iSuppli: NOR, NAND flash sales to remain strong

According to the latest iSuppli Corp. forecast, strong demand for applications using NOR and NAND flash will drive combined flash sales to $15.4 billion in 2004, up 39 percent from an estimated $11.1 billion in 2003.
iSuppli predicts that total flash unit shipments will hit reach 2.98 billion in 2004, up 22.6 percent from 2.4 billion in 2003. The flash average selling price will increase to $5.19 in 2004, up 13.5 percent from an estimated $4.57 in 2003.

According to the market research firm, NOR flash accounted for 66 percent of flash revenue in 2003 and will decline to 58 percent in 2004. Conversely, NAND flash represented 34 percent of overall revenue in 2003, and will grow substantially in 2004 to account for 42 percent of the overall flash market.

iSuppli expects the next few years to be very bright for the overall flash market. However, it is the NAND suppliers that will need to wear shades, because by 2007, NOR and NAND will reverse positions. NAND in 2007 will account for 57 percent and NOR will command 43 percent of estimated total flash revenue of $24.7 billion that year.

Further, strong sales of feature-rich mobile handsets requiring high-density NOR flash, as well as healthy demand for set-top boxes, DVD players and a host of other consumer products are said to have boosted NOR flash sales in 2003. These applications are seen to continue their growth in 2004, but not at the same rate as in 2003.

The spike in demand has benefited the NOR flash suppliers. As inventories have dwindled and lead times have extended, the NOR flash suppliers have been given the long-awaited opportunity to raise prices. However, iSuppli believes that this will be a short-lived bout of price increases and supply tightness.

NOR flash supply will remain tight in the first quarter of 2004 and potentially throughout the first half of the year. Additional wafer starts put in place by suppliers in November and December won't translate into increased output and an alleviation of the shortfall until the late February-March timeframe.

Pricing pressure on NOR flash will resume by the middle of the second quarter, iSuppli predicts. The reason for this is that the NOR market, unlike the NAND area, lacks a killer app. Without any new killer application, revenue growth will be modest throughout the next few years. However, the landscape could change for NOR flash as multi-level cell technology may find opportunities in applications that traditionally use NAND at low densities like 32, 64 and 128Mb.

iSuppli expects NAND pricing to remain at its current levels with some potential for price increases in the first quarter. This is because demand for removable storage devices, such as USB drives or Pen drives, will consume any additional output.