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September 28, 2007

Enormous Opportunities Remain for Flash Memory Market

Despite pause in 2007 market growth, long-term flash outlook is strong

A forecasted decline in the 2007 flash memory market will not be enough to slow the growth of the flash memory market. In fact, IC Insights remains bullish for the long-term health of this product segment. In its Mid-Year Update to The McClean Report, IC Insights forecasts the 2007 flash market will decrease 1% to $19.9 billion from $20.1 billion in 2006. However, the flash market is forecast to rebound 16% in 2008, increasing to $23.1 billion.

According to the Mid-Year Update, slower market conditions in 2007 have been caused by lower unit volume growth (11% increase forecast for 2007) due to migration to higher densities and lower ASPs (-11% decrease forecast for 2007) resulting from much more global flash capacity.

IC Insights believes, however, that the market downturn in 2007 will be short-lived as both new and existing applications drive demand through 2010. Figure 1 shows the amount of NAND flash content in three major applications. Between 2007 and 2010, NAND flash used in cell phones is expected to increase by an average of 107% annually. Cell phones have become personal communications/entertainment devices with Internet and email access, music, video, and photo libraries, and 2Mpixel-resolution cameras on board. Driving NAND flash consumption in cell phones through 2010 will be the growing market for mobile television on the cell phone.

The amount of flash memory used in computing applications is expected to jump more than 5X between 4Q07 and 4Q08. Whether used in USB drives or to replace hard disk drives (HDDs) altogether, flash memory applied to PC applications is poised for solid growth. Currently many handheld computers ship with flash memory rather than a hard disk drive. Earlier in 2007, Dell began shipping a line of flash-based PCs (sold at a premium). By the end of the decade, IC Insights forecasts the price per megabyte of flash memory to be comparable to that of HDDs, resulting in flash-based PCs (handheld, laptops, and even desktop systems) becoming more of a mainstream product.

Figure 1

Meanwhile, a new generation of low-cost 5-, 7-, and 10-Mpixel resolution digital cameras has triggered a replacement cycle of these devices. The upgrade cycle is forecast to boost the average content in flash storage cards for cameras 59% per year to 3.0 gigabytes in 2010.

Besides these applications, the flash memory market is forecast to benefit from the emergence of flash-based digital camcorders as well as televisions with flash-based integrated personal video recorders (PVRs).

Fueling current and future applications will require a substantial increase in flash unit shipments and bit volume. IC Insights forecasts units to rise 11% in 2007 to 6.1 billion units (38% increase in NAND shipments, -2% decrease in NOR shipments). Total flash units are forecast to climb 17% to 7.1 billion in 2008 and increase to 10.2 billion in 2011. Flash bit volume, which increased 219% in 2005 and 87% in 2006, is forecast to grow 48% in 2007.

Report Details

IC Insights’ 2007 Mid-Year Update to The McClean Report is a 190-page updated market forecast report on the IC industry. It features analysis of all major integrated circuit market segments and global economic trends as well as revised projections on semiconductor capital spending and forecasts on IC product revenues, unit volumes, and ASPs through 2011. For those not currently subscribing to The McClean Report, the Mid-Year Update is available for purchase for $1,490. Additional copies are priced at $395.

For more information, please visit www.icinsights.com/prodsrvs/mcclean/.

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About IC Insights

IC Insights, Inc., based in Scottsdale, Arizona, is dedicated to providing high-quality, cost-effective market research for the semiconductor industry. Founded in 1997, IC Insights offers coverage of global economic trends, semiconductor market forecasts, capital spending and fab capacity trends, product market details, and technology trends, as well as complete IC company profiles and evaluations of end-use applications driving demand for ICs.

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