NAND sales, which consumer products mainly drive, now face crumbling consumer confidence arising from poor global economic conditions. With the challenging retail situation and the inventory overhang among OEM (original-equipment-manufacturer) customers, NAND-chip suppliers have cut chip prices to increase their sales, iSuppli Corp says.

According to iSuppli estimates, unit shipments of 1-Gbyte-equivalent NAND chips will likely rise by 126% in 2008, down from 179% in 2007 but still representing tremendous unit growth. That growth, however, has resulted in oversupply. In 2009, unit growth will decline to 71%, iSuppli projects, noting that, over the past five years, the market has averaged a 192% annual increase.

On the oversupply, analysts expect ASPs (average selling prices) of 1-Gbyte-equivalent NAND chips to drop by 62% in 2008, followed by a 50% decline in 2009.

Decreasing unit growth in the NAND-flash market potentially will affect the semiconductor-capital-equipment industry as NAND-flash suppliers have been increasing their capital spending to increase their capacities. Analysts expect industry spending to decrease by 38% in 2009, according to the company's data.