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Rise of NAND reshapes NOR market

Posted: 13 Sep 2005     Print Version  Bookmark and Share

Keywords:nor  nand 

NOR suppliers may need to seek new non-volatile memory technology

The first quarter of 2005 marked the first time that revenues for NAND-type flash exceeded those of NOR. iSuppli Corp. expects this situation to continue for the foreseeable future as the seemingly insatiable demand for low-cost solid state storage in consumer electronics continues to drive NAND demand.

NAND revenue will exceed that of NOR in 2005, accounting for slightly more than half of total flash memory revenue. By 2007, NAND will account for 61 percent of total flash-memory revenue.

The demand for NAND primarily is being driven by the removable flash card, USB drive and MP3 player markets. In contrast, NOR flash suppliers serve the two broad markets of wireless and embedded products, with the bulk of sales of high-density and high average selling price (ASP) parts being driven by the mobile-phone segment.

The past 12 months have proven very tough for the major suppliers of NOR flash memory for the mobile-phone market: Intel, Spansion and STMicroelectronics. Market share competition has spurred severe ASP erosion, and when coupled with the maturation of the mobile-phone market and no new application on the horizon to bolster growth, the incentive to invest in more NOR capacity via process shrinks or larger wafers has been diminished.

NOR suppliers have migrated or are moving to multiple bit per cell technologies to increase density. As they complete their move to the next generation of advanced flash lithography, i.e. 90nm, they most likely will have sufficient wafer capacity in place at existing 200mm fabs to satisfy mobile-phone demand through the end of the decade.

This capacity will be augmented further as other products now using 200mm capacity move to 300mm facilities. Memory manufacturers need volume production to keep their factories running and to justify further investments in wafer fabrication facilities and technologies. Without the volumes, the suppliers' only choice is to revert to a strategy of continuing to cost reduce existing products to remain in the business.

If this scenario begins to drive the situation in NOR, the question to be pondered is will all of the current players remain in the business? It's a sure bet some of the minor players will be forced to exit because the big guns seeking incremental growth will be targeting smaller market segments that have been served by the more diminutive suppliers in the past.

The potential shrinking of the supplier base for NOR should be of concern to mobile-phone manufacturers who have enjoyed a prolonged period of favorable pricing. If the NOR supply base shrinks to be smaller than what is needed to support phone demand, what course of action should be taken?

During the past few years, NAND has been touted as a replacement for NOR in mobile phones. However, will there be enough NAND available to fill the void left by NOR supplier departures?

iSuppli believes the answer to this question is no.

Supply of the lower density NAND used in mobile phones, i.e. 128Mbit to 1Gbit, is dwindling as suppliers shift production to high-density devices for the removable storage market. When available, those low-density NAND parts are commanding a price premium.

In the case of NAND, as with DRAM, legacy devices disappear from the market and only a few parts of the highest density are supported at any given time. Unless NAND suppliers are prepared to offer extremely attractive prices for these high-density devices, the mobile-phone makers could be priced out of access to NAND.

The dynamics of the flash market have changed fundamentally because for the first time in the history of NOR, its destiny has been interwoven with that of a competing technology. Because of this, consumers and suppliers of NOR should monitor the supply situation closely, iSuppli believes.

The rate at which NAND is being consumed by applications beyond mobile phones, and the fact that long-term agreements for guaranteed supply already are emerging--such as the deal between Apple Computer Inc. and Samsung Electronics Co. Ltd.--should represent sufficient incentive for mobile-phone suppliers to consider their future memory support plans very carefully.

In order to maintain their role as long-term providers to a broad base of memory applications, the NOR-only suppliers should augment their offerings with products that will be compelling to the consumer market, which presently is so enamored with NAND.

Such products could be NAND-like offerings, or they could be new memory technologies that meet a wide variety of requirements, including non-volatility and fast read and write times.

Mark DeVoss

EE Times

Mark DeVoss is the senior analyst, flash/SRAM/MCP for iSuppli Corp. Contact him at mdevoss@isuppli.com





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