According to the most recent report from IHS, the global NAND flash memory market is slowing down in H2 as demand diminishes for local data storage in smartphones and tablets. The reason behind this is the rise of cloud-based services, noted the market research company.

Preliminary estimates show that total NAND bit shipments were estimated to have grown eight percent in Q3, down from nine percent in Q2, stated IHS. For the year's final quarter, NAND shipments will expand by an even lower five percent, down sharply from the 16 percent rise seen in 4Q12.

"The fast-growing season for flash memory appears to be running out of momentum as density growth levels off in many of the products that are leading users of NAND," said Ryan Chien, storage systems analyst at IHS. "Moreover, few upcoming devices are expected to increase their NAND options, further dampening growth in the short term."

Despite the H2 slowdown, the projected total for the NAND flash industry in 2013 will amount to 39 billion gigabytes of shipments and $24 billion in revenue—both industry records.

"Streaming media options and free cloud storage are diminishing the prospects for increased NAND usage in smartphones," Chien said. "This is true for all three major mobile operating systems—Apple's iOS, Google's Android and Microsoft's Windows Phone. With less need to store data in local devices, the requirement for greater storage is reduced."

Another reason for slower NAND growth is that NAND use is limited in low-end smartphones that make up the fastest-growing part of the smartphone market. By keeping NAND use down, low-end smartphones can more easily control costs and maintain affordability.

Meanwhile, newly released flagship handsets from Apple, Samsung and Sony have not added larger density options compared to predecessor models.

Furthermore, consumer interest in recent years has been lukewarm in several NAND-heavy device categories such as game consoles, PCs, e-readers and USB drives. And in media tablets, the rapid transition to lower-cost 7in and 8in sizes is squeezing product price points—and, therefore, flash densities.

Regardless of the slowdown in flash consumption, prices have actually risen considerably. A fire at South Korean memory supplier SK Hynix has caused it to shift some of its NAND capacity to dynamic random access memory (DRAM). And even though the impact on NAND will be small and NAND bit production in Q4 is still expected to increase, the possibility of supply challenges has catalyzed major component price hikes.

For instance, the IHS NAND price index—formulated to keep track of movements in NAND pricing over time—has jumped nearly 10 percent since the fire, signaling some nervousness in the market. As demand concerns start to weigh on the market, however, prices have drifted lower in recent weeks.

The relationship between DRAM and NAND continues to be important. DRAM figures prominently in various functions, from storing mapping tables in solid-state drives, to masking slower triple-level-cell NAND in the client solid-state drives of Samsung, to providing extra speed in enterprise flash caches for sequentializing write operations.

By: DocMemory
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