Report: ’Apple effect’ no impact in NAND market

For years, Apple Inc.’s new product introductions have jumpstarted the NAND flash-memory market. The so-called ’’Apple effect’’ would boost the fortunes and bottom lines of Hynix, Samsung, Toshiba and other NAND vendors, which sell product to Apple.

According to a new report from Semico Research Corp., the NAND market for 2008 has not experienced the ’Apple effect’ seen in previous years, despite the upcoming 3G iPhone and the SSD option for the MacBook Air.

The research firm was referring to new and upcoming products from Apple, one of the world’s largest buyers of NAND flash. NAND is used for storage applications in the iPod and iPhone line of products.

Low sales
’’Consumer confidence is low because of the repercussions brought by the U.S. subprime mortgage crisis and consumer disposable income is hampered by rising prices at the gas pumps,’’ said Semico, adding that, ’’These factors are having a dampening effect on consumer electronics sales.’’

Still, NAND unit shipments are expected to reach 3,528.50 million units in 2008 compared to 2,508.60 million units in 2007. NAND revenues are seen to grow 13 percent in 2008 compared to 25 percent in 2007, according to the research firm.

Ongoing crisis
Despite the growth, there are some bad signs for NAND. ’’Although the data points indicate that there are about a million 3G iPhones built in the June quarter, which is well-documented and known, we believe that the difference has been pushed out into the September quarter,’’ according to a report from Find Friedman Billings Ramsey Group Inc. (FBR).

’’Thus, on aggregate, we still expect 11 million 3G iPhones to be shipped in the timespan of the June and September quarters,’’ said the FBR report. ’’However, due to weaker-than-expected handset/consumer electronics end markets, we still expect NAND prices to continue to weaken into Q3 2008.’’’

For example, Micron Technology Inc.’s ’’NAND outlook is mixed,’’ said Daniel Amir, analyst, Lazard Capital Markets. Recently, Micron posted a loss, caused in part by the NAND downturn.

’’NAND remains challenging, as inventory levels in the industry are relatively high,’’ added Amir. ’’For August, we expect ASPs to decline 22 percent with bit growth of 20 percent,’’ he noted.

On the brighter side, Micron ’’expects to have 50 percent of its production at 34nm by year-end, which could position the company as a cost leader,’’ the analyst said. ’’Smart phone shipments ramping in the 2H should benefit Micron, especially because of its high-market share in the embedded NAND segment,’’ he stressed.

- Mark LaPedus
EE Times