Expect strong demand, stable prices for NAND
James Carbone -- Purchasing, 4/15/2004 2:00:00 AM
Digital still cameras, universal serial bus (USB) drives and cell phones with cameras will drive demand for NAND flash memory over the next several years. The NAND market will grow from $3.7 billion in 2003 to about $8 billion in 2006, according to market researcher IC Insights.
Despite booming demand, buyers can expect prices to remain stable. Suppliers are moving production to 90-nanometer technology and using 12-inch wafers, which will result in more flash chips. In addition, more suppliers will jump into the NAND flash fray so capacity will increase. Suppliers will fight for market share and keep pricing competitive.
NAND flash demand has skyrocketed over the last two years because more equipment is using it. "Before 2003, NAND was used largely for digital still cameras," says Erik Aldana, flash product marketing manager at Samsung. "That market was growing 50-60% per year. Then, in 2003, we saw the emergence of USB flash drives," he says. USB drives use flash for storage and are replacing floppy drives in computers.
"The PC market is three or four times larger than the digital still camera market in sales. We saw our available market for NAND flash quadruple in one year. The attach rate of PCs with USB drives is high in Asia and is growing in North America," says Aldana.
Cell phones are the third big driver of NAND flash. Cell phones have used NOR flash for code storage. However, many phones are now equipped with cameras, which need NAND flash to store pictures.
"NOR has traditionally been used for code storage because it provides fast reads, which is useful for pulling data out of memory," says Brian Matas, an analyst with IC Insights. "However, NOR writes data slowly. NAND reads data slowly, but has fast write speeds, which is desirable for handset makers looking to integrate digital cameras, MP3 audio, global positioning systems (GPS), and other multimedia technologies into their products."
Cell phone manufacturers plan to use NAND storage for code storage as well.
With demand booming buyers can expect manufacturers to improve densities.
Demand is greatest for 512 megabit (Mb) and 1 gigabit (Gb) chips. The chips are packaged in memory cards. In terms of density, the sweet spot for memory cards is 256 megabytes. However, densities for memory cards will rise in the next several years as manufacturers increase chip densities.
"256 megabytes is actually 2 gigabits of memory. We expect to support the move to two gigabits by launching our 90-nanometer, 2 gigabit monolithic chip," says Aldana.
"With that we are able to do stacking so we have a 4 gigabit and 8 gigabit quad die stacked with the same 48-pin thin square outline package (TSOP) package. It opens up a lot of new markets because with 8 gigabits, you have 1 gigabyte of memory in a single chip. That enables card makers to build four gigabyte cards, which you need for the new applications," he says.
The higher densities will likely further boost NAND flash demand.
"Demand is robust, which is significant because this is typically the slow season," says Aldana. "Demand is outpacing Q4. We have enough backlog and bookings so we think there will be allocation through Q2."
Samsung and other manufacturers are adding capacity. Samsung expects to more than double its flash bit output in 2003.
"We have added our 12-inch wafer production at 90 nanometers. It is a small portion of production right now. In Q3, we expect that to be in mass production and contribute to the supply," says Aldana.
Toshiba plans to increase production by boosting bit density in its chips, says Brian Kumagai, business development manager NAND flash. "Every year our plan is to double the monolithic density," he says. Toshiba will ship a 4-gigabit multilevel cell monolithic die, which can be stacked. By the middle of next summer Toshiba plans to ship 8-gigabit devices.
Hynix and STMicroelectronics are expected to start shipping NAND flash in volume this year. Some analysts say the increase in capacity may help keep flash prices stable. But others aren't sure.
Kumagai says manufacturers getting into the flash market will make 512 Mb parts. But the industry is shifting to 1 and 2 gigabit chips.
"We don't see capacity being introduced into the market as being too influential in 2004," says Kumagai. "Maybe in 2005 it will be a different story."
Flat prices
Aldana says even without additional capacity flash prices probably won't increase.
"There never seems to be an explosive upward trend with flash pricing," he says. "The reason is that flash is used in consumer devices and consumers insist on paying less every year for whatever devices they are buying."
A lot of flash is used in flash cards that go into consumer electronics equipment. But the embedded market for flash will grow in coming years, says Scott Nelson, business development director, memory for Toshiba.
"Embedded is in its infancy and is just starting to take hold," he says. "Probably 30-40% of NAND is embedded, but that is driven by digital still camera. Third generation (3G) cell phones will drive higher memory content."
Besides prices and overall availability, buyers should keep an eye on the move to multilevel cell (MLC) technology in flash memory.
A multilevel cell stores two bits of data per memory cell rather than one. Intel began using the technology in 2001 and other flash manufacturers have developed their own versions of the technology, says Matas.
However, there are technical issues facing MLC technology. MLC devices have reliability issues because of leakage of charge, says Matas. MLCs must manage electrical charges more precisely than single level cells, he says.
Performance can also be an issue with MLC flash. With fewer bits per cell to erase, single-level cell (SLC) chips can program and erase information three to four times faster than MLC flash devices, according to Matas. Digital camera users would notice the difference when their digital camera equipped with MLC flash forced them to wait an extra second or two between shots.
MLC devices also don't have as much endurance as SLC devices. MLC flash units are rated at about 10,000 cycles, compared to 100,000 cycles for SLC units. After 10,000 cycles, the MLC wears out and its ability to keep information stored properly becomes suspect, says Matas.
However, MLCs cost about 20% less than SLC devices.
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