El Segundo (CA) - Following three quarters of recovery, NAND flash manufacturers are facing tougher times in the months ahead, according to iSuppli. Revenues are expected to grow "marginally". Even industry darling Apple has slashed its flash order forecast for iPods.
The market research firm believes that 2008 is shaping up to become a poor year for NAND flash manufacturers. The industry sales growth forecast for 2008 has been reduced from a previously estimated 32% to the "single-digit-range." Most significantly, Apple, which was the world’s third-largest OEM NAND flash purchaser with a volume of $1.2 billion, is apparently expecting less dramatic growth rates for its iPod. iSuppli said that the company informed suppliers that its demand growth will slow in 2008 compared to 2007.
Suppliers could be hit with losses, at least during the first quarter and before adjustments take place. Playing against the slower revenue growth, which is due to declining consumer confidence as well as the U.S. subprime mortgage crisis, is the fact that capital spending on NAND production is expected to rise by more than 20% over the course of the year. "In light of these factors, NAND suppliers are likely to go into the red in the first quarter, and are not likely to recover in the second," Nam Hyung Kim, iSuppli director and chief analyst for memory, warned.
The market showed some deterioration, as fourth quarter revenues declined to $4.1 billion, down 2.4% from $4.2 billion in the third quarter. Of the Top-8 NAND suppliers, six suffered sequential declines in revenue. The only companies to achieve a sequential gain in revenue were Intel and Micron, which produce NAND through their joint venture, IM Flash Technologies (IMFT).