Coming off its biggest year yet in 2010 when the market climbed 38 percent, NAND flash revenue this year will reach $22.0 billion, up 18 percent from $18.7 billion, as shown in the figure. The rise in revenue will be accompanied by an even larger increase in NAND bit growth, projected to soar 72 percent in 2011 to 19.3 billion gigabytes.
Source: IHS, iSuppli, USA.“Buoyed by the success of Apple Inc.’s iPad, NAND flash will likely enjoy explosive growth in 2011 with the arrival of tablet products from other players such as Samsung Electronics Co. Ltd., Dell Inc. and Research In Motion Ltd.,” said Michael Yang, senior analyst for memory and storage at IHS.
The biggest segment of NAND demand historically has been commodity flash, exemplified by its use in USB flash drives and bundled microSD memory cards. Nonetheless, the segment’s importance will dwindle in the coming years given its maturity. On the other hand, demand for NAND memory shows no signs of letup in the other major segment for sales: embedded applications. Here, use of the product continues at a fever pitch in popular devices like mobile handsets—particularly smart phones—as well as in the newly energized segment for tablets.
Despite the strong growth, a shift in market conditions could occur by the end of 2011, Yang warned. Given the optimism now surrounding the market and the likelihood of overspending on manufacturing on the part of suppliers, risks to the industry could surface by the close of 2011 when supply is likely to surge ahead of demand. A slight downturn is predicted for 2012, after which the market will recover by 11 percent in 2013 and then rise again the year after.
2011 trends point to an energetic market
In the embedded market, competition is heating up. Idaho-based Micron Inc. has become even more formidable after its acquisition early last year of Numonyx, which manufactured non volatile memory for cell phones, digital cameras, MP3 players, computers and other high-tech equipment. Micron in 2010 gained market share to become the world’s third-largest NAND supplier, behind Samsung and Toshiba.
More challengers are expected to emerge in the embedded NAND market this year, as demonstrated by the recent joint venture of California-based Kingston Technology and Phison Electronics Corp. of Taiwan. The two companies, which will supply mobile memory products for smart phones and tablets, have teamed up to compete more effectively against market leader Samsung.
For both the embedded and commodity flash memory segments, the key to success will lie in the development of controller technology. Next-generation flash memory will require 60-bit to 80-bit error correction code (ECC) engines, compared to 2-bit ECC just four years ago. To successfully launch next-generation memory products, controllers need to be closely coupled—simultaneously developed and readied for the market.
Among manufacturers, aggressive technology shrinks to low 2x-nanometer production may drive supply well ahead of demand—a dangerous scenario. With the embedded market requiring higher performance and reliability checks that typically take three to six months for qualification, suppliers may opt for a rapid ramp-up similar to what happened with triple-level cell (TLC) memory in 2010 when demand lagged supply.
Such a state of affairs could prove destructive, resulting in the significant erosion of average selling prices during the first half of the year and plunging the market into chaos.
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