NAND flash market to fall short of
expectations in 4Q, iSuppli says Worldwide market revenue for NAND flash memory in the third quarter slightly exceeded forecasts but disappointing sales of MP3 players has prompted a downgrade of the outlook for fourth quarter sales, according to research firm iSuppli. Global sales of NAND flash memory in the third quarter reached US$3.1 billion, a near bull's eye with iSuppli's forecast of US$3 billion issued in September. The overall market for NAND flash grew by 11.8% in the third quarter compared to US$2.7 billion in the second. As expected, per-megabyte NAND prices fell by 22% in the third quarter, while megabyte shipments grew by 44%, said the research firm. "iSuppli is likely to trim its fourth quarter sales projection in the near future," said Nam Hyung Kim, director and principal analyst for memory ICs and storage systems at iSuppli. "We previously predicted 21% sequential sales growth for the fourth quarter. The primary cause of the reduced outlook was the market for flash-based MP3 players, whose sales appear to be falling short of expectations." Toshiba stars among the top suppliers Among the top NAND sellers, number two supplier Toshiba distinguished itself with revenue growth of 26.2%, as its sales rose to US$849 million in the third quarter, up from US$673 million in the second quarter. The company's market share expanded to 27.8%, up from 24.6% in the second quarter. With leading supplier Samsung Electronics' sales having risen by only 4.3% during the third quarter, Toshiba closed the gap with its larger, South Korean rival. Toshiba's share in the third quarter trailed Samsung's by 15.3 percentage points, down from 21.6 points in the second quarter. The Japanese chip supplier also increased its lead over its nearest rival, Hynix Semiconductor of South Korea. Toshiba's strong performance during the quarter was due to its rapid rise in bit production. The company achieved sequential NAND flash bit production growth of 70% during the third quarter, exceeding the industry average of 44%. US-based NAND flash up-and-comers Intel and Micron Technology achieved the strongest growth of all suppliers, with their sales rising by 127.8% and 35.3% on a sequential basis respectively. However, this growth was from a very small base as both companies are still developing their NAND-flash businesses. Hynix increased its sales by 11.9% during the quarter and remained the third largest NAND supplier based on iSuppli's market share estimates.
Source: iSuppli, compiled by DigiTimes.com, November 2006 MLC adoption on the rise One positive development for the NAND flash market in the third quarter was a fast rise of sales of multi-level cell (MLC) parts. MLC allows the storage of more bits per memory cell, dramatically increasing NAND flash density. Samsung and Hynix's production of NAND parts using MLC technology increased to 40% and 50% of total manufacturing, respectively, during the third quarter, beating iSuppli's forecast. At the present rate of adoption, 80% of global NAND megabit production will use MLC technology by the first quarter of 2007, iSuppli predicts. Still struggling Despite progress in the MLC segment, iSuppli is still maintaining its negative near-term market rating of conditions for NAND flash due to the lackluster demand outlook late in the fourth quarter and in the first quarter of 2007. However, improving margins for DRAM will compel DRAM suppliers to allocate more production to DRAM, and less to NAND. DRAM suppliers' NAND capacity represents 75% of global NAND output. This should lead to more positive pricing and supply conditions for NAND in 2007, iSuppli predicts.
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