Taipei – Good news for buyers and manufacturers of NAND Flash. Lower production costs for NAND Flash thanks to improving technology will drive higher demand for devices, including SSDs and eMMCs, next year, according to DRAMeXchange, a research division of TrendForce. The NAND Flash market is forecast to reach as high as $27.6 billion at an annual growth rate of 12 percent in 2015.
In the third quarter of 2014, total NAND Flash revenue reached $8.58 billion, resulting in a 12.2 percent quarterly increase for suppliers, thanks in part to stable pricing. “Embedded products manufactured on next-generation process technology became mainstream in the market in the third quarter, improving vendors’ cost structure, said Sean Yang, assistant vice president of DRAMeXchange, in a statement.
However, due to new hardware devices typically released in the third and fourth quarters, demand will likely be constrained in the first two quarters of 2015, according to Yang. He believes the NAND Flash market will grow primarily during the second half of 2015, which will ease any potential oversupply that occurs in the preceding two quarters.
In addition, 2015 is expected to be a critical period for NAND Flash manufacturers as they try to slow capacity expansion, said DRAMeXchange. The market researcher expects wafer volumes to only increase by eight percent next year.
From a supply perspective, three things will be vital to growth in the NAND Flash market — manufacturing processes, 3D NAND Flash technology, and TLC-based applications – according to DRAMeXchange. “The keys for the supply side will be placed on the 15/16 nm manufacturing processes intended for planar NAND products, 3D NAND Flash technology, and TLC-based applications.”
Currently, Samsung and Toshiba have started to manufacture 15/16 nm products in limited quantities at the end of the third quarter, but DRAMeXchange reports that neither company has plans to start mass production immediately. “Yield rates for the 15/16-nm components tend to take longer to improve compared to those produced on the 1ynm manufacturing process.”
Due to limited yield, DRAMeXchange analysts don’t expect to see components made on the 15/16-nm processes in any embedded products until after the second quarter of 2015.
In addition, some manufacturers – Samsung and the Intel/Micron partnership – are developing 3D NAND Flash, another emerging technology, because of the complexity involved in manufacturing planar NAND products. Yang said “the progresses made by the early 3D NAND Flash adopters will lead to a series of similar developments from manufacturers who have yet to announce their plans with the technology. Considering the time needed to improve a 3D NAND Flash product’s cost and performance, their adoption will unlikely become significant until the fourth quarter of next year or the first quarter of 2016.”
For buyers looking to lower their bill of materials (BOM) costs, TLC will likely become the technology of choice particularly as the industry shifts from high-end to mid-to-low end sectors. Samsung has become very successful in the eMMC/eCMP client SSD market due to the price-to-performance ratio of its TLC-embedded products, stated Yang.
“The fact that controller chips are able to resolve the speed and performance issues typically associated with TLC also make them an attractive option for PC and mobile vendors. As Apple will begin using TLC components and other first-tier vendors are likely to follow suit, the adoption of TLC will likely improve significantly next year. DRAMeXchange believes TLC’s output ratio will rise to approximately 41 percent in 2015,” Yang added.
2015 Market Drivers
Demand drivers in the NAND Flash market will be smartphones, tablets, and SSDs, accounting for about 85 percent of the industry’s overall bit demand next year, according to DRAMeXchange. NAND Flash bit demand volume is forecast to grow 42.8 percent to 38,379.9 million (2 GB equiv) in 2015.
Shipments of smartphones, due to demand for low- to mid-tier models, is projected to rise by 12.4 percent by the end of 2015, while tablets will experience slightly weaker shipments “as their maturity increases and the specs among different brands become less distinguishable,” according to Yang.
However, Yang expects improvements in storage capacity of NAND Flash components will be critical for tablet manufacturers. For example, Apple’s iPhones and iPads feature NAND Flash with storage capacities of 64 GB or higher, said Yang, and Apple is encouraging low- to mid-tier manufacturers to increase the storage offered in their smartphones. By the end of 2015, DRAMeXchange forecasts the average capacity of NAND Flash (eMMC) components used in smartphones will grow by approximately 18 percent compared to the same period last year.
SSDs also are becoming an important driver of NAND Flash growth. The market research firm expects demand for SSDs will be higher than any other NAND Flash products in 2015. The adoption of SSDs in notebook computers, alone, will increase by about 26 percent in 2015, according to TrendForce.
By region, China is one of the largest consumers of NAND Flash chips. As of this year, nearly 3.518 billion NAND Flash chips (2 GB) have been consumed in the China market, accounting for 20.6 percent of the world’s NAND Flash output, according to DRAMeXchange. By the end of 2014, the total value of the NAND Flash market in China will reach up to $6.3 billion. China’s overall NAND Flash usage is projected to reach 30 percent or higher in 2015.
“Due to the relatively high proportion of CPU, DRAM, and NAND Flash components imported by China, the government policies that are implemented with regard to these three product categories may prove critical to the country’s industries. The Chinese government announced a policy worth NT$600 billion that involves mastering the technologies at the upper streams of the country’s semiconductor supply chain and applying these technologies to mid to lower streams. The main purpose behind this is to enable the country’s supply chains to be more integrated and to allow momentum in China’s domestic industries to persist,” according to TrendForce.