Revenues of the global NAND flash industry increased 3.4% sequentially to US$8.55 billion in the second quarter of 2016, according to DRAMeXchange.

Brisk demand for high-capacity eMMC/eMCP from China-based smartphone vendors and stock-up demand ahead of the iPhone 7 release caused a gradual tightening of NAND flash supply in the second quarter, DRAMeXchange indicated. Contract prices for eMMC, and client- and enterprise-grade SSDs also began to fall at a slower rate, while prices of NAND flash wafers in the channel have even started to grow on a monthly basis since April. Consequently. branded NAND flash vendors saw their combined revenues rise in the second quarter ending a 2-quarter streak of sequential decreases.

"Demand is rising sharply for smartphones and client-grade SSDs in this year's second half, so NAND flash supply is going to become increasingly tight in the third quarter," said Sean Yang, research director of DRAMeXchange.

DRAMeXchange expects NAND flash suppliers to post revenue and operating margin growth for the third quarter, driven by steady growth in the chip prices. "Sequential revenue and operating margin increases are also forecast for the fourth quarter," Yang continued.

Samsung Electronics remained the leading NAND flash vendor with a 36.3% market share in the second quarter, followed by Toshiba with a 20.1% share and Western Digital (formerly SanDisk) with a 16.1% share, according to DRAMeXchange.

"In terms of product strategy, Samsung has rapidly gained market share with its 3D-NAND flash SSDs," Yang noted. "The company is also the market-share leader for high-capacity eMMC/UFS and eMCP." Samsung continues to expand its production capacity for 3D NAND flash chips, which will boost its overall NAND flash bit output for 2016 above the industry's average.

Toshiba's new Fab 2 has begun mass production of 3D-NAND flash and will achieve a capacity of 40,000 wafers per month in the fourth quarter, DRAMeXchange said. The 15nm process remains Toshiba's primary manufacturing technology and is expected to account for 80% or more of the company's total bit shipments starting the third quarter.

Western Digital continues to rely on 15nm NAND flash products as the main revenue generator, and is accelerating the development of its 64-layer 3D-NAND flash that offers up to 512Gb of density per chip, DRAMeXchange indicated. By the end of 2017, 3D-NAND flash is expected to account for at least 40% of the supplier's annual bit output.

SK Hynix is increasingly relying on its latest 14nm process, which is going to account for a greater share of the bit output starting in the third quarter, DRAMeXchange said. Additionally, SK Hynix will be capable of producing 20,000-30,000 wafers monthly for 3D NAND at the end of 2016.

Micron's Fab 10X is currently "doing small-batch production of 3D-NAND flash" in the third quarter, with mass production scheduled for the fourth quarter, DRAMeXchange indicated. Micron is also preparing to launch its second-generation 3D-NAND flash. As the share of 3D-NAND in Micron's total bit shipments increases rapidly, DRAMeXchange forecast Micron's overall NAND flash bit shipments for 2017 will be above the industry's average.

DRAMeXchange also observed that the conversion of Intel's fab in Dalian, China is proceeding as scheduled. Equipment has been installed and the fab has entered its trial production stage. "The plan for the fab to begin mass production and shipments in this year's fourth quarter remains unchanged," DRAMeXchange said.

Intel previously disclosed plans to utilize the Dalian fab to help expand its manufacturing capacity in non-volatile memory, and expects initial production of 3D NAND chips at the facility to kick off in the second half of 2016.

By: DocMemory
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