With each passing month, smartphones seem to take over more and more of the electronic component industry. The latest impact from smartphones is being seen in the NAND flash memory market. In 2011-2012, feature phones, which lack several features when compared to smartphones but are not mutually exclusive, actually held the lead in NAND shipment forecasts, despite the continuous barrage of smartphones on the CE market. However, according to IHS, smartphones will regain their lead and push forward as feature phone demand continues to decline.
Shipments for flash memory units, both NOR and NAND, are forecasted to combine for almost 800 million units in the smartphone category in 2013, while feature phones should be just over 700 million. 20 nanometer chips saw increasing demand in 2012 as the industry moved to lower voltage and lower power devices. In July, we discussed how the 20nm chips would become mainstream in 2H12. One of the other consequences of this advancement is that supply for older style NAND chips (32nm and 28nm) would decrease, thus driving up prices on these parts. We did in fact see these effects come to light in 3Q12 and are carrying into 4Q12.
ASML, the largest manufacturer of chip-making equipment, is predicting an importunate 2013 for NAND, based on their forecasts. They are not expecting an increase in demand for removable memory cards, that could have an effect on smartphones such as the Samsung Galaxy 2, which require users to purchase a microSD card to expand their storage capabilities. ASML predicts that the industry, which is already working on 14nm microprocessors, could feel similar effects on pricing and supply as a result of this shift. However, we still have a few years before that technology becomes regularly available and impacts are seen.
Despite the growing demand for smartphones, feature phones will still remain relevant in the flash memory industry, requiring over 500 million units of memory through 2016. Elements like high-end camera functionality, music storage and wireless 3G in feature phones will keep up the NAND flash unit demand. Also, emerging markets in Latin America, the Middle East, and parts of Africa are seeing increased cell phone usage and that is contributing to the continued demand for feature phones in the face of smartphone adoptions. Prime markets for smartphones continue to be Europe and North America, whose consumers are tend to be the front-runners in new technology adoption.
In sum, heading into the end of 2012, the reports for NAND are mixed: some are stating that NAND will bounce back in 2013, while other reports are predicting a bleak year. With the holiday season moving quickly, this time of year is always a whirlwind in the component industry. It’s too soon to tell where everything will land, but that’s always been part of the intrigue.