SAN FRANCISCO--Sales of NAND flash memory chips declined by 7 percent in 2012 despite a strong increase in demand from Apple Inc. for its iPhone line, according to a report by market research firm IHS iSuppli.
NAND sales slipped to $19.7 billion, down from $21.2 billion in 2012, IHS said. The firm said it expects sales of NAND to improve in 2013, forecasting growth to $22.4 billion this year. IHS expects NAND sales to continue to grow for the next several years.
In 2012, NAND sales were hampered by disappointing sales of Ultrabooks--the low-power, ultra-thin computer concept championed by leading chip vendor Intel Corp.
"Because of its high-memory density, combined with high-volume shipments, Apple's iPhone line in 2012 was the largest single consumer of NAND, helping to increase demand for the memory from the smartphone market," said Michael Yang, senior principal analyst for memory and storage at IHS, in a statement. "However, Ultrabook sales fell short of industry expectations, dragging down the overall NAND market for the year."
Apple's iPhone consumed 10.5 percent of the total NAND flash supply in 2012, according to IHS. All other smartphones combined used 10.4 percent, according to the firm. The iPhone in 2012 had an average density of 24.5 gigabytes, a 19 percent increase in density loading compared to 2011 and the highest amount of embedded NAND flash in any smartphone, according to IHS.
Disappointing sales of Ultrabooks in 2012 meant lower NAND revenue for the cache solid state drives (SSDs) that are required for a system to get the Ultrabook designation, IHS noted.
Ultrabooks have had some success penetrating into the consumer market adoption overall has been underwhelming, and the incremental increase to demand has been significantly below expectations, IHS said. Analysts generally blame disappointing sales of Ultrabooks on the price tag of the systems, which continues to hover at around $1,000 for most models.
IHS said the late October launch of Microsoft Corp.'s Windows 8 operating system also hurt the NAND market in 2012. PC shipments declined substantially in the third quarter of last year as consumers waited for the release of the new OS, IHS said.
According to IHS, prospects for the NAND market hinge on three pillars of demand: smartphones, tablets and SSDs. The firm predicted that the second half of 2013 would be an especially good period for the NAND market, boosted by increased demand throughout the NAND portfolio.