NAND recovery likely in H2-2009

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NAND recovery likely in H2-2009

By 2011, iSuppli believes that SSDs will be the number one NAND flash market driver in terms of dollar value

Pradeep Chakraborty

Thursday, August 21, 2008

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EL SEGUNDO, USA & BANGALORE, INDIA: iSuppli's recent report on the NAND market highlighted that Micron had managed to buck the weak NAND market conditions, and was closing the gap with Hynix in Q2.

Nam Hyung Kim, Director & Chief Analyst, Memory, iSuppli Corp.

To find out more about the global NAND Flash market scenario, I discussed the health of the NAND market conditions, performance of certain companies, and the possible impact of SSDs on the NAND market, in depth with Nam Hyung Kim, Director & Chief Analyst, Memory, for the market research firm, iSuppli Corp., El Segundo, Calif., USA. Excerpts.

CIOL: NAND continues to be weak. How much longer, before we can see some sort of recovery?

Nam Hyung Kim: The NAND market conditions will depend on suppliers' manufacturing capacity plans and on the global economy. The health of the NAND flash market is largely determined by consumer spending, since more than 85 percent of demand for the memory is generated by consumer-electronics-type products like digital still cameras, mobile handsets and flash storage devices.

Market conditions won't improve much this quarter. However, iSuppli Corp. does expect NAND prices to stabilize to some degree during the fourth quarter due to a slowdown in certain suppliers' capacity expansion plans. A major recovery is expected in the second half of 2009.

CIOL: What's the reason for Micron to have done better in a weak market scenario?

NHK: Micron is doing well based on market share and sales growth—but not in terms of profitability. Micron has been expanding its market share by ramping up production aggressively. The company joined the flash market later than its competitors and is trying to catch up. In the memory world, a supplier needs to have critical scale. Without scale, the company won't be competitive. Thus, Micron is increasing its scale—i.e., its volume—to be more like the size of the top-three suppliers at this moment.

CIOL: If Micron has been aggressive, why haven't the others? Couldn't the others also plan or migrate to 34nm?

NHK: Except for Samsung, all of the suppliers are losing money in their NAND businesses now. Each supplier has a different product mix and strategy, so being aggressive during tough times is not a suitable approach for certain firms.

Others also plan to migrate their process to sub 40 nanometers. However, Micron will be the first one that produces 34nm products this year.

CIOL: iSuppli has now cut its 2008 NAND annual flash revenue growth forecast from 9 percent to virtually zero. What are the reasons? The slowdown was predicted during the end of last year, so why cut predictions?

NHK: This is indeed the second cut this year. We cut our forecast early this year to 9 percent, which was a dramatic reduction from the more than 20 percent growth forecast previously. I believe, we were the first research firm that cut the market growth dramatically this year, followed by other research firms.

The NAND flash market is relatively new and has lots of growth potential. However, oversupply issues, along with weak consumer spending, prompted us to cut the growth outlook further this time.

CIOL: What are the chances of SSDs in helping with a turnaround? Or, are they (SSDs) hyped?

NHK: I should not say SSDs (solid-state drives) are overhyped. There are lots of issues that the industry must overcome when bringing SSD technology to the real world. Hard disk drives (HDDs) have been used in PCs for more than 30 years, so the movement to SSD technology won't be very rapid.

iSuppli had predicted that SSDs would not impact the market this year or next year. The real prime time for SSD adoption will be in 2010. There are many optimization problems associated with SSDs, which is typical at an early stage in the technology industry. By 2011, iSuppli believes SSDs will be the number one NAND flash market driver in terms of dollar value.

CIOL: iSuppli now believes that the global NAND flash per-megabit Average Selling Price (ASP) will decline by about 60 percent in 2008, compared to its previous forecast of a 56 percent decline. Again, what are the reasons?

NHK: As mentioned, the NAND flash market, even in third-quarter, holiday season, won't have a turn around, which brings the ASP down to the 60 percent level.

CIOL: When you take NAND out of the equation, how does the semiconductor industry look like?

NHK: iSuppli believes that the 2009 global semiconductor market growth will be higher than that of this year. The semiconductor market is also cyclical, so it will be impacted by global GDP growth this year.

CIOL: Finally, how do you forsee Nymonyx (there was an article saying it will conquer NAND Flash)?

NHK: Numonyx is still a major NOR flash supplier with limited NAND flash market share. Unlike Intel, Numonyx's focus is on mobile applications. Its joint-venture partner, Hynix, is scaling down its NAND flash production at this time and is focusing on DRAM production.

iSuppli doesn't expect Numonyx to be a formidable competitor in the NAND flash memory market during the near term.

©CIOL Bureau

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kevin said on 8/23/2008 2:27:41 AM:
Thanks for very relevant article

to kevin

Ed said on 8/22/2008 5:21:28 PM:
Take memory out and semiconductors rock!

to Ed

PCM said on 8/21/2008 11:27:00 AM:
Very good

to PCM

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