Landscape of 2011 global NAND flash market

TAIWAN: According to DRAMeXchange, as for 2011 NAND Flash market outlook, we expect seasonality for 2H11 hot-season effect to be improved compared with 2H10 since economic recovery for advanced countries will further improve as well, given the 2011 global economic recovery progress is slightly slower-than-expected.

1H11 will still be impacted by the slow-season effect and oversupply is likely to happen during the period. However, NAND Flash demand from new smart phone and tablet PC launch as well as Chinese Lunar New Year holidays will partially ease the slow season effect so that the 1Q11 oversupply conditions will be less than 2Q11.

As some NAND Flash vendors will consider to slightly slow down the bit output growth pace helping ease the oversupply in 1H11, we also expect NAND Flash market to be back to more balanced status in 2H11.

Even though NAND Flash vendors have already cautiously adjusted the future production plan facing the volatile market status, yet we still think seasonality issue will still affect the NAND Flash price trend in 2011. 2010 NAND Flash price decline is significantly relatively lower than past several years, given the efforts of proper control on supply growth and profitability improvement concerned from NAND Flash vendors.

However, we expect NAND Flash price trend to mainly vary with the cost-down effectiveness of process technology migration as well as the seasonality of procurement demand in 2011. We expect the NAND Flash price decline in 2H11 to be less than 1H11.

However, the pricing strategy of NAND Flash suppliers will be varied based on different customer mix and order status in the short term. We expect NAND Flash ASP to decline about 35 percent YoY in 2011 so that the global NAND Flash sales will grow about 16 percent YoY to reach $21.5 billion in 2011.Source: DRAMeXchange.

We expect 2011 bit output growth of NAND Flash suppliers to be mainly driven up by process technology migration that new 300mm wafer capacity expansion will be added properly depending on market demand status while some 200mm wafer equipment will be continuously phased out.

The mainstream NAND Flash process technology will be migrated to 3xnm & 2xnm in 2011 from 4xnm & 3xnm in 2010. Therefore, DRAMeXchange expects 2011 worldwide NAND Flash bit supply to grow 78.3 percent YoY to 9,326 M 16Gb equiv. from 5,232 M 16Gb equivalent in 2010.

From the demand side perspective, tablet PC and smartphone are the two foreseeable spotlight in 2011 NAND Flash demand application.

With the trigger from iPad and other iPad-like product penetration, DRAMeXchange estimate 2010 tablet shipment will reach 15M units. 2011 tablet shipment is expected to be 50M units given the strong iPad growth and catalyst from Android system. Also, Tablet PC is likely to turn to the second mobile device in consumer and commercial market.

We expect embedded Flash consumption portion can reach over 60 percent in 2011 since smartphone can account 1/4 of mobile handset and strong momentum from tablet PC. It means that NAND Flash vendors need to make strategy and product planning based on the shipment pattern of consumer electronics and emerging embedded design.

With the continuous embedded Flash product development, the cooperative relationship between vendors and system customers will also be the spotlight in competition. NAND Flash vendors will aggressively rise up the exposure in system customers and develop more new NAND application coping with the new devices.

The 2010 NAND Flash demand bit growth is estimated to grow 76.5 percent YoY to 5,150.2M 16Gb equivalent. Given the steadily rebounding global economy and surging smartphone and tablet PC, DRAMeXchange expects 2011 NAND Flash demand bit growth will increase 80.2 percent YoY to 9,283M 16Gb equivalent.Source: DRAMeXchange.