM buyer of NAND flash memory in 2007, representing 13.1 percent of the global market with purchases topping $1.2 billion, iSuppli said. 

“Unless the economy recovers vigorously later this year, last year’s DRAM market disaster could be repeated in NAND this year,” said Nam Hyung Kim, Director and Chief Analyst, memory, for iSuppli. “In light of these factors, NAND suppliers are likely to go into the red in the first quarter, and are not likely to recover in the second,” Kim warned.

This would infer that the only profitable quarter in 2008 would be the third quarter due to seasonal demand in anticipation of end-of-year consumer spending. Currently, iSuppli believes that NAND prices are below fully loaded cost.

Kim cited the NAND market conditions from the fourth quarter of last year as an insight to the conditions expected through 2008, which saw revenues decline to $4.1 billion, down 2.4 percent from $4.2 billion in the third quarter. Of the Top 8 NAND suppliers, six suffered sequential declines in revenue.

Not surprisingly, capital spending is expected to rise in 2008 by approximately 20 percent as the major manufacturers continue capacity additions and die shrinks at 300mm fabs.

Even though DRAM capital spending is in decline and bit growth is coming primarily from die shrinks, supply will still outstrip demand. iSuppli projects that DRAM revenues will only increase by 4 percent in 2008. The expected pricing recovery is not expected for a few more months, according to Kim.

iSuppli also released its preliminary NAND flash market share figures for 2007, highlighting the tremendous growth of Intel and Micron via their IMFT manufacturing joint venture. Revenue rose by 139.2 percent for Micron and 269.6 percent for Intel. IMFT achieved explosive growth in unit production that offset the impact of falling prices, according to iSuppli.

Samsung remained the largest supplier but only saw revenues rise by 4.4 percent in 2007. Of the Top 8, only Renesas and Qimonda saw revenue declines. The NAND flash revenues in total grew by 12.5 percent in 2007.