As a commodity market, memory has always been subject to gluts and shortages. Over the past six months, for example, oversupply has led NAND flash manufacturers to work to reduce excess inventory. Now, the pendulum may be swinging back the other way. I recently chatted with Jim Feldhan, president of Semico Research Corp., to see what he thinks lies ahead for the NAND flash market.
How are the market leaders handling themselves during this market correction that we’re in?
In the past year, companies have scaled back a little bit on their capital expenditure. Toshiba has stopped expanding their one new factory although Samsung has announced some increases in theirs—they've been known to expand during slow times and I guess I would characterize the last six months of last year as a slow time.
When do you think we’ll turn the corner?
The market has spent the last six months or so bringing inventories down because people were afraid of what the economy was going to do. We think inventories are a little too low so the second half of this year, we may see some tight supplies. We also think there's a bit of pent-up demand that occurred last year due to component shortages because of the flooding in Japan. That's really just going to get back to pre-flood production the end of this quarter and into third quarter.
How big is the market?
For 2012, we’re looking at a NAND flash market of almost $31 billion, for 23.6% growth. That’s an improvement from 2011, which was 15.3% growth at $25 billion. The NAND flash has done well because of smart phones and tablets, as well as SSDs going into the enterprise and cloud computing. If we look out to 2015, the market is going to reach $57 billion.
What are the main drivers?
Last year, smart phones grew at about 29% which was a little higher than what we had expected. This year, we’re looking at 34% growth. The tablet market will probably expand to the range of 48 or 49% this year. Each year they put more NAND flash in the systems, so there's a lot of growth.
What about the cloud? Will it undercut the use of NAND flash in portable devices?
Not so much because people still want to take their movies and their games with them. Although we talk about how we're connected everywhere, there are a lot of places where we aren't. As we move forward, you can store your applications on the cloud so you don't have to have a huge rotating hard drive on your notebook but I still think there's a trend of people wanting to keep their content locally.