John Paczkowski

Recent Posts by John Paczkowski

NAND Market Suffering From Apple-Related Memory Loss

nand-in-hand-thumbThe NAND flash memory supply may be heading for a drought, thanks to Apple. According to a new report from iSuppli, Cupertino is again planning to increase the iPhone’s memory, which will motivate rivals to boost memory in their smartphones.

The resulting demand for NAND flash will be “insatiable,” says iSuppli analyst Michael Yang. And supplies for the year will likely be strained. iSuppli figures that in 2010, iPhone shipments will reach 33 million units, up from 25.1 million in 2009–each with an average of 35.2 gigabytes of NAND.

That’s a hell of a lot of flash. Add to that the memory requirements of Apple’s iPod line and its new iPad slate and, well, you can see where things are going (see chart below; click to enlarge). Says Yang: “With the iPhone already the largest application for NAND, this huge growth is likely to lead to some periods of under-supply for the year.”

That’s not likely to be a problem for Apple (AAPL), which typically inks long-term supply agreements with its flash suppliers to ensure that its needs are met. Recall that the company boasted of a half-billion dollar flash memory deal with Toshiba last July.

“We did a long-term supply agreement with Toshiba,” Apple COO Tim Cook explained at the time. “As a part of that, as part of the terms and conditions, we paid them $500 million as a pre-pay earlier in the quarter. You know, we view Flash as a very key component for us because as you know we use it in so much on so many of our products and also we are a reasonable percentage of the user of Flash on a worldwide basis.”

But an undersupply of flash will almost certainly cause difficulties for other consumer electronics companies, which may be forced to grapple with part shortages and price increases across the entire NAND flash market.


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