SanDisk warns of NAND flash oversupply

April 4, 2012 // 3:25 p.m.

Tags: #dram #memory #nand-flash #sandisk #solid-state-storage #ssd #storage #toshiba

Memory giant SanDisk has warned that falling demand for its flash memory components has led to some financial problems, while rival Toshiba is rumoured to be building a new facility in Japan ahead of a predicted explosion in the market.

SanDisk's financial warning comprises a revision of its first-quarter projections, down from $1.3 billion in January to $1.2 billion. It's a pretty big dip, and one that has analysts and investors worried. In after-market trading following the announcement last night, SanDisk's shares dropped 7 per cent.

The lowered projection comes at a time when the global memory industry is seeing dropping prices, largely due to slowing demand from selected customers and overproduction issues causing a surfeit of components in the channel.

Some manufacturers are still doing well: the explosion of interest in Apple's iPhone and iPad devices, and Samsung's equally well received Galaxy product line, mean increasing shipments - but the remainder of the market is seeing a definite slowdown in global demand.

While Micron president Mark Adams claims that the DRAM pricing slump is at an end, NAND flash markets aren't doing so well. As a result, companies are expected to be tightening their belts over the coming months as they clear inventory of last-generation parts and prepare for a process shrink.

Toshiba, meanwhile, is planning ahead with Japanese business paper Nikkan Kogyo claiming the company is looking to build a new facility in Japan for NAND flash production. The plant, which has not been confirmed by Toshiba itself, would allegedly be coming online in 2013 in order to boost the company's production capacity ahead of predicted demand.

From SanDisk and Toshiba's differing reactions to the current market, it's plain to see that things are in flux. Growing interest in mobile devices, the majority driver of demand in the NAND flash market, is on the one hand promising massive growth; early overproduction and slow growth from anyone who isn't Apple and Samsung, on the other hand, is causing short-term problems.

As NAND flash demand grows in the mobile market, economies of scale should kick in. As a result, NAND-based solid-state drives (SSDs) can be confidently predicted to drop in price in the near future. This will likely only apply to small- to medium-capacity models, however: 64GB is a lot of storage for a smartphone or a tablet, but a budget-level SSD for a laptop or desktop.
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