iPhone, iPad and Ilk Driving ‘Insatiable’ Demand for NAND

It’s a good time to be in the NAND flash business.
In a new report, “All Eyes on Apple,” market research firm iSuppli predicts that rising Apple iPhone sales will generate “insatiable” demand for this nonvolatile form of storage, used in devices such as solid-state drives, servers, cell phones, Apple’s iPod and, soon, the Apple iPad.
iSuppli predicts that revenue for the NAND flash memory market will rise from $13.5 billion in 2009 to $18.1 billion in 2010 and up to $25.5 billion by 2013.
“An average of 35.2GB of NAND will be used in each iPhone sold in 2010, iSuppli estimates,” Michael Yang, an iSuppli analyst, said in a Feb. 17 statement. “Furthermore, iPhone shipments are set to rise to 33 million in 2010, up 31.5 percent from 25.1 million in 2009. With the iPhone already the largest application for NAND, this huge growth is likely to lead to some periods of undersupply for the year.”
Such strains on supply are already driving up prices, and Apple has been described as “paying a premium” to assure that enough NAND is available to get 2.5 million iPads into Apple stores during the second quarter of this year.
Further, iSuppli expects shipments of mobile handsets with embedded NAND flash to grow 13.8 percent from the 643 million units shipped in 2009, for a 2010 total of 732 million units.
“The success of the iPhone in the smartphone category has spurred the launch of a series of competitive mobile phones,” Yang said. “These include the Motorola Droid, HTC Android Iris, Palm Pre and Google Nexus One. Although these phones may choose a different solution for storage memory, such as a microSD card, they will still aim to match the iPhone spec for spec in terms of memory capacity. This bodes well for NAND flash demand.”
While e-readers, which contain approximately 512MB to 2GB, use far less NAND than a device like the Apple iPod, both e-readers and tablet PCs are nonetheless contributing to the rising demand for NAND.
In a Feb. 16 research note, Lazard Capital Markets analyst Daniel Amir wrote that Apple’s NAND purchases delivered $81 million of revenue to NAND supplier SanDisk during the fourth quarter of 2009-a number that Amir expects will rise, particularly if Apple introduces two new iPhone models in May.
iSuppli’s Yang expects that, if the Apple iPad is adopted at rates close to those of the iPhone or iPod, it could be a “serious” market-changer for NAND vendors.