Growth of NAND Flash Slows – IHS iSuppli

A decrease in the amount of memory carried by mobile devices like handsets and tablets is slowing overall growth in the NAND flash industry and poses fresh cause for concern among NAND suppliers, according to an IHS iSuppli Flash Dynamics brief from information and analytics provider IHS.

In a convergence of density trajectories, a sampling of handsets and tablets studied by the IHS iSuppli Teardown Analysis Service demonstrated lower flash memory loading over the course of a two-year period. Memory capacity in phones, for instance, is down to 12.8GB on average in the first half this year, compared to 13.2GB the same time a year ago. Such a decline is in stark contrast to the nearly threefold increase that took place between the first half of 2011 and 2012, when flash memory in phones surged from 4.6GB to 13.2GB.

Tablets tell a similar story of dwindling memory density. From the first half of 2011 to the same time a year later, flash memory loading in tablets dipped 25% from 32.1GB to 24.0GB on average. The fall so far this year during the first half is even greater, down 42% as tablet memory skids to 14.0GB.

Handsets and tablets represent a major portion of NAND memory shipments, absorbing 36% of demand this year. As a result, a drop in memory loading for either device-let alone both-is cause for serious concern to makers of NAND flash memory.

In handsets, the pervasiveness of smartphones has had the effect of driving up the total amount of memory being used in the category, but growth overall is flattening. For instance, the most recent iterations of two of the best-selling smartphones in the industry, the Apple iPhone 5 and the Samsung Galaxy S III, have the same storage options as their predecessors-unlike in the past when a new model from either maker would mean a discernible bump up in NAND flash for the phones.

For tablets, the high densities that were the standard in tablet models of previous years have been replaced by lower-cost tablets with lighter NAND loading. Many consumers appear to find their experience of using smaller-sized tablets undiminished compared to using larger tablet models, which has emboldened tablet makers such as Google and Amazon to release smaller form factors such as 7- to 9-inch tablets. The move has exacted a toll on the NAND industry, because the smaller-sized tablets in the teardowns average just 50% of the flash loading of their larger 10-inch counterparts.

Even the so-called sweet spot has shrunk for large and small tablets alike. The preferred memory configuration for 10-inch tablets is between 16GB and 32GB. For the 7-inch segment, the sweet spot is likewise dominated by 16GB products, with 8GB units also popular. The smaller flash densities have ruled in both classes because of the availability of streaming and cloud services-options that obviate the need for large physical storage in devices as device makers offer their own application ecosystems and online storage benefits.

The advantages of the cloud have also diminished the use among consumers of the microSD memory card-another source of revenue for NAND flash makers. A removable device that can be plugged into phones at will, microSD cards still play a big role in providing additional storage for entry-level smartphones as well as lower-end handsets known as feature phones. But the detachable cards can no longer be used in many high-end handsets, which instead have opted for embedded storage, doing away with any sort of card slot on the phone.

Compounding difficulties, the embedded storage in handsets has not increased to compensate for the dropoff in slot attach rates. As a result, local storage in handsets appears to have leveled off at 16GB, again to the detriment of NAND flash suppliers.

Overall, the slowdown in NAND loading for handsets and tablets is driving manufacturers to seek greener pastures elsewhere. Idaho-based Micron Technology and SanDisk of California, for instance, are aggressively exploring NAND flash options in the solid state drive market-a faster-growing segment with more opportunities to add value and raise revenue.