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© dimitry romanchuck dreamstime.com Analysis | May 23, 2014

3D NAND Flash development expected to heat up in 2H 2015

Due to the potentially strong peak quarter performances of smartphones, tablets, and enterprise SSDs, the 2014 NAND Flash bit demand is expected to grow 39% compared to the previous year, whereas total industry output value has a chance of rising 5% YoY to US$ 25.2 billion, according to DRAMeXchange.
As shown by the manufacturers' 2014 production plans, a good number of the NAND Flash maker's increased capacity in 2014 were driven by their active technological migrations. Given concerns over the NAND Flash manufacturing processes' reaching of its scaling limit this year, more and more companies have begun to invest in technologies that are intended for next year's 3D NAND Flash production, with total investment amount expected to rise 12% YoY in 2014 to an estimated US$ 9.2 billion.

Samsung's Xian Plant, whose operations officially began in May, is currently expected to account for the majority of the company's expanded output as well as focus on developing 3D NAND Flash technology. Taking into account the time it takes for 3D NAND products to be verified by clients and the Xian plant's intention of adjusting its production ratios based on 3D NAND Flash demand, TrendForce believes that the overall output contributed by Samsung's Chinese plant will be relatively limited this year, and predicts Samsung's 2014 production growth will only reach 40%.

Looking over to Toshiba, given that the second phase of the company's Fab 5 construction is not expected to be complete until the third quarter of this year, the official deployment of its relevant production equipments might not take place until the fourth quarter. The plant will mainly be focused on producing 1z nm and 3D NAND Flash products, with volume production set to begin in 1Q 2015. As a sign of its ambition and interest in 3D NAND technology, Toshiba announced a few days ago that it would also be revamping its original Fab 2 plant and have it produce new 3D NAND Flash components as early as 2016. Despite the Fab 2 plant's new operations being scheduled from 2H 2015 to 2016, Toshiba's yearly output growth could still reach a hefty 38% this year thanks to its active migration towards 1ynm technology.

With regard to SK Hynix, the Korean company’s Q2 NAND Flash output is currently expected to return to the levels before 3Q 2013’s fire accident as it continues to show promising recovery and re-allocate portions of its production capacity to NAND Flash. With SK Hynix's 16nm products currently being verified by clients at a respectable rate, the company should have little trouble satisfying its OEM client demands during the upcoming peak quarters.

The new Micron group, like SK Hynix, appears to have a similarly optimistic business outlook as its Singapore plant completes its DRAM-to-NAND Flash transition this quarter and raises its total NAND Flash capacity to approximately 230K/M. The plant will primarily serve as a production base for critical products such as eMMC, eMCP, and SSDs. Taking into consideration the wafer production progresses of the key NAND Flash companies mentioned above, the 2014 bit output growth for the entire industry is estimated at 38% YoY.

While Samsung has been able to use its existing chip technologies to accelerate the integration of its 3D NAND Flash components into embedded products such as enterprise SSDs, the company's progress with 3D NAND Flash is still relatively limited this year due to the longer than expected client verification and testing processes. Toshiba is looking to produce 3D NAND Flash on a limited scale beginning in 3Q 2014, but will be unable to contribute significantly to the 3D NAND Flash market as its new equipments will not be ready for mass production until 2H 2015 or 2016.

Like Toshiba, neither SK Hynix nor Micron is expected to mass produce their 3D NAND Flash products until the second half of next year. Given the existing 3D NAND Flash production schedules, TrendForce has revised the 2014 3D NAND Flash output ratio to 2%. The proportion of 3D NAND Flash products is expected to gradually increase only when manufacturers officially mass produce the product in 2H 2015.

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