Weak holiday prospects and global concerns hound industry as year-end approaches
Marking its second consecutive quarter of decline, the worldwide NOR ?ash market is expected to contract during the ?nal three months of 2010 in the face of continued doubts about the health of the global economy, according to the market research firm iSuppli Corp.
Shipments of NOR flash in the fourth quarter of 2010 are projected to drop to 1.01 billion units, down 6 percent from 1.07 units in the third quarter. Revenue during the same period will amount to $1.07 billion—a 5.3 percent decrease from $1.13 billion in the third quarter.
The revenue decline expected for the fourth quarter is reminiscent of a similar contraction experienced during the third. Although shipment levels increased from the July to September period, Average Selling Prices (ASPs) retreated, leading to a 9.6 percent drop in revenue when compared to the second quarter.
Taken together, results from the third and fourth quarters indicate the NOR flash market weakened in the second half of 2010, compared to the brisk performance seen in the earlier part of the year.
The diminished outlook for the NOR market in the second half also echoes encroaching economic concerns in global trade and industry. Despite earning significant revenue in non-cyclical segments such as industrial electronics, the NOR market remains mostly consumer based and is, therefore, vulnerable to swings in economic mood.
The negative atmosphere that started in the third quarter has now manifested itself more conspicuously, iSuppli believes, and the good feelings about a sustained recovery have vanished in light of continued worries about the fourth quarter as well as weaker-than-anticipated prospects for the holiday buying season.
On the supply side, the downturn has disproportionately impacted Taiwanese NOR makers operating in the computer and consumer electronics segments. After four consecutive quarters of sequential growth, the expansion has finally come to an end for the Taiwanese NOR suppliers.
PC and TV Outlook Impacted for Now, but Growth will Continue
Growth projections are declining for the once red-hot PC market and formerly strong television segment. Representing a combined 17 percent of NOR shipments, both applications have not been as resistant to economic fluctuations as smart phones—a pillar of strength for the NOR market that shows no signs of deceleration.
Nonetheless, iSuppli sees impressive long-term momentum for PCs, despite sales cooling off from their red-hot performance in the first half. Global PC shipments will rise to 390 million in 2011, up from 347 million in 2010. And despite increasing fragmentation in the computing environment, the U.S. PC outlook remains strong, accompanied by buoyant emerging markets that will drive international growth prospects.
Televisions also will post strong long-term growth. Even the mature U.S. market has room to grow as smaller flat-panel TVs continue to permeate households and as larger sets adopt LED backlighting, iSuppli research shows. More important, flat-panel televisions remain new, highly desired consumer devices in the emerging markets— where traditional tube-type CRT models reigned supreme for decades.
Overall, iSuppli projects that NOR shipments for applications such as PCs and TVs will rise at a Compound Annual Growth Rate (CAGR) of 7.5 percent from 2009 to 2014.
Such growth, however, contrasts with a decline of 4.7 percent in total NOR revenue during the same period as the market continues to come under assault on numerous fronts. A host of factors will continue to buffet the NOR industry, iSuppli projects, including price erosion, the shift to serial interface products and the loss of share in the wireless market to the competing technology of NAND flash.