History 2000: Flash Memory Shipments Reach Unprecedent Levels, Surpassing 1.6 Billion in 2000

Fast rising sales of consumer products such as cellular phones, digital still cameras, Internet audio devices, handheld computers and set-top boxes are propelling the flash memory market to record heights.

The market for flash memory chips is so robust that suppliers cannot keep up with demand.

In its report Flash Forward! Flash Memory Hits Its Stride ($2,995), Cahners In-Stat Group forecasts that flash memory shipments will exceed $6 billion for 2000 and unit shipments will surpass 1.6 billion.

By 2004, the total flash memory market will skyrocket to $16 billion with a CAGR of 20.5%.

Intense demand has ratcheted up ASPs by more than 50% on some flash memory densities.

Manufacturing lead times are running into more than 20 weeks for most densities.

The wireless phone handset market is the hottest driver for flash memory growth. Some wireless phone forecasts are as high as a billion units by 2003. In 2000, this area will grow to $1.65 billion in flash shipments, with a 25% end use market share. By 2004, it will jump to $3.36 billion. By then, its flash memory market share will fall to 20% as emerging applications such as digital cameras, Internet audio devices and handheld computers gain market share.

The Internet audio category, primarily MP3 Internet audio players, will be one of the fastest growing in the flash memory market as it shoots up from $132 million and 2% market share in 2000 to $1.68 billion and 10% share in 2004.

Digital cameras both still and camcorders will also jump mightily from 4.5% share in 2000 to 13% share in 2004.

The demand for more features and higher storage capacity on consumer products will require higher density flash memory devices.

Some manufacturers have allayed fears of flash memory shortages by signing multi-year procurement deals with vendors.

Samsung Electronics entered into a 3-year flash memory supply agreement with Advanced Micro Devices in January. AMD will supply Samsung’s wireless terminal division with flash memory for its cellular phones.

Intel and Ericsson inked a deal in February in which Intel will supply an estimated $1.5 billion of flash memory to Ericsson for its cellular phone business.

AMD signed a 3-year supply agreement with Cisco Systems in March. AMD will supply flash memory for data and code storage in Cisco’s network systems.

These deals are just the beginning.

“More and more manufacturers will seek supply protection with multiyear purchase agreements,” says Grant Johnson, industry analyst with Cahners In-Stat Group.

This article is an abstract of news published on issue 151 on August 2000 from the former paper version of Computer Data Storage Newsletter.