DRAMeXchange: NAND Flash Demand to Diversify, Industry Growth Stable in 2012

According to DRAMeXchange, a research division of Trendforce, benefitting from strong smartphone and tablet PC shipments, the rise of ultrabook and server growth due to greater adoption of cloud computing, SSD penetration rate has increased rapidly. Furthermore, Intel’s new Ivy Bridge platform, to be introduced in 2012, will feature integrated USB 3.0 support. This move is sure to stimulate USB 3.0 flash drive sales, in turn helping the entire NAND flash industry maintain a high growth rate. Thus, DRAMeXchange expects the NAND flash market value to increase from this year’s US$22 billion to US$26 billion in 2012, representing a 20% growth.

From the supply perspective, as it is uncertain whether or not the global economy will improve in 2012, many NAND flash vendors are looking to the forecasted figures for next year as guidance for setting their target bit output growth rates. Thus, vendors will hopefully be able to minimize the risk of oversupply due to economic fluctuations and maintain stable operational profit, while adopting new technology and lowering cost. DRAMeXchange expects the NAND flash supply bit output growth rate to remain at nearly 68% in 2012, closing in on demand. Furthermore, 2012 ASP is expected to decrease by 30% YoY due to technology migration to the 2ynm and 1xnm nodes, which will hopefully increase system vendors’ willingness to use SSD and other NAND flash products.

As for CAPEX, facing an increasingly uncertain economic future, the 2012 NAND flash CAPEX will increase to 8.3 billion, a slight decrease from approximately 9.1 billion in 2011, the majority of which will go to technology migration; wafer capacity expansion will be adjusted based on the actual change in market demand.

From the demand perspective, benefitting from smartphone, tablet PC, and SSD growth, Trendforce estimates that bit demand growth will reach 69.3% in 2012. Apple’s iPad and iPhone products have stimulated other companies to speed up development of tablet PCs and smartphones, to the benefit of the NAND flash industry. Furthermore, most tablets are equipped with eMMC storage devices (at 16, 32, and 64 GB capacities), creating new demand for NAND flash. When it comes to smartphones, Apple’s influence is even more apparent; products with eMMC or other types of customized NAND flash as internal storage are now commonplace. DRAMeXchange expects global smartphone shipment volume, benefitting from mid to low-level product lines, to reach nearly 600 million units in 2012, almost 40% growth compared to 2011’s 440 million units.

With the further integration of Android’s software and hardware, as well as the continuing development of apps, the platform is gaining a competitive edge. The Android improvements, along with Apple’s iOS and Microsoft’s upcoming Windows 8, will increase tablet PC sales volume, which DRAMeXchange estimates at 70 million units for 2012.

In terms of the ultrabook market, as Intel pushes to revolutionize the PC industry, DRAMeXchange expects ultrabook penetration rate to rise to 10% of standard notebook shipment volume in 2012. Furthermore, improved specifications set by Intel, such as higher performance and faster startup times, have given SSD a vital role in the ultrabook market. Additionally, the rise of cloud computing has increased server demand, which in turn has benefitted server SSD.

In conclusion, as the European debt crisis and the U.S. economy recovers slowly, the momentum of overall NAND flash demand remains to be seen in 1H12. However, as related product shipments are strong and average content per box is increasing steadily, the NAND flash industry should be able to maintain stable growth, a rare feat considering the plethora of memory products available on the market today.