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TrendForce: Penetration Rate of SD 3.0 Memory Cards May Reach 20% in 2014

23 October 2013 Semiconductors Alan Chen

According to DRAMeXchange, a research division of TrendForce, the penetration rate of SD 3.0 memory cards may only be around 10% in 2013. The main reason for this is that the SD 3.0 format has yet to be widely adopted in system products (for instance, smartphones, tablets, and cameras), and that the majority of the demand comes only from the channel market, which has fewer shipments proportionally compared to system OEM market. In the event that the above situations gradually improve, the penetration rate of SD 3.0 memory cards has a legitimate shot of approaching 20% in 2014.

The maximum bandwidth SD 3.0, also known as UHS-I, offers a transfer speed of 104 MB/s (much quicker than SD 2.0’s 25 MB/s), and a write speed that easily surpasses 10 MB/s (equivalent to Class 10 level). In order to take full advantage of SD 3.0’s rapid read and write speeds, memory card vendors will often attempt to stack two or more NAND Flash dies into a single package. Because of this, the density of SD 3.0 memory cards generally begins at 8GB. Judging by the kinds of density and performances offered by SD 3.0 memory cards, it is clear that such a product will be most suitable in the high-end markets, particularly for products such as smartphones, tablets, video recorders, and single lens reflex cameras.

According to TrendForce’s senior manager, Alan Chen, smartphones and tablets account for more than 80% of the demand in memory card markets. The rapid growth experienced by such devices, however, has not stimulated demand for SD 3.0, in part because of the inability of their application processors (AP) to support the SD 3.0 interface (only a few smartphones and tablets are currently known to support such a format). Even if SD 3.0 supports backward compatibility (SD 2.0), this alone would not be enough to impress nor entice potential clients. SD 3.0 memory card demand, all in all, remains most heavily concentrated in the high-end camera and camcorder markets.

Another important reason for the lack of strong SD 3.0 demand, in addition to the one mentioned above, is that many smartphones and tablets are already equipped with 4/8GB and above eMMCs, which are generally sufficient to support the read and write speeds required of the said devices. This has effectively encouraged the market’s largest memory card buyers –ie. the smartphone and tablet OEMs— to direct the majority of their attention towards the relatively cheaper SD 2.0 memory cards. Tablet and smartphone OEMs using 16GB and above eMMCs for high-end products will generally opt to not provide any free memory cards in order to lower their cost.  

The abovementioned purchasing strategies of the system clients can be said to have caused the demand of SD 3.0 memory cards to be shifted towards the channel markets. With photos, videos, applications, and other operating systems requiring more and more storage capacity, the 4/8 GB eMMC-based smartphones and tablets are becoming less and less able to satisfy consumer requirements, and an increasing number of consumers are beginning to purchase high-speed and high-density SD 2.0 Class 10 or SD 3.0 memory cards in order to make the most use of their mobile devices. Most of the business opportunities for SD 3.0 memory cards essentially come from the high-end memory card demands that originated from the channel markets. In order to facilitate the sales of the SD 3.0 memory cards, vendors have marked their memory card products with both the “Class 10” and “UHS-I” labels.

Given the factors mentioned above, the SD 3.0 memory cards’ penetration rate is likely to only be around 10% in 2013 (see figure 1). In 2014, there is a slight chance that that figure will rise to 15-20% following the gradual increase in the number of AP chips supporting the SD 3.0 format. What’s more, with the prices of smartphones and tablets gradually becoming lower, various manufacturers will continue to use low density eMMCs as a means to decrease cost. The demand for high-end memory cards in the channel market, as such, will have a chance to continue growing. Looking at the market-side, given that the proportion of smartphones are consistently rising in the mobile phone industry, the system OEM markets with the greatest shipment levels are becoming smaller. This has led to an increase in the proportion of memory cards accounted for by the channel market, and could in turn help raise the market penetration rate of SD 3.0 memory cards. In order to profit and come up with an ideal product mix, the leading memory card manufacturers are likely to also begin raising the proportion of SD 3.0 memory cards, and do so at a faster pace. This will help boost the SD 3.0 memory card’s market penetration rate as well.     

As of this moment, only a few SD 3.0 vendors are known to adopt the in-house production approach. The majority is known to use either Silicon Motion’s or Phison Electronics Corp’s SD 3.0 controller chips. Aside from these two manufacturers, Skymedi, Alcor Micro, and Solid State System also produce relevant controller chips in the market. As the SD 3.0 memory card shipment gradually increases in the future, and as the SD 3.0 controller chip’s profit rate exceeds that of SD 2.0, the competition within the SD 3.0 controller chip market will undoubtedly become a lot more intense. The SD 3.0 controller chip has already begun to experience higher usage in the market for SD 2.0 Class 10 memory cards given its ability to significantly enhance the NAND Flash component’s read/write performance. Pricing competition in the market will also inevitably increase as the SD 3.0 business opportunities grow and as competitors emerge. TrendForce believes that the shrinking price gap between SD 3.0 and SD 2.0 controller chips will eventually help to speed the rate at which the latter is replaced. All considered, it is not unreasonable to expect further business opportunities to arise for SD 3.0 controller chips in the future.

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