It’s hard to believe that 2013 is more than halfway over. Looking back, NAND flash memory has clearly established itself as a crucial and highly sought after commodity in the electronics industry. We have already seen at least one shortage this year along with an ever-expanding lead over DRAM, as first referenced in 4Q12.
As a result of the increasing demand for NAND chips, Toshiba is considering an increase in production despite their decisions around this time last year to scale back and help reduce oversupply in the market. This type of consideration by one of the biggest players in the NAND market shows strong faith in the future of these non-volatile chips. Toshiba is also exploring the possibility of a new manufacturing space in Mie, Japan, known as “Fab 5.” Even if they carry through with their plans, it is unlikely that this new facility will have an impact on both the supply and pricing of the current NAND offerings because Fab 5 is slated to focus on 3D memories and next generation process technology.
Solid state drives (SSDs) are still creating demand as a thin, lightweight, fast and, power efficient solution in smart wireless devices (SWDs). HDD market share is expected to drop drastically from 94% in 2012 to 64% by 2017 as SSD market share is expected to own 36% of the market by 2017, according to iSuppli. Currently, there are still minor shortages of enterprise SSDs, as well as some the brands of enterprise NAND flash used to build these high-end SSDs.
NAND pricing and shortage forecast
In a related market, Taiwan-based NAND flash controller manufacturers are facing market consolidation. The steady growth of SSDs and eMMC devices has caused a downshift in demand for controller chips. Controller manufacturers are struggling to find a way to support these devices or face a possible buyout and/or elimination from the market. To make matters worse, some memory card manufacturers who deal in microSD cards requiring COB (chip-on-board) packaging have decided to partner with their NAND suppliers and purchase microSD cards from them instead of manufacturing the cards themselves. This decision is bad news for the smaller controller companies who cannot raise that level of investment.
Looking forward, NAND pricing is expected to show minimal growth in 3Q13 as the demand for tablets and smartphones has yet to reach projected numbers. USB and consumer demand has taken a hit because of the 2Q13 shortage, which resulted in increased pricing, and is expected to remain flat. 4Q13 could show a 10% increase, pending a launch of new products from Apple and Samsung. Finally, enterprise SSDs will continue to be in a minor shortage position but with stable pricing, while consumer/PC SSD pricing is expected to decline closer to the end of the year.