Toshiba/SanDisk Produces 33% of NAND Wafers in 3Q12 – Trendfocus

He is an abstract of CQ3’12 Quarterly Update of NAND/SSD Information Service – November 13, 2012, from US analyst company TRENDFOCUS, Inc.

Consumer Spending Declines as Macroeconomic Issues,
Europe Crisis Take Longer for Recovery

NAND/SSD sector affected by soft PC shipments,
adjustment in NAND production
and disappointing Ultrabook sales

It seems like the world is slowing down as if there was another oil shock. The Euro crisis and macroeconomics are bogging down a business recovery. Since CQ4 ‘11, many thought that the global financial crisis was finally over as stock prices were rising, Black Friday lines were long, companies were hiring and anecdotal indicators were positive. Much has changed since then.

Amidst commercial and consumer belt-tightening, NAND companies have taken on a cautious approach, the IT supply chain’s recovery has unraveled, and there are few catalysts for renewed PC growth. Nevertheless, there are some that see this sluggish economy as an opportunity to grow by focusing, aggressively, on mergers and acquisitions, or by cutting capital spending.

Micron and SK Hynix are good examples as they have procured, or are in the process of closing, deals to fortify future revenue streams. Micron is in the final process of approval by the Japanese regulatory bodies in acquiring the financially troubled Elpida, which used to be the number 3 DRAM player. The deal is expected to be closed by end of 2012 or early 2013. On the other hand, SK Hynix acquired LAMD (Link_A_Media), a US-based controller manufacturer that specializes in controllers for HDD, SSD, hybrid HDD and e-MMC. SK Hynix needed an in-house controller resource as it was getting difficult to manage the ECC, wear leveling, endurance, performance, etc. with the smaller process nodes.

Toshiba and Samsung took the cautious route by reducing their capacity output hoping to stabilize the supply side as prices were declining faster than expected.

                    Total NAND Wafer Market Share, by Supplier

 (Source: TRENDFOCUS)

• Toshiba‘s capacity cut of 30% took effect from July 2012 and there are no signs of change. The company is expected to maintain this approach until the market recovers and prices stabilize. Toshiba may consider further production cuts in CQ1’13 if the market
  does not revive. Obviously, this will reduce any chances of capital
  expansion.
• Samsung‘s construction of a Mega fab in Xian, China, is still on schedule as it is expected to start mass production in second half of 2014. This will be an exclusive fab for manufacturing NAND with the latest process node. Nonetheless capital spending for 2013 has been slashed.
• SanDisk‘s ramp up of Phase 2 for FAB 5 has been delayed until second half of 2013, as the demand for NAND in consumer products have slowed down.
• SK Hynix is putting more focus on developing products using LAMD solution rather than ramping up its new Fab (M12) in Cheong-Ju, Icheon.