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Electronics Production |

iSuppli cuts 2008 NAND growth forecast

Amid signs that major buyers are slashing their expected order growth for NAND-type flash in 2008, iSuppli is cutting its forecast for global revenue growth for the memory this year by about two-thirds.

Global NAND flash memory revenue now is expected to rise to $15.2 billion in 2008, up 9% from $13.9 billion in 2007. iSuppli's previously forecasted global NAND revenue would rise by 27% in 2008 to reach $17.9 billion. The revised forecast lowers expected worldwide NAND revenue growth by two-thirds, 18 percentage points and $4 billion. Chart: iSuppli's new global flash-memory revenue forecast “The major factor behind the diminished outlook is weakening consumer spending,” said Nam Hyung Kim, director and chief analyst, memory ICs/storage systems for iSuppli. “NAND flash is used heavily in consumer-electronics applications-including MP3 players, USB flash drives and digital still cameras-which are driven by retail sales to consumers. Spending growth on these items is expected to slow in 2008 compared to 2007 due to the U.S. subprime mortgage crisis and its collateral impact on worldwide consumers and economies. In light of this development, the world's largest buyers of NAND-type flash will slow their spending growth in 2008.” As iSuppli first reported in February, Apple, the world's third-largest OEM buyer of NAND flash, has slashed its expected 2008 order growth forecast. Subsequent press reports from Asia indicate that Apple has not commenced making large-scale orders to NAND suppliers in 2008, contrasting sharply with the huge purchases the company made in 2007. Furthermore, Intel Corp., a supplier of NAND flash to Apple, issued a financial warning that cited weakening prices for the memory. Finally, Korea's Hynix, the world’s third-largest supplier of NAND, said it was reducing its output of the memory due to weak market conditions. “iSuppli now predicts Apple's spending on NAND-type flash memory will rise 12 percent to reach $1.4 billion in 2008, up from $1.2 billion in 2007,” said Min-Sun Moon, analyst for OEM semiconductor spending and design influence at iSuppli. “Before word of Apple's cut in its expected order growth, iSuppli had predicted the company's NAND flash purchases would rise by 32.2 percent this year, reaching $1.6 billion. iSuppli's new forecast means Apple will spend $400 million less on NAND flash in 2008 than previously expected, an event that will have a major impact on the worldwide memory market.” The vast majority of this NAND flash will be used in Apple's lines of flash-memory-based iPods and iPhones. Apple in 2008 is expected to increase its use of NAND for Solid-State Drives (SSDs), which are available as an option in its MacBook Air notebook PC. However, the volumes of SSDs expected to be sold by Apple won't come close to compensating for the reduced order growth for NAND for its highly popular iPods and iPhones. In order to plan production, suppliers of commodity components like flash memory work closely with their major customers to forecast expected demand levels for the coming quarters. News that a major buyer is slashing its expected order growth levels has a major effect on the supply/demand balance and pricing of a commodity part, such as NAND flash memory. Table: iSuppli's ranking of the Top-10 NAND flash suppliers in 2007. With its finger on the pulse of consumers, and its agile approach to managing its supply of key components, Apple can serve as a leading indicator of commodity market trends. However, it is not the only company whose NAND purchasing is being impacted by weakening consumer spending. SanDisk, the world's largest NAND flash buyer in 2007, now is expected to purchase $2.2 billion worth of the memory in 2008, up 8.4 percent from $2 billion in 2007, according to data from iSuppli's OEM Semiconductor Spend Analysis Tool. iSuppli previously predicted SanDisk's NAND spending growth would rise by 33 percent in 2008. The world's second-largest NAND flash buyer in 2007, Sony Corp., now is expected to buy $1.4 billion worth of NAND-type flash in 2008, up 6.8 percent from $1.3 billion in 2007. iSuppli previously predicted the company's spending would rise by 16 percent this year. The worldwide average per-megabyte price for NAND flash memory declined by 36 percent in the first quarter, which will followed by a 13 percent decrease in the second quarter, iSuppli predicts. iSuppli expects that prices will stabilize somewhat early in the second quarter as OEMs replenish their inventory, leveraging low NAND prices. The pricing stabilization in mid-2008 will allow global NAND revenue to achieve positive revenue for the year.

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March 28 2024 10:16 am V22.4.20-1
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