El Segundo (CA) – In a report released yesterday, iSuppli director and principal analyst Nam Hyung Kim said that, with inventories of consumer goods dependent on NAND flash memory finally beginning to decline, and demand starting to rise after having survived some economic potholes, a bottom is in sight to the precipitous plunge in NAND flash prices.
As a result, iSuppli raised its rating for near-term market conditions from negative, where they had been since last February, back up to neutral.
Just last March, Hynix Semiconductor’s director of investor relations, James Kim, told Reuters that although his company had expected NAND prices to fall by an annual rate of 20% in 2006 – and was preparing for the turmoil that would ensue as a result – the company ended up revising its forecast to a 50% freefall or higher, with half of that fall coming in the second quarter. Preliminary estimates seem to indicate Hynix was right to make the change. Hynix was the #3 supplier of NAND flash worldwide in Q1 of this year, by iSuppli estimates, with 14.8% market share and rising, but still well behind #1 Samsung and #2 Toshiba.
Nam reports, however, he’s hesitant to raise his outlook for NAND flash any further, citing waning consumer confidence numbers in recent months. After taking a dip in May to 104.7, the US Consumer Confidence Index for June rose a tad to 105.7, though the six-month trend remains slightly below flat-line. (A CCI index of 100 indicates the same level of consumer confidence as when the Conference Board first took measurements in 1985, during the height of the Iran-Contra scandal.)
Perhaps in an attempt to capitalize on the positive trend for flash, Toshiba announced today its introduction of a 4 GB SD flash memory card – its first to follow the new SDHC specifications for high-capacity SD cards of 4 GB and above. SDHC features certain regulatory protocols for varying grades of data throughput; Toshiba’s will be rated for “Class 4,” which governs 4 MB/sec throughput. By contrast, Samsung is acting on the notion that speed may be more important to some consumers than capacity, announcing today it will be introducing a new class of its OneNAND memory in 2 GB capacities with throughput of 17 MB/sec.
Nam is even less willing to raise his outlook for the global DRAM market, whose iSuppli rating remains at negative. Usually, the introduction of a new operating system generates new requirements for even more memory in PCs, which triggers surges in memory demand. The rise in demand on account of Vista, Nam believes, aren’t exactly surges, although “Vista’s arrival will generate enough sales to tighten DRAM supply,” he writes.
As DRAM producers diversify to build more NAND flash memory, they may become less able to respond to increasing DRAM demand in coming months, Nam believes. As a result, availability may tighten, prices may rise, and iSuppli may just be willing to upgrade its outlook. On the other hand, iSuppli may need to take a good look at Qimonda, whose development track is precisely the opposite direction: As the company confirmed in face-to-face meetings with TG Daily last week, Qimonda is concentrating on DRAM production, and could very well benefit from that move if prices rise in the short term as iSuppli predicts.