The slow moving 2H13 for NAND is growing more dismal as the need for cloud-based services steals away some of the demand for physical storage in devices like tablets and smartphones. It is estimated that NAND shipments grew 8% in 3Q13 and are expected to grow by only 5% in 4Q13. (As a reference, in 4Q12, growth was 16% for the NAND market.)
According to the latest report from IHS, several factors are contributing to the doleful NAND market, one of which is the increased offerings of cloud-based services for consumer storage. The three major smartphone companies all offer cloud storage, which diminishes the need for local storage on their devices. Normally this storage is made available by NAND flash memory. It’s also expected that the China and Asia Pacific regions will take over as the leading segment worldwide for tablet PCs, according to NPD DisplaySearch. By 2017, the North American and EMEA regions will account for only 36% of the tablet market while China and Asia Pacific will combine for almost 60%.
In further detriment to smartphone NAND demand, low-end smartphones, which amount to the fastest-growing segment of the smartphone market, are confined when it comes to using NAND memory in their equipment. The main reason for this purposeful limitation is to keep costs down and sustain affordability in their target market. Along the same lines, the latest high-end smartphones are still not offering a density larger than 64GB.
Despite this bad news, the projections for total NAND shipments in 2013 will come to roughly $24 billion and revenue 39 billion gigabytes of shipments. Both of these numbers would be records in the industry. NAND production is still predicted to expand in 4Q13, though recent concerns of slowing demand have resulted in short-term price hikes. SK Hynix is also contributing to mass production by launching the second-version 16nm NAND flash. The first-version went to production this past June, however the second-version is proving to be more cost effective due to its smaller chip size.