Prices to drop by one-third

Staff -- Purchasing, 2/17/2005

The flash memory market will decline about 2% to $15.5 billion after growing 34.4% to $15.8 billion in 2004. But buyers can expect price declines of 30% to 35% for parts because of stiff competition and slower demand compared to 2004.

As they did last year, cell phones and consumer equipment will continue to drive flash memory use. Cell phones typically use NOR flash for code storage, but more phones have multimedia features such as cameras, which require nand flash as well for data storage.

But what's needed globally depends on the individual market. Because people in Asia use cell phones to watch streaming video, browse the Internet and play games, cell phones typically need 128 megabytes of flash memory. In North America, multimedia in cell phones has not caught on and only 32 megabytes of flash is needed. However it's expected that multimedia features will become popular in North America and further increase flash memory use over the next several years.

In addition, as cell phones become more computer-like, they will require multiple types of memory including NOR and nand flash, sram and dram. Flash-memory buyers can expect more multichip packages that bundle those memory technologies into a single package

Consumer equipment will also drive flash demand in 2005. While unit shipments may not be as strong as 2004, equipment is using higher-density flash chips which carry higher price tags.

Digital cameras are an example. "Everyone wants more megapixels," says Steve Weinger, product marketing manager for flash memory for Samsung, because the more megapixels, the sharper the picture.

A year ago, most cameras were 2 megapixel cameras. "Then it went to 3. Now the standard is 5 to 7. The more megapixels there are, the more memory you need on the flash card. No one has a 32 Mb card anymore, it is 256 Mb or higher," says Weinger.

That need for more memory means that more higher-density nand flash chips will ship in 2005, says Michael Yang, product marketing manager nand flash for Samsung. "With nand in 2003, 1 gigabit (Gb) was the sweet spot. Now it is moving to 2 gigabit," he says. In 2004, about 40% of shipments were 1 Gb. In 2005, 90% of shipments will be 2 Gb,

But don't expect a similar change with NOR flash. "The primary requirement is 16 Mb," says Yang. He says 40% to 50% of the market is 16 Mb while about 25% is 32 Mb and that won't change in 2005.