Date: 15/11/2010

NAND type flash memory revenue to grow by 38% to reach $18.7 billion in 2010

The global NAND flash memory business will post record revenue in 2010 thanks to increased usage in smart phones and the newly invigorated tablet category, according to market research firm iSuppli Corp.

Market research firm iSuppli has forecasted the revenue for NAND flash memory in 2010 to reach $18.7 billion, a growth of 38 percent from $13.5 billion last year. With these forecasts, it can be easily analyzed that the NAND flash is going to be the key product category in the semiconductor chip market growth in 2010.

The market drivers are mainly the smartphones and tablet computers or call them smart pads, where the main memory to store user data is NAND based SSDs and other card type interfaces.

ISuppli adds:
During the next two years, however, projections call for a mild decline in Average Selling Prices (ASP) ranging from 23 percent to 29 percent. In addition, oversupply could be a problem beyond 2011, and 2012 presents significant risk for a downturn, iSuppli warns. Given the current upbeat outlook, the industry may be goaded by over optimism to increase NAND flash production ahead of actual demand-leading to oversupply and a subsequent fall in the market.

Overall, NAND flash revenue will dip slightly in 2012, pick up the year after, and then retreat once more in 2014, predicts iSuppli.

With planned fabs from Samsung Electronics, Toshiba Corp. and the Intel-Micron joint venture of IMFT adding another 70 percent increase in production next year, the risk of oversupply is high, alerts iSuppli.

Unless suppliers prudently manage production mix according to demand, iSuppli cautions, the additional capacity coming online next year will send the market into a tailspin.

Here are some more observations and advises by iSuppli:
1. Tablets Present New Growth Opportunity, but Suppliers Must be Prudent
Among consumer electronic devices, tablets represent the newest growth sector for NAND flash, in addition to the memory product's continued healthy application and usage in smart phones.

2. The mad rush for NAND flash in tablets echoes a similar trend in netbooks two years ago, but is occurring on a larger scale, iSuppli believes, given the high average densities used in tablets. According to projections, consumption of NAND flash in tablet devices will soar to 1.7 billion gigabytes in 2011, up from 428 million gigabytes in 2010.

3. Collectively, the iPad will have the highest average NAND flash density of any tablet device, anticipated to reach 52.5GB in 2012. Apple's expected dominance in the tablet market for some time to come-together with the more than 30 tablet devices to become available in the fourth quarter from major brands-portends a continuing boon for NAND memory.

4. Nonetheless, iSuppli warns that suppliers will need to walk a fine line as the industry moves to 2x-nanometer and more advanced semiconductor manufacturing processes by the end of the year.

5. Along with the rise in capacity spending from manufacturers and an expected increase in output from new fabs, suppliers must balance the twin demands of reducing production costs as well as growing the supply of NAND flash in the market.

6. Should seasonal demand in the second half of the year-and beyond-not shape up to expectations, oversupply and other expenditures could sink an otherwise resilient market and push NAND memory toward a downturn.

ee Herald