Tuesday, January 8, 2019
Fast NAND flash price falls are expected to accelerate the penetration of the memory into various application segments, and may also trigger a wave of reshuffle among suppliers in 2019, with technological leaders standing a good chance of becoming winners.
In 2018, the NAND flash market reversed a tight supply scenario seen in 2017, with prices falling by over 60% to only US$0.08 per GB by the end of the year, due mainly to makers ramping up shipments of 64-layer 3D TLC (triple-level cell) NAND flash memory products and racing to roll out new-generation chips with larger storage capacities.
Affected by technological bottlenecks, the yield rates for 3D NAND failed to improve as fast as expected in 2018, resulting in substandard products flooding the market to drag down prices of consumer SSDs. The prices of 120G SSD had plunged by over 50% to US$0.2/GB between December 2017 and the third quarter of 2018. And the prices for 240GB and 480GB SSDs had also declined by over 40-50% in the same period.
The average contract prices for NAND flash memory chips fell by 10-15% in the third quarter of 2018, as smartphone replacement demand failed to appear in the traditional peak season and 64- and 72-layer 3D NAND production capacities increased significantly.
The prices fell further in the fourth quarter of 2018, given the market worries about escalating trade tensions between the US and China, Intel CPU supply shortages and lackluster sales of new iPhones.
According to Digitimes Research, NAND flash bit-shipments surged 43% on year in 2018 after posting an annual growth of 36% in 2017, and may further rise 39% on year in 2019 despite continued price falls.
For the world's leading NAND flash suppliers, 3D NAND has become their mainstream flash memory process technology, accounting for 90% of NAND flash capacity at Micron Technology, 85% at Samsung, 75% at Toshiba/Western Digital, and 60% at SK Hynix.
Starting year for QLC NAND production
Since the second half of 2018, some makers have ventured into the production of 96-layer 3D NAND flash memory chips, with single die capacity hitting 1Tb (128GB). And 2018 was also a starting year for volume production of QLC (quad-level cell) NAND architecture, whose bit density is 33% higher than TLC NAND's.
Among major 3D NAND flash suppliers, Micron has taken the lead to volume produce 64-layer QLC NAND products for use in enterprise servers. Samsung has also released 1TB QLC SSD for use in consumer electronics devices, at prices 40% cheaper than its 1TB TLC SSD released in January 2018. Other suppliers SK Hynix and Toshiba/WD are also expected to launch their own QLC SSDs with capacity of up to 4TB.
Market research firms estimated the global memory market scale at US$150 billion in 2018, including over US$57 billion for NAND flash products. China is now the world's largest memory market absorbing 32% of the global memory supply, prompting China memory makers including Yangtze Memory Technology (YMTC) to step up development of NAND flash memory chips.
Already producing 32-layer 3D NAND flash chips in small volume, YMTC has delivered 64-layer samples for test at related supply chain, probably set for commercial production in the third quarter of 2019. The company also plans to skip the development of 96-layer 3D NAND technology and directly foray into the 128-layer segment.
YMTC's parent company Tsinghua Unigroup has decided to funnel a total of CNY180 billion (US$26.21 billion) into the production of 3D NAND chips at its three major production bases in the Chinese cities of Wuhan, Nanjing and Chengdu. The group is also seeking to cooperate with Intel to develop NAND flash technology at full throttles.
Industry observers said that it is a matter of time for China memory makers to join the competition in the NAND flash market, although they will remain at a trial-run stage in 2019.
Keen competition in 96-layer 3D NAND segment
In 2019, the NAND market is expected to boom further and see increasingly intense competition among major players, especially in the 96-layer segment. Samsung has announced the start of volume production of over-90-layer 3D NAND flash memory chips, and will invest US$7 billion to build a second NAND flash fab in Xi'an, China.
Toshiba/WD has also since September 2018 started mass production of 96-layer 3D NAND. Intel's phase-two NAND fab in Dalian, China and SK Hynix's M15 fab in South Korea also jumped on the production wagon later in 2018
Meanwhile, driven by lingering price falls, NAND SSDs are expected to see fast penetration into consumer electronics devices and may have a chance of experiencing a golden cross with HDDs in 2019 in terms of market penetration, according to industry sources.
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