Flash Memory Market to Decline Slightly in 2012: IHS

The wireless sector continues to be a trouble spot for NOR, while an erosion in NAND prices will also contribute to a fall in flash memory revenue.

Revenue for the flash memory market by year-end is projected to decline to $24.3 billion, down 4.7 percent from $25.5 billion in 2011, according to an IHS iSuppli Mobile & Embedded Market Tracker Report from information and analytics provider IHS.

The NAND segment this year will account for $20.8 billion and the NOR sector will make up the remainder at $3.5 billion as flash memory manufacturers confront a rapidly shifting landscape driven by increasingly sophisticated mobile handsets, which strongly influence industry trends and determine which suppliers will be successful.

Overall, the report said the NAND segment this year would account for $20.8 billion and the NOR sector would make up the remainder at $3.5 billion. The IHS study also indicated the NOR industry continues to contract, with the latest retreat occurring in the second quarter. Revenue fell to $837 million, down 4.6 percent from the earlier quarter, and down by an even steeper 28.2 percent from the second quarter a year ago in 2011. The larger-than-expected erosion in NAND prices, which contributed to the fall in revenue, the market will rebound in 2013 and grow 11.4 percent, resuming the healthy growth rates the market typically experiences.

NOR’s troubles come from the wireless sector, where it is being squeezed by lower-cost NAND-based solutions emulating NOR capabilities. NOR, which grew quickly in the early years of the handset business, continues to be used in lower-cost cellphones, despite ongoing market share losses in its total market to rival NAND.

Meanwhile, NAND flash is enjoying high demand as consumers migrate to more sophisticated and powerful smartphones, in which data storage in the phones takes advantage of NAND cost, scale and die size. The report noted NAND flash sector continues to flourish despite a temporary setback this year that saw an erosion in average selling prices. The fall in prices cut into total anticipated revenue, the report said.

“The action in the NOR and NAND flash memory market largely is being driven by mobile handsets,” IHS senior principal analyst for memory and storage Michael Yang said in a statement. “Flash memory growth is due in large part to mobile handsets. With Apple and Samsung leading the way, phones today are constantly being refreshed with the latest features and processors—requiring more powerful memory products, in turn.”

There is another competitor when it comes to the memory technology used in smartphones, dynamic random access memory, which a September IHS report found is likely to increase by nearly 50 percent this year. Density in DRAM memory is also expected to increase and has climbed already, the report noted, with 4GB chips encompassing roughly a 37 percent share of the DRAM market for smartphones, followed closely by the 8GB chip configuration with 36 percent. Those standings are expected to reverse next year, with 8GB chips rising to command 46 percent share among smartphones, while share of the 4GB chips will decline to 28 percent.