NOR flash heads into buyers' markets
Gina Roos -- Purchasing, 10/21/2004 2:00:00 AM
The NOR flash memory market is shifting into low gear with a buyers' market on the horizon after a robust first half in 2004, which was marked by long leadtimes and rising tags for lower density devices. NOR flash supply was extremely tight for 16- and 32-Mbit densities because all the die shrinks and expansion plans were aimed at high density 64-, 128- and 256-megabit (Mb) devices. Those chips are used in all new cell phones, says Mark Hampson, senior product marketing manager for Sharp Microelectronics of the Americas.
As supplies got tight earlier in the year, prices increased for low-density products. Today, the pricing scene has changed. Philippe Berge, marketing director for STMicroelectronics' memory group says prices have stabilized for low-density NOR flash. Tags for higher density devices, which benefit more from advanced technology and process migrations, are on a slightly decreasing price trend.
Leadtimes have also improved and range anywhere from four to 10 weeks, although one supplier notes that deliveries for unforecast demand will be longer, about 12 to 14 weeks, in the short term.
NOR flash suppliers have now increased production for devices with densities of 64Mb and lower. That coupled with process technology shrinks means prices will drop during the remainder of the year with a possible oversupply situation in 2005, predicts Betsy Van Hees, principal analyst for memory at iSuppli. "We're in a supply equals demand scenario in the third quarter but we're quickly moving into an oversupply situation for NOR flash," she says. She believes there may be oversupply for much of 2005, which will result in significant downward price pressure.
For example, iSuppli estimates that worldwide contract pricing for 16Mb NOR flash will decline 6.8% in the fourth quarter and 6% in first quarter 2005.
Because of a robust first half in 2004, the worldwide NOR flash market is expected to reach $10.4 billion in 2004, up from $7.5 billion in 2003, according to iSuppli. However, growth will slow in 2005 and 2006 due to declining prices and oversupply.
Despite the slowdown, there won't be any supplier shakeout. "We've had a minor boom and now a minor bust but I don't think anyone will drop out of the market. If anyone was going to drop out, it would have been in the 2001 or 2002 time frame," Van Hees says. That will be good news for wireless handset manufacturers. Cell phones are the single biggest market segment driving NOR flash demand.
Handsets consume about half the industry bits shipped every year, says Ian Williams, vice president of worldwide sales for Spansion LLC, the flash memory subsidiary of Advanced Micro Devices and Fujitsu. He says the average amount of NOR flash memory in handsets is about 150 megabits today and the amount doubles about every five quarters. Networking/telecommunications, consumer electronics, automotive systems and industrial controls also use NOR flash.
Surprise, surprise
NOR flash suppliers are surprised by the slowdown in second half 2004. They say the market started to ease up in late summer, which is typically when the flash memory market picks up.
The majority of cell phones being launched now use twice the density of flash so it's surprising that the market hasn't picked up more strongly, Hampson says. Instead of accelerating, the market has remained flat, he adds
As the market turns to oversupply, flash buyers are reevaluating their supplier bases. Each NOR flash supplier is taking a distinct approach to success with different product strategies to best serve their customer base. For instance, Spansion, which was the number one supplier of NOR flash in the first half of 2004, offers a broad NOR flash product offering from 1Mb to 512Mb to address the needs of individual market segments.
STMicroelectronics continues to build its product portfolio for mobile communications, and launched its first NAND flash memory products in volume production earlier this year. "A lot of our product strategy leans toward our capability to offer a complete solution in the mobile market," Berge says.
On the other hand, Sharp Microelectronics uses its broad product portfolio as leverage to support the handset market. In addition to flash memory, it brings other parts to the table, including imaging products and displays. "We might cover 70% of the bill of materials so we have a bit of leverage when buyers look first at the overall system cost versus the piece by piece price," Hampson says.
One key trend in the NOR flash memory market is the shift from NOR flash to NAND flash in mobile handsets. This is primarily driven by higher functionality requirements in mobile handsets that increase the need for greater data processing and storage. Many flash memory solutions for mobile phones combine NOR flash with SRAM or PSRAM.
In general, NOR flash suppliers believe that NOR flash will remain the predominant memory architecture in handsets because of performance tradeoffs with NAND flash. Price will also play a key role in the decision-making process.
"As a purchasing agent you have to pull out your crystal ball and determine what the market is going to look like when you go into production," Hampson says.
For example, in early summer when NOR flash was in tight supply, NAND flash might have been about 5% cheaper. However, for a new design today, pricing for NAND flash has been drifting up on contract pricing, while NOR flash has been drifting down on pricing, Hampson says. Typically, pricing and availability in the NOR flash memory market varies depending on the application.
The two primary markets for NOR flash are wireless, which represents about 65% of sales, and the broad market, which accounts for the remainder of sales, according to market research firm iSuppli. The wireless market typically consumes 16-, 32-, 64-Mbit and higher density devices.
Smartphones to drive NAND flash demand
08/12/2009NOR flash to post slower growth through 2009
10/19/2005Expect NAND flash prices to rise
07/16/2009Strong demand means NAND will surpass NOR
02/18/2004
Now Playing: 