iSuppli: NAND flash controller chip market to decline

The fast falling prices for NAND flash memory controller chips have resulted in an expected decline in overall market revenue for 2007. The fall reflected weak conditions in the overall flash business, according to iSuppli Corp.

The worldwide market for NAND flash memory controller chips in 2007 is forecast to decrease by 11 per cent to Rs.1,631.61 crore ($386 million), down from Rs.1,842.96 crore ($436 million) in 2006, according to iSuppli. This is mostly due to falling average selling prices for such controllers, which are expected to decline by 30 per cent in 2007 to reach 49 cents. Such controller chips are used in removable flash-memory storage cards, USB flash drives and solid-state drives.

Prices also have been on the decline for NAND flash memory parts themselves, due to a glut of supply on the market. The source of the market revenue decline is the captive market for flash controllers, i.e., the group of companies that produces controllers for their own flash-memory products, such as flash storage cards.

These companies include SanDisc and Toshiba. The captive NAND flash controller market will decline to Rs.650.95 crore ($154 million) in 2007, down 34 per cent from Rs.993.34 crore ($235 million) in 2006.

In contrast, the merchant market for flash controllers, i.e. those sold by third-party suppliers, will rise to Rs.980.66 crore ($232 million) in 2007, up 15 per cent from Rs.849.62 crore ($201 million) in 2006. The captive makers are focused on providing highly integrated, SoC embedded controllers. Meanwhile, the merchant suppliers are concentrating on gaining market share in discrete controllers, helping to expand this part of the market.

Living in captivity
Captive supplier SanDisc Corp. was the leading seller of NAND flash storage card controller chips in 2006, with Rs.356.33 crore ($84.3 million) in revenue and a market share of 24.3 per cent. No. 2 was merchant supplier Silicon Motion Technology Corp. with revenue of Rs.310.68 crore ($73.5 million) and a market share of 21.2 per cent. Together the two suppliers dominated the market, with nearly half of worldwide revenue.

Looking at the entire NAND flash storage card controller market, the captive suppliers including SanDisc and Panasonic account for the majority of sales.

Silicon Motion accounted for 45 per cent of share in the merchant market in 2006. The other merchant suppliers, such as Skymedi, InComm and Phison, also generated strong market share gains in 2006.

Merchant marines
In contrast to the flash storage card controller market, the USB flash drive controller segment has been dominated by merchant suppliers. USB flash drives are often used for removable storage for PCs.

Phison remains the No. 1 supplier in this market with a 31.8 per cent market share. M-Systems, now part of SanDisk, accounted for 75 per cent of Phison's total controller sales in 2006 followed by Toshiba, which earned about 20 per cent of Phison sales.

Phison recently introduced a dual-chip controller that can support both single-level cell and multi-level cell. Silicon Motion ranked No. 3 in USB flash drive controller shares with 18.6 per cent of the market in 2006.

- Nam Hyung Kim
iSuppli Corp.