As cloud computing, aka software as a service, continues to see rapid gains in momentum there are many questions and forecasts for the cloud value chain. More specifically, it is quite apparent that this IT shift will have serious implications for the semiconductor industry because of the hardware requirements to support cloud computing.
The hardware requirements (and implications for the semiconductor industry) that are raised by the increase in cloud computing encompass a value chain worth of issues. These issues extend from requiring new CAPEX investments by service providers in order to meet their consumers' increased mobile bandwidth needs, as consumer and corporate users download and access applications and data networks via smart wireless devices (SWD) (see this ComputerWorld article); and the implications continue on through to data storage requirements at both the device (smartphone, tablet PC, desktop PC) and the backend server systems, as users shift the location of their data from on their device to more data being housed 'in the cloud' (see this recent iSuppli analysis of NAND flash and Apple effects on the memory market).
The memory sector is notoriously volatile and the question around the positive and negative impacts on various memory types is affecting production and pricing, particularly given the backdrop of the presently unstable global macro-economic situation (see this and this article in MarketWatch Commentary from last week). Exactly how the cloud is affecting memory and other semiconductor market sectors is still being monitored and will be discussed in Smith's next MarketWatch Quarterly due out in mid-September.
Meanwhile, as pointed out in the iSuppli research report, any deceleration in NAND flash memory is not likely to occur until many issues pertaining to cloud computing have matured: data security, standards, pricing, latency, bandwidth utilization, and system costs and standards for private enterprise clouds for corporations (cf. here and here from iSuppli, here from ComputerWorld, here and here from Data Center Knowledge, here and here from CIO, to name a few sources pertaining to these cloud issues).
Presently, many corporations are exploring strategic goals and plans for their data centers, much as SaaS and cloud hosting companies are recognizing additional vulnerabilities and additional requirements to hosting these services (see this article from CIO regarding physical aspects of data centers). Meanwhile, electronics device manufacturers are contemplating the directions of HDD, SSD and the associated DRAM and NAND configurations for their end-products, as well discussed in this ComputerWorld article.
Device strategies to satisfy the demand for these shifts in IT (software and data hosting) services are being modified based on the various forecasts that attempt to shed light on the current inventory builds, the market uncertainty through 3Q, and the direction of the expected (hoped for) rebound during the end of 2011 and into 2012, assuming positive outcomes to the present global economic issues (see for example this comprehensive review from EETimes Asia of the latest Gartner data on global PC sales to monitor one critical global demand variable).
Here at MarketWatch, we are monitoring these interacting variables daily and will continue to provide you with means to understand the shifts in products, components, demand drivers, and economic situations affecting the semiconductor supply chain.