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iSuppli cuts 2008 NAND growth forecast by two-thirds
On adjusted forecasts from NAND buyers, global revenue for the flash memory is now expected to rise to $15.2 billion in 2008, up 9% from $13.9 billion in 2007.
By Suzanne Deffree, Managing Editor, News -- Electronic News, 4/7/2008
The ailing economy is beginning to show its influence on the electronics supply chain, with softening consumer spending encouraging buyers to cut back purchasing in the semiconductor market.
iSuppli Corp today reported that, as major buyers of NAND flash slash their expected order growth for 2008, the market research company is cutting its forecast for global revenue growth for the memory this year by about two-thirds.
Global NAND flash memory revenue now is expected to rise to $15.2 billion in 2008, up 9% from $13.9 billion in 2007. iSuppli's previously forecasted global NAND revenue would rise by 27% in 2008 to reach $17.9 billion. The revised forecast lowers expected worldwide NAND revenue growth by two-thirds, 18 percentage points, and $4 billion.
“The major factor behind the diminished outlook is weakening consumer spending,” said Nam Hyung Kim, director and chief analyst, memory ICs/storage systems for iSuppli, in a statement. “NAND flash is used heavily in consumer-electronics applications -- including MP3 players, USB flash drives, and digital still cameras -- which are driven by retail sales to consumers. Spending growth on these items is expected to slow in 2008 compared to 2007 due to the US subprime mortgage crisis and its collateral impact on worldwide consumers and economies. In light of this development, the world's largest buyers of NAND-type flash will slow their spending growth in 2008.”
To be sure, this is not the first time iSuppli has stated issue with the economy’s impact on the flash market and its buyers. In February, iSuppli first reported Apple Inc, the world's third-largest OEM buyer of NAND flash, had slashed its expected 2008 order growth forecast.
“iSuppli now predicts Apple's spending on NAND-type flash memory will rise 12% to reach $1.4 billion in 2008, up from $1.2 billion in 2007,” said Min-Sun Moon, analyst for OEM semiconductor spending and design influence at iSuppli, in the statement. “Before word of Apple's cut in its expected order growth, iSuppli had predicted the company's NAND flash purchases would rise by 32.2% this year, reaching $1.6 billion. ISuppli's new forecast means Apple will spend $400 million less on NAND flash in 2008 than previously expected, an event that will have a major impact on the worldwide memory market.”
Moreover, Apple NAND supplier Intel Corp issued a Q1 financial warning that cited weakening prices for the memory. And Korea's Hynix, the world’s third-largest supplier of NAND, said it was reducing its output of the memory due to weak market conditions, iSuppli noted.
“In order to plan production, suppliers of commodity components like flash memory work closely with their major customers to forecast expected demand levels for the coming quarters. News that a major buyer is slashing its expected order growth levels has a major effect on the supply/demand balance and pricing of a commodity part, such as NAND flash memory, iSuppli explained.
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Also, iSuppli noted that Sony, the world's second-largest NAND flash buyer in 2007, is now expected to buy $1.4 billion worth of NAND-type flash in 2008, up 6.8% from $1.3 billion in 2007. iSuppli previously predicted the company's spending would rise by 16% this year.
According to iSuppli, the worldwide average per-megabyte price for NAND flash memory declined by 36% in Q1. That will be followed by a 13% decrease in Q2, iSuppli predicted, adding that it expects prices will stabilize somewhat early Q2 as OEMs replenish their inventory, leveraging low NAND prices. The company conclude that pricing stabilization in mid-2008 will allow global NAND revenue to achieve positive revenue for the year.
iSuppli is not alone in reporting issues with the NAND market. Gartner, for one, cut its 2008 semiconductor market growth forecast nearly in half earlier this year, calling NAND a trouble spot for the electronics supply chain.
