NAND flash sales up, prices down

Samsung continues to lead in flash sales with 40% of market share

The sale of new tablet PCs and smartphones with solid-state storage technology is compensating for weak demand for memory cards and USB flash drives and has led to a 17% quarter-to-quarter increase in NAND flash shipments and an average price drop of about 9%.

According to DRAMexchange, the research division of Trendforce, Samsung continues to lead the market in NAND flash sales, benefiting mostly from sales to smartphone and tablet PC equipment manufacturers.

For the third quarter, NAND flash vendors reported a total of $5.1 billion in revenue, up 6.9% over $4.76 billion in the second quarter.

In its quarterly sales report, DRAMexchange stated that system manufacturers' orders of NAND flash for mobile devices eased pricing pressure for solid-state drive technology, which had climbed and then leveled off for several quarters.

While vendors have different pricing strategies, some vendors adopted aggressive price-cut promotions to stimulate the demand from memory card and USB flash drive resellers, driving down the average selling price for NAND.

NAND flash market share

Samsung remains in the lead with a 39.7% share of the NAND flash market and $2 billion in revenue, while Toshiba took second place with market share of 35.7% and $1.8 billion revenue, according to DRAMexchange. Micron came in third with a 10.2% market share and $522 million in sales, followed by Hynix with $478 million in sales. Intel was fifth with $256 in flash revenue.

Samsung reported NAND flash shipments were up about 10% quarter over quarter, while the average selling price was down 5%.

Samsung expects embedded NAND flash product orders from some system manufacturers will remain high in the fourth quarter, resulting in a 20% increase in flash shipments. The company also expects its average selling price to decline about 15%.

Toshiba's average NAND flash selling price declined moderately while its shipment rate grew significantly in the third quarter, bringing revenue up 15.3%.

Toshiba expects to boost its output of 24-nanometer (nm) NAND flash technology with the opening of its new fabrication facility, which it built with SanDisk. Toshiba's transistor technology is among the most compact used today. By producing more compact NAND flash chips, the total cost to produce higher-capacity products, such as SSDs, would be reduced, which would allow Toshiba to further lower its prices.

Micron's quarterly shipments of NAND flash grew about 7% quarter over quarter, and its average selling price dropped about 3%. Micron has completed its acquisition of Numonyx, and it expects to aggressively pursue the embedded memory business in the smartphone and tablet PC markets.

Also, with a plan for mass production at its new fabrication facility in Singapore, Micron expects its output to jump quarter to quarter in 2011, according to DRAMexchange. In the fourth quarter of this year, Micron will also increase its output of 25nm flash technology.

Intel's average selling price for NAND flash fell significantly and its shipments grew only slightly, resulting in a decline in revenue of about 15.3% in the third quarter. The performance can be attributed to weaker demand from system manufacturers and a price-cut promotions around the industry.

Intel is also expected to increase its output of 25nm NAND flash to enhance its ability to compete on price and to boost its sales of SSDs to ease the effects of declining prices.

Hynix Semiconductor led the pack in average selling price decline in the third quarter. Its prices dropped 23%, while its NAND flash shipments grew 42% as a result of its aggressive price-cut promotion.

The company also benefited from the depreciation of South Korea's currency, the won, and saw revenue grow 21.4% quarter over quarter. Hynix is expected to move aggressively to try to raise its market share among new system manufacturers and thereby broaden its distribution channels and boost its output of 26nm flash products. The company expects its flash bit shipments to grow about 15% next quarter.

Lucas Mearian covers storage, disaster recovery and business continuity, financial services infrastructure and health care IT for Computerworld. Follow Lucas on Twitter at @lucasmearian, or subscribe to Lucas's RSS feed . His e-mail address is lmearian@computerworld.com.

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