Semico: NAND Flash Market: How Low Will Prices Go?

Phoenix, Arizona April 5, 2007 - The NAND flash memory market continues to be one of varying market dynamics. In 2006 NAND revenues grew only 9%, down sharply from the double and triple-digit percent increases of previous years. On the positive side, gigabyte shipments continue to increase at the fastest rates in the history of the semiconductor industry, growing at a rate of 217% in 2006. Annual gigabyte growth is projected to continue at 102% CAGR from 2006 to 2011. While this is slower than in previous years, this growth is still impressive compared with previous growth rates of other memories.

“NAND market pricing is like a rubber ball: what goes up must come down, and then back up again,” said Adrienne Downey, Senior Analyst Non-Volatile Memory at Semico Research Corporation. “Revenue growth was spectacular for several years, but as more manufacturers enter the market, prices fall to profit-erasing levels. Shortages tend to appears when a significant new application hits the market and consumes all the available NAND in sight.”

In 2007, that new gadget is the iPhone, set for release in June. Already Apple has released orders for NAND for their 4GB and 8GB phones. Apple predicts they will ship millions of iPhones. What does this mean for the NAND market? Semico’s latest flash memory report, NAND Market: How Low Will the Prices Go? Fourth Quarter 2006 Pricing & Forecast provides an in-depth analysis of this dynamic market.

NAND prices began to collapse in the fourth quarter 2006. This pricing softness has extended in the first quarter 2007. Semico projects 2007 NAND revenues to be up only 2% over last year while unit shipments will increase 82%. Manufacturers with both DRAM and NAND capacity are in a constant balancing act, trying to switch their capacity to whatever will bring the most demand and the most revenue.

Over the course of the next 5 years, NAND will continue to displace existing forms of media as NAND prices are forecasted to continue to decline.

“One interesting technology to watch is Phase-Change Memory (PCM) and the advances that companies are making in this new memory market,” comments Downey. “Developments in this area could impact the NAND market.”

The Semico NAND forecast methodology is perhaps the most complete and accurate model in the market. Over the course of the forecast year Semico's quarterly flash forecasts hovered within 4% of actual revenues in 2003, within 13% of actual in 2004, a year marked by a 65% NAND price collapse, and within 12% in 2005. The forecast is built upon a model that compares end-application demand using the Semico MAP model to production capacity from Semico's exhaustive fab database. This is layered upon pricing models extracted from historical market behavior, and is continually tested against WSTS history, company financials, and Semico's Inflection Point Indicator.

This NAND study is available for immediate delivery for $3,500. To purchase, please contact Susan Cadel at 607-368-7600 or susanc@semico.com, and reference report NV101-07, NAND Market: How Low Will the Prices Go? Fourth Quarter 2006 Pricing & Forecast.

About Semico
Semico Research Corporation is a marketing and consulting research company located in Phoenix, Arizona. Semico was founded in 1994 by a group of semiconductor industry experts who have improved the validity of semiconductor product forecasts via technology roadmaps in end-use markets.