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NAND flash memory market status worse than expected

03 November 2008 | By Mark Osborne | News > Fab Management

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iSuppli Corp now expects NAND demand to fall significantlyIn a massive revision to its previous NAND flash market forecast, iSuppli Corp now expects NAND demand to fall significantly, prompting a revenue decline in 2008 of 14 percent to around $12 billion, compared to a 3 percent decline, previously projected. Worse is yet to come, with the market research firm projecting a revenue decline of a further 15 percent in 2009, which is a massive reverse on its 3Q08 forecast of 12 percent growth next year.

"Unlike other memories, which depend more on non-consumer/non-retail products, NAND flash is bearing the brunt of the challenging retail conditions,” commented Nam Hyung Kim, Chief Analyst at iSuppli. "Combined with uncertain global economic conditions and a lack of killer applications, the NAND flash memory business is facing a triple whammy. Beyond the macroeconomic and structural challenges, the NAND flash industry also is experiencing the fundamental challenge of declining demand elasticity. With sufficient capacity in their existing flash storage cards and USB flash drives, consumers don't need to upgrade their products and are not as sensitive to price declines as they used to be.”

Hailed as one of the fastest new semiconductor markets only a few years ago, major memory manufacturers invested $billions in new 300mm fabs to capture a significant share of the emerging flash storage market. However, capital spending is forecasted to be significantly lower in 2009 and could fall by 38 percent over 2008, iSuppli said. 
 
Few if any expected 60 percent ASP declines three years in a row as considerable over capacity and now slowing demand will result in 2008, being the first year of revenue declines in this relatively new memory market. In only 2005, the market saw annual growth rates of 62.2 percent, according to iSuppli.NAND flash memory market status worse than expected

On a unit shipment basis, 1Gbyte equivalent-density NAND chips are expected to increase by 126 percent in 2008, down from 179 percent in 2007. According to iSuppli, the market has averaged a 192 percent increase annually over the last five years.

What makes the 2008 and more importantly the 2009 decline so significant for this market is that iSuppli is forecasting a decline in unit shipment growth of 71 percent.

ASPs of 1Gbyte equivalent of NAND is expected to drop by 62 percent in 2008, confirming fears that the ASP decline would be greater than the 60 percent declines of the last two years. Significantly, iSuppli is projecting a 50 percent decline in ASPs for 2009. The slight improvement in the decline would indicate that over capacity will continue and the expected boost from the adoption of SSD technology in laptops is a 2010 and beyond factor.

Without further cuts in production capacity from the major manufacturers such as Samsung, Hynix, Toshiba/SanDisk and IMFT, coupled to greater consumer spending, the NAND flash market will continue to impact semiconductor equipment spending and drag on overall worldwide semiconductor growth for the next few years.

Revenue decline of a further 15 percent in 2009

Related articles

Hynix delays 300mm fab ramp - 01 April 2008

iSuppli cuts NAND revenues from 27 percent growth to 9 percent for 2008 - 07 April 2008

Memory madness set to continue - 30 June 2008

Apple iPad pushing strong growth in NAND flash memory - 20 January 2011

Gartner cuts NAND flash market growth for 2008 by half - 03 March 2008

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