NOR Flash revenue set to grow in 2010 after downturn

EL SEGUNDO, USA: Buoyed by improved demand and a brightening macroeconomic environment, NOR flash memory market revenue is projected to return to growth in 2010, according to iSuppli Corp.

Reversing the market’s slump of the past year from the worldwide economic downturn, revenue for NOR flash memory is projected to climb a modest but encouraging 4.2 percent, rising to $4.8 billion this year from $4.6 billion in 2009.

The figure presents iSuppli’s revenue forecast for NOR flash memory from 2009 to 2010.Source: iSuppli, USA.

The embedded NOR flash market, an area comprising a wide range of electronic products other than cell phones, accounts for 83 percent of all NOR shipments, at 3.3 billion units in 2010. iSuppli projects unit shipments of NOR flash parts for the embedded market will grow at a 5.3 percent CAGR through 2014, while the cell phone segment will shrink due to the rising penetration of rival NAND flash memory technology.

Within the embedded NOR segment, the PC market—including the motherboard, disk drive and networking sectors—will constitute more than 50 percent of units. Given that more than five NOR parts are needed for every computer system, and in light of projections showing the PC market expanding 16 percent this year, the NOR flash market can expect upgraded prospects in 2010 compared to generally depressed results last year, iSuppli believes.

Aside from the PC market, the other non-mobile categories anticipated to enjoy heightened activity in 2010—and benefitting the NOR market in the process—include set-top boxes, automotive infotainment, computer monitors and televisions.

Sudden good fortune catches NOR suppliers unprepared
“While iSuppli’s NOR revenue forecast is in line with previous projections showing a healthier 2010, the earlier-than-expected upturn of the market has caught flash makers off-guard,” said Michael Yang, senior analyst for iSuppli.

“Following the recession, companies cautiously started carrying leaner inventories to minimize bloated stock. The sudden, early upsurge in NOR demand—an expansion that started in the second half of 2009 and that has continued since then—has left suppliers scrambling to fulfill orders. And despite capacity increases and close-to-maximum fab utilization levels among NOR suppliers, lead times have ballooned for clients awaiting product,” he added.

The net effect of such developments has been to prolong the strength of chip pricing, with average selling prices projected to hold steady for the rest of the year, Yang pointed out.

The NOR market also is wary of its heavy reliance of the industry on PC product shipments for growth. But thanks to its utility, low unit pricing and specific advantages in functionality, NOR seems assured of remaining as a key segment in the flash memory industry for years to come, iSuppli believes.

Source: iSuppli, USA.