Smith Market Blog

NAND Flash Memory: Observations and Expectations


2012 has been a turbulent year for NAND flash memory. Price declines and oversupply in 1H2012 led to production decreases by most manufacturers to bring supply and demand back, closer to balance. On the other side, mobile device demand has grown significantly since January, leading to improved demand for NAND. According to iSuppli, NAND revenue rose 5% in 3Q2012 to $4.5 billion and operating profits throughout the industry nearly doubled from $159.2 million to $350.9 million.

Recapping 2012

December 2012 brought some slightly unexpected changes. Replenishment demand continued to decline, but wafer production increased, and the new 20nm products really started to take hold. Based on these events, combined with supplier promotion programs, NAND contract prices will continue to decline. Just last month, we looked at how the 20nm chips would affect the market. We also expected solid state drive demand to increase around the holiday season, but the only upswing seen on that type of part was in enterprise applications.

All of the major NAND manufacturers reported positive news from their NAND divisions. It appears that their efforts over the summer to reduce inventory and try to bring prices back to profitable levels are continuing to function properly. Operating margins, cash holdings, and profits were all up in 3Q12. As it stands, all of these changes have helped both supplier books and the market. This positive news is expected to continue through the end of 2012.

2013 expectations

So, what does all of this mean for 2013? The smart device market is simultaneously ever-changing and ever-growing. Consumers are expecting all of their devices to be connected and provide an intelligent user interface. On the flip side, this requires manufacturers to continuously develop more efficient and cheaper devices. Supporting demand is the increase expected in consumer electronics. Namely, by 2017, the amount smart home energy management devices shipped globally is anticipated to reach 400 million units. Also forecasted to increase is the demand for smartphone and mobile devices as well as SSD applications.

The outlook for NAND over the next 12 months is still debatable. On one hand, the improvements in 2H12 have some companies seeing the glass half full, while disappointing market conditions, like slow consumer demand for SSDs, have others seeing the glass as half empty. Either way, manufacturers and OEMs alike will be keeping a tight watch on their share of the glass' contents.

Brent Topa, International Account Representative
Written on Thursday, 20 December 2012 15:28 by Brent Topa, International Account Representative

Viewed 3716 times so far.
Like this? Tweet it to your followers!

Latest articles from Brent Topa, International Account Representative

Hits: 3717


TrackBack URI for this entry

Comments (0)

Write comment

Copyright 2012 N.F. Smith & Associates LP.  All Rights Reserved.  View our Privacy Policy.

PlagSpotter - duplicate content checker tool


Contact Smith

Live Help