Eli Harari, founder, chairman and chief executive of SanDisk, also warned that the gloomy business model for NAND could make it ''unattractive'' for vendors to build new fabs.

On the positive side, Harari said the total bit demand for NAND flash will hit 100,000 petabytes (PB) by 2013, up from 7,000-PB today. There is still exploding demand for NAND in current and future applications, including the top potential driver: the embedded removable market, he said.

To meet that demand, the total capital spending among all NAND vendors must reach $25-to-$30 billion between 2010 to 2013, he said during a keynote at the Flash Memory Summit here.

But here's the problem: Average selling prices (ASPs) will continue to slide for NAND. Between 2005-to-2009, ASPs fell 60 percent per year. ASPs are expected to fall 33 percent in 2009 and 40 percent in 2010.

So, if the industry reaches the $25-to-$30 billion spending levels required during that time frame, NAND vendors in total will only generate $20 billion in revenues, he said.

In other words, the return-on-investment (ROI) model is broken. And vendors will continue to go ''cash-flow negative" based on projections. Even worse, the poor NAND ''model puts in question the ROI for the need of future fabs,'' he said.

''It's not a good business model,'' he declared.

By: DocMemory
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