This is another example of bad journalism. Not only are the facts and figures questionable, but only one side of the issue is presented. The other side would include facts showing that rapid increases in demand for NAND flash will likely exceed available capacity in 2011 and extending into 2012, if not even further. Good journalism would present both sides of the issue, with appropriate references.
I find this analysis bizarre. Not just because his numbers are wrong, as others have pointed out. Of course NAND prices are going to fall. And of course they are going to fall at least 40%. But they probably won't fall to .65 in Q4. Sure capacity is coming online. But fabs aren't brought up in a day or a month or even 6 months. Transitions to new nodes aren't even completed in 6 months--even if the vendors actually wanted to do this, they couldn't do it. Micron announced their transition to 25nm over a year ago, and they still aren't at 100% 25nm--not even close. Sandisk has said that they expected output Fab 5, which they will share with Toshiba, to be maybe 5% of their output in 2011. Everyone is keenly aware of the dynamics of new fabs, and they are all bringing them up slowly.
A 40% drop in ASPs over the next 12-16 months will actually be normal and even welcomed by the vendors, especially since their costs should come close to approximating that kind of drop. The reason it will be welcome is twofold: first, because it will allow tablet and smartphone prices to either drop or to add more storage capacity, depending on the strategy of the vendor. And second, because it will go a long way toward enabling the SSD market, which will eat up all of the new capacity from those fabs coming on line.
This article contains very superficial analysis. I would be surprised if it accurately reflects Jim Handy's work.
The numbers are wrong. This analyst predicting a collapse is probably wrong as well. I don't see fab capacity being an issue in the next year or two, particularly since demand for technology products remains healthy.
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