Prices of NAND flash memory could plummet this year because of weak demand and an oversupply in the market, analysts said on Wednesday.
If concerns about the U.S. economy deepen, consumers may reduce spending on phones, MP3 players and the other devices that use NAND flash, weakening demand for the chips and depressing prices, said Nam Hyung Kim, director and chief memory analyst for iSuppli. He predicted that prices could fall by as much as 55 per cent this year.
Up to 90 per cent of NAND flash is sold as storage for MP3 players and cell phones, or as cards such as the MicroSD that are slotted into digital cameras and other devices.
The reduced price for flash could lead to cheaper products for consumers. Apple already dropped the price of its 1GB iPod Shuffle this week, to US$49 from US$79, partly because of the falling prices of flash memory, said Shaw Wu, an analyst with American Technology Research.
“Flash pricing definitely has an impact in terms of giving Apple the ammunition to be able to lower price points,” Wu said. At the same time, flash pricing was down a lot in the fourth quarter of 2007, so Apple could have dropped its prices sooner, though it would have earned it slimmer margins on its iPods, Wu said.
The concerns about the economy and consumer spending prompted iSuppli to slash its revenue forecast Wednesday for the flash industry this year. It now expects global NAND revenue to climb between 7 per cent and 9 per cent, down from its earlier projection of 27 per cent, Kim said. Global NAND revenue in 2007 was US$13.9 billion, up 12.5 per cent from US$12.36 billion in 2006, he said.
This year’s revenue growth will also be affected by a reduction in NAND flash orders by device makers, Kim said. Apple, one of the largest buyers of NAND flash, ordered US$1.2 billion worth of flash memory last year, but has slashed its order forecast for 2008, according to Kim.
