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Flash growth to slow, SSDs not selling as well as expected

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Flash growth to slow, SSDs not selling as well as expected

Taipei (Taiwan) – DRAMeXchange has revised its Flash bit growth forecast once again, from 108.2% in September to only 81%, which is less than half the growth rate the sector posted just two years ago. The market research firm said that the new number reflects a declining demand of consumer electronics.

NAND flash manufacturers are already in trouble and it seems that 2009 will only get worse. The new bit growth expectation is still high at 81%, but behind the 175% in 2006, 151% in 2007 and 121% in this year. And while the absolute number of bit growth will be stronger next year than it was in 2008, the greater capacity of flash chips indicates that actual shipments of flash devices may not grow at all are even decline.

According to DRAMeXchange, about 28.2 billion 1 Gb flash units were shipped during 2008, up from 12.7 billion in 2007. The 2009 forecast estimates shipments at 52.0 billion 1 Gb units – translating to an 81% bit growth rate. However, due to increased competitive pressure, flash storage capacity is generally expected to at least double next year, which could mean that actual chip shipments may decline.

The primary reasons for this scenario is the cellphone industry which is expected to post decline in shipments for 2008. Demand for digital cameras, MP3 players and USB memory sticks is still on the rise, but has slowed as well, according to DRAMeXchange. Most interestingly, the market research firm found that solid state disk drives are not selling as well as anticipated: “The short term demand mainly comes from the industrial market and the outcome in the low cost PC market is actually lower than expected, which was due to price and reliability issues,” the company said.  
 
Most notebook makers PC still are still focused on the traditional hard drive as its major storage device. “The penetration rate of SSD in the low cost PC market will be lower than 10% in 2009,” DRAMeXchange stated.

There is still an oversupply of flash memory in the market, which will cause manufacturers to reduce their wafer production by about 10% quarter-over-quarter in Q1 2009. According to DRAMeXchange, flash companies will also adjust their product mix, lowering the unprofitable portion of the NAND flash related production and shifting to more profitable devices such as SSDs.