Micron bucks weak NAND market conditions

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Micron bucks weak NAND market conditions

Closes gap with Hynix in Q2, according to iSuppli

Nam Hyung Kim, iSuppli

Thursday, August 21, 2008

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USA: Micron Technology Inc. in the second quarter narrowed its NAND flash memory market-share gap with Hynix Semiconductor Inc., setting the stage for a battle for the industry's third rank this year, according to iSuppli Corp.

US-based Micron in the second quarter sold $300 million worth of NAND flash memory, up 11.9 percent from $268 million in the first quarter, the largest percentage and revenue growth of the Top-7 suppliers ranked by iSuppli.

Micron's industry-leading performance was all the more remarkable given the generally weak conditions in the NAND flash market in the second quarter.

Global NAND flash memory revenue declined to $3.36 billion in the second quarter, down 2.5 percent from $3.45 billion in the first quarter. Five of the Top-7 NAND suppliers posted either declines or zero growth in revenue compared to the first quarter.

No.-4 ranked Micron's share of global NAND revenue market increased to 8.9 percent in the second quarter, up from 7.8 percent in the first. Micron in the second quarter trailed No.-3 ranked Hynix of South Korea by only 4.5 percentage points, down from 7.2 percentage points in the first quarter.

The figure presents iSuppli's worldwide ranking of NAND flash suppliers in the second quarter.

Source: iSuppli

Micron's market-share advance reflects its aggressive production ramp of 300 millimeter (mm) wafers and its plan to migrate nearly half of its NAND flash manufacturing to the 34 nanometer (nm) process geometry by the end of 2008, iSuppli believes.

"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."

Because Hynix is expected to focus mainly on DRAM throughout 2008, its NAND market share gap with Hynix will narrow further iSuppli believes.

Significantly, the only other company besides Micron to achieve sequential NAND memory revenue growth in the second quarter was its manufacturing partner, Intel Corp. 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.

Due to intense competition and the slowdown of the economy, the NAND flash market has been experiencing a sharp downturn since the beginning of 2008. iSuppli early this year warned that the NAND market would experience a challenging 2008. iSuppli now has cut its 2008 NAND annual flash revenue growth forecast from 9 percent to virtually zero. Unless NAND prices stabilize during the forth quarter, even such flat growth may not be possible this year.

"The flash industry is abuzz with talk about Solid-State Drives (SSDs) and other emerging applications that could drive new NAND demand," Kim said.

"However, none of these applications is expected to change the momentum of the NAND business anytime soon. With the gloomy economic outlook, excess inventory, slow orders and weak consumer spending, the NAND market will remain under pressure for the foreseeable future.

With its extensive use in consumer-oriented products like MP3 players and digital still cameras, NAND is highly susceptible to changes in macroeconomic conditions."

iSuppli now believes 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. No-1 NAND flash memory supplier Samsung in the second quarter maintained its market lead with a 42.3 percent share of global revenue. The company was the only profitable NAND supplier during the second quarter due to its diverse product lines, iSuppli believes.
The author is Director and Chief Analyst, Memory ICs/Storage Systems, iSuppli

Source: iSuppli

©CIOL Bureau

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