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Price contrast seen between NOR and NAND flash
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Monday, December 9, 2002
Intel Corp. last week confirmed it will seek 20% to 40% price hikes on NOR flash, and Advanced Micro Devices Inc. (AMD) said it is also negotiating price increases with customers. Fujitsu Ltd. has made no price announcements, but a spokesman said, "We would welcome healthier pricing in the NOR flash market."
If NOR vendors can extract higher prices, it will be an about-face from earlier this quarter, when a glut drove prices down 15%, according to a report from iSuppli Corp., El Segundo, Calif. "NOR prices will firm as excess capacity diminishes by the first half of 2003," the report said.
In contrast, NAND flash prices in the second half of this year have plummeted amid fierce competition between the two principal producers, Samsung Electronics Co. Ltd. and Toshiba Corp.
Tom Quinn, vice president of marketing for Samsung Semiconductor Inc., San Jose, estimated that NAND prices have dropped as much as 40% since the first of the year, and expects further declines next year, or at best, a leveling off.
The NOR-NAND pricing dichotomy is caused by sharply different supply patterns.
Analysts said NOR vendors under- invested in capacity in the last few years, with supply--especially of new 128Mbit chips--hard pressed to keep up with a sudden escalation in orders.
"I think it is reasonable to expect there is an inflection point coming in terms of the supply and demand equation," Smith said. "The aggressive flash [price] erosion of the last couple of years may start going in another direction."
One analyst warned that 128Mbit flash shortages could arise next year if demand continues to be as strong as is forecast.
High-density NOR is needed for cellular phones with color screens and higher performance, said Philippe Berge, director of memory marketing for ST, Geneva, Switzerland.
"There are only a few suppliers to address high-density NOR demand, so any shortages would start in these products," Berge said.
Analysts said an expected sharp rise in NOR sales next year could make this happen. The NOR market, after a flat year in 2002, is forecast to skyrocket 84% next year, to $11.9 billion, according to Semico. NOR unit shipments are predicted to jump 40% next year, to 2.31 billion.
At the other flash pole, NAND prices are falling "due to a significant Samsung and Toshiba production ramp-up in the second half of 2002," iSuppli wrote in a report. Samsung has converted two aging DRAM fabs to produce NAND flash, though Samsung's Quinn pinned the price decline on sudden supply increases by Toshiba and its partner, SanDisk Corp.
Quinn also said 90% of NAND chips shipped to North America were used in memory cards sold at the retail level. "This tends to hold down any large price increases. If [NAND] supply does get tight, prices only flatten out," he said.
Despite NAND price declines, Semico forecasts a revenue jump in 2003 of 60% over this year.
By: DocMemory
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