ISuppli warns of Nand Flash woes
Market watcher warns that circumstances for Nand suppliers are "worst in the history of the market"
The Nand Flash market is still in poor shape, iSuppli has claimed, despite the market watcher upgrading its short-term rating for the sector from ‘negative’ to ‘neutral’.
According to iSuppli, “circumstances for suppliers were the worst in the history of the market”.
However, after six months of continuous price erosion, iSuppli speculated that the market was about to turn the corner thanks to a better balance of supply and demand.
Nam Hyung Kim, director and principal analyst at iSuppli, said: “The major factor behind iSuppli’s upgrade is a slowing in the growth of supply, which is helping to mitigate the severe price erosion that has been the dominant driver of market conditions over the past half year.
“The South Korean suppliers, Samsung Electronics and Hynix Semiconductor, are decelerating their Nand production growth, leading to a more balanced supply/demand situation and firmer pricing in the market.”
Samsung and Hynix controlled 63 per cent of the Nand market and 45 per cent of DRam sales last year. In the last quarter, iSuppli said that both companies had been shifting their Nand capacity to DRam, which Kim said is causing a significant decline of excess supply and surplus inventory in the supply chain.
Although prices are still falling, the rate of descent is slowing, but iSuppli claimed that it’s too early to even think about giving the market a ‘positive’ rating.
iSuppli doesn’t believe that the big Korean memory companies will shift their capacity back from DRam to Nand in the second quarter, since Nand margins are worse than those for DRam. For 2007, it expects DRam margins to remain higher than Nand’s.
Samsung is expecting strong demand for Nand this year, especially with the arrival of new Flash-based products.
According to Samsung’s chief executive, Hwang Chang-gyu, the forthcoming iPhone from Apple will be good for business.
“We expect applications including the iPhone and MP3 players that double as video recorders to crank up demand for Flash memory in the second half of the year,’’ he said.
“The market for Flash memory is predicted to stabilise further in 2008 thanks to such envisioned applications, which need large memory capacities.”