Even with all those millions of iPads, iPhones and iPods Apple is selling around the world, there is an oversupply of NAND flash memory on the market. Who knew?
Looks like the new Samsung/Toshiba fabrication plants in the Far East have been spitting out too much product, allowing pricing to slip and profits to tailspin down.
iSuppli, a Southern California-based flash industry analyst, reported the week of July 15 about serious overproduction of 3-bit-per-cell parts used for removable memory cards and USB drives, which caused a temporary kink in the growth of the red-hot NAND flash memory market in the second quarter.
After five consecutive quarters of upward expansion due to strong demand and short supplies [that's where the cell phones and iPads come into play], global revenue from shipments of NAND-type flash memory declined to $4.1 billion in the second quarter, down 6.5 percent from $4.3 billion in the first quarter, iSuppli said.
From here on out, however, iSuppli said it expects the NAND flash market to return to sequential growth for the next five quarters. That in itself is a pretty bold statement, considering the roller-coaster nature of the flash market.
The 3-bit-per-cell (TLC) flash parts represent the latest development in the NAND market, allowing the storage of three bits of information in each memory cell, thus tripling the density of a flash device. This more powerful NAND has enjoyed strong acceptance in memory cards and USB drives.
In comparison, the other large consumers of NAND--embedded applications and mobile communications--use 2-bit-per-cell Multilevel Cell (MLC) and 1-bit-per-cell Single Level Cell (SLC) flash which is fine for those purposes.
"The NAND flash market is officially on a winning streak, amid strong demand and short supplies," said Michael Yang, manager of memory/storage systems for iSuppli. "However, soaring production of TLC parts has resulted in these parts going into oversupply, causing prices to decline and bringing down revenue for the entire NAND market in the second quarter."
It's ironic that NAND flash itself is nonvolative memory, but the market itself is about as volatile as it gets. For years, the industry has been plagued by intense highs and equally intense lows, as far as supply-and-demand goes.