Despite Price Drops, Demand for NAND Flash Will Boost Revenue by 8% in 2012

From X-bit Labs: The NAND flash memory market is expected to achieve healthy 8% growth this year because of major sales drivers, including solid-state-drive (SSD) equipped ultrabooks, according to an IHS iSuppli report.

Global NAND flash revenue this year is projected to reach $22.9 billion, up from $21.2 billion in 2011. With NAND flash consumption increasing in the three principal markets for smartphones, tablets and SSDs in ultrabooks, NAND revenue will climb continually during the next few years, hitting approximately $30.9 billion by 2016, according to the market research firm.

The NAND industry finished 2011 somewhat below industry expectations, mainly because consumers did not embrace tablets as enthusiastically during the fourth quarter as initially expected. While the Apple iPad is a major achievement, the same level of success has not been shared by other manufacturers’ tablets.

“Given the lukewarm performance of the tablet segment last year, there was some trepidation coming into 2012 for the NAND industry. But even though most NAND manufacturers had planned to be on the fast track in 2012 to increase production at newly built fabs, each supplier has since reduced capital spending compared to its original plans, electing to moderate supply expansions to allow demand to catch up. Such a strategy will avoid a precipitous price decline that the industry won’t be able to withstand, leading to more optimism for a stronger 2012,” said Michael Yang, senior principal analyst for memory & storage at IHS.

The greatest success besides the iPad has been achieved by lower-end tablets such as the Kindle Fire from Amazon. However, the Fire comes with only 8GB of NAND flash, compared to the iPad’s maximum 64GB of storage. This is resulting in overall lower consumption of NAND flash than if competitive tablets had similar NAND densities to the iPad. Even so, tablets will be responsible for 12% of NAND flash bit shipments this year, with NAND flash consumption in tablets reaching 3.6 billion gigabytes, up from 1.6 gigabytes in 2011.

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