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NAND Posts Strong Performance at Close of 2012

28 May 2013

The NAND flash industry delivered solid results in the fourth quarter, aided by a relatively sturdy low-cost tablet segment, to boost total year-end revenue and reduce what would have been a larger loss for 2012, according to an IHS iSuppli Data Flash market tracker report from information and analytics provider IHS.

NAND revenue reached $5.8 billion in the final October to December quarter of 2012, up 17 percent from $4.8 billion in the third quarter, in what amounted to the strongest performance for the year. Results from the final quarter of 2012 effectively pushed NAND revenue last year to the $20.0 billion mark, representing a decline from 2011 of just 4.6 percent-less than initially feared.

Lower-end tablets provided significant growth to NAND in the face of a maturing Android operating system along with the 7-inch tablet craze sweeping China. Apple, the original driver of tablet demand through its industry-leading iPad, also did its share for the NAND industry by offering a 128-gigabyte (GB) version of the iPad for plenty of local storage. Following suit, other manufacturers like Google, Samsung Electronics and Amazon bumped up the density of their own tablet offerings to 16GB and 32GB, further fueling the role of tablets in NAND growth.

Overall, the embedded segment typified by tablets provided the impetus for much of NAND expansion last year as demand waned for removable USB drives and flash cards. Tablets consumed roughly 11 percent of total NAND supply, with smartphones remaining the top application at 23 percent and solid state drives (SSD) for computers making up 15 percent.

The PC market, however, continued to be elusive in 2012 for SSDs. The success of SSDs rests on Ultrabooks, but the thin computers did not achieve the kind of triumph envisioned by Intel or the PC industry. More hope is seen this year that ultrathins-including the Intel-supported Ultrabook segment-will hit their stride via Intel's new Haswell processor, which would improve battery consumption and enhance performance overall.

Such a development could provide a welcome bump for the NAND industry, as flash storage is essential to the performance requirement of Ultrabooks, which will come with a full SSD as storage; or more likely, with a cache SSD or even a hybrid hard drive that would lower the cost of the machines at retail to lure consumers.

Should Ultrabooks, in fact, ignite in the market, their victory could then compensate for yet another risk factor to the mobile PCs, given that cache SSD size being used in the machines is shrinking. While 32GB has been the popular choice of implementation thus far, most PC manufacturers are downsizing to a storage size of 16GB. In the face of the diminished capacity, the loss is a non-trivial setback for NAND demand, IHS iSuppli believes.

Just the same, fresh optimism appears to underlie the NAND market for this year. Given the conscientious management of capital expenditures expected in 2013 from NAND suppliers, the second half of the year could see a largely undersupplied NAND environment-a benefit to the flash memory industry.

Suppliers overall will be aiming for profitability-no longer obsessed over market share or even market relevance. A relatively strong first quarter is expected after final numbers are compiled, to be followed by a weak second quarter when demand is at a seasonal low, with pricing to then rebound in June and pave the way for a healthy second half.

Read more >> Supply Constraints Trigger New Growth Period for NAND

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