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USB 3.0 devices to suffer low market penetration

Posted: 24 Sep 2013     Print Version  Bookmark and Share

Keywords:TrendForce  Crystal Free USB 3.0 Controller IC  NAND Flash  UFD module  DRAMeXchange 

DRAMeXchange, a research unit of TrendForce, has forecasted that the market penetration rate for USB 3.0 flash drives may only be 10 per cent in 2013, which is weaker than expected. Even though the size of the USB 3.0 flash drive market has yet to expand, a number of controller IC manufacturers are speeding up their research developments and investments. This is one of the reasons why the ROI for USB 3.0 products fell short of expectations, and why leading manufacturers may soon emerge within the market, stated the market research firm.

In 2Q13, the USB 3.0 flash drive shipments reached 50-60 lakh units (the same as the previous quarter), whereas market penetration rate ended up at only five per cent. The unimpressive sales can mostly be attributed to the tightened NAND Flash supplies, the not-yet-refined controller IC solutions for USB 3.0 flash drives, poor PC sales and the intensified price wars among the major USB 2.0 flash drive manufacturers.

Despite the possibility of an improved NAND Flash supply situation in 2H13 and the upcoming release of the cost-efficient Crystal Free USB 3.0 Controller IC, the persistence of the USB 2.0 price competition and pressures of declining NAND Flash prices are expected to put a noticeable strain on USB 3.0 flash drive sales. In Q4, the USB 3.0 flash drive penetration rate is likely to only grow slightly to 10-15 per cent.

TrendForce projects that the 2013 USB 3.0 flash drive market penetration rate will increase from 2012's 3-4 per cent and arrive at somewhere around 10 per cent. As more and more leading manufacturers begin releasing USB 3.0 products into the market, the penetration rate is likely to approach 20-25 per cent in 2014.

The UFD module manufacturers have, for a long time, longed to see the price difference between USB 3.0 and USB 2.0 products reduced. In order for this to happen, controller IC manufacturers need to not only be able to offer the aforementioned Crystal Free solution, but also begin migrating to the more advanced manufacturing technologies and increase their products' compatibility with different NAND Flash components. To attain these goals properly, the investment in technological and human resources will undoubtedly need to be greater now than it has ever been during the USB 2.0 era. However, given that the size of the USB 3.0 flash drive market has not been expanding as expected and that it has become increasingly more difficult for the investment efficiency of USB 3.0 controller IC to support the cost of developing next gen products, more and more manufacturers are beginning to face increased pressure on the business end.

The controller IC solutions developed by Innostor, Phison and Silicon Motion are the choices favoured by most UFD manufacturers as of the present, said DRAMeXchange. These three companies have a combined market share of 85-90 per cent.Due to the persistent draining of their financial resources, the uncertainties within the market, and the aforementioned three manufacturers' continuous promotion of their USB 3.0 Crystal Free solutions, an increasing number of vendors have begun to contemplate steering away from the controller IC market, while only a few are believed to be capable of competing effectively. Taking into account the aforementioned development, TrendForce believes the USB 3.0 controller IC market will soon end up being in a similar state as the market in the USB 2.0 era. That is, only five to six major vendors are likely to be supplying the major controller IC products.

For more statistics and forecasts, click here.

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