Worldwide revenue from the sale of NAND flash memory, which had been one of the reliable segments in the semiconductor industry, is expected to fall by double digits in 2008 and 2009 as consumers buy fewer Apple iPods and other data storage devices, according to new analysis from iSuppli.
NAND flash, which is used as the main memory technology in MP3 music players such as the Apple iPod and in devices such as SSDs (solid-state drives), had been growing by double digits just a few year ago. However, a glut of supply has lowered prices during the last three years, and the current financial crisis has forced consumers to cut back on purchases of notebooks and other gadgets.
In 2008, iSuppli is predicting that revenue from NAND flash memory sales will total about $12 billion, a decline of 14 percent compared with the $13.9 billion the industry saw in 2007. In 2009, NAND revenue is expected to decrease by about 15 percent.
The Oct. 31 iSuppli report revised estimates from earlier this year. Originally, the research firm called for NAND flash revenue to decline only about 3 percent in 2008 and then by 12 percent in 2009.
In addition, the average selling price of NAND flash memory is expected to decline. For example, the sale price of a 1GB NAND flash memory chip is expected to fall 62 percent this year and then 50 percent in 2009.
If there is a silver lining in this forecast, it means that products that use NAND flash will drop in price. For consumers and enterprise buyers, this could mean that laptops that use SSDs, such as the Lenovo ThinkPad X300 and X301, might also decrease in price. Right now, both laptops start between $2,500 and $3,000.
"All in all, the only winners in this market are and will be consumers who have access to fire-sale prices for these flash storage devices due to those issues," according to the iSuppli report.
On the other hand, semiconductor companies that make NAND flash memory chips, such as Intel and Micro Technology, might cut back on their capital spending. iSuppli is expecting that capital spending will decrease by about 38 percent in 2009. Gartner issued a report that found that capital spending in the semiconductor market will decrease by about 25 percent in 2008, due in part to falling prices for DRAM (dynamic RAM) and NAND flash.
The iSuppli report also found that shipments of NAND flash will increase this year before falling in 2009. For example, shipments of 1GB NAND chips will increase about 126 percent in 2008, and then decline by about 72 percent in 2009.