Market Watch

NAND Flash Revenue Down 4.3 Percent in Q2, Brings Large Market Share Shifts

Revenue falls to $4.7 billion; most market players performed well

September 01, 2011

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The NAND flash memory market suffered a surprising decline in the second quarter, dragged down by the substantial fall in revenue of just one major player in the space, according to a new IHS iSuppli Flash Memory Market Brief from information and analysis provider IHS.

With final numbers in, worldwide NAND revenue in the second quarter amounted to $4.7 billion, down 4.3 percent sequentially from $4.9 billion in the fi rst quarter. The larger-than-expected market de­cline was mostly due to troubles at Toshiba, whose sales in the second quarter fell a stunning 21.4 percent to $1.4 billion. As the No. 2 player in the NAND space after South Korea’s Samsung Electronics Co. Ltd., the magnitude of Toshiba’s decline impacted the entire market, dragging down the overall index. 

Toshiba’s revenue contraction during the period was partly because of the appreciation of the yen, its native currency, but primarily due to the impact of the Japan March earthquake on its production. Because the earthquake occurred toward the end of the fi rst quarter, the impact on supply chain and production disruptions, as well as the loss of sales to other earthquake-affected customers, did not fully materialize on Toshiba’s financials until the second quarter.

Notwithstanding Toshiba’s troubles, the rest of the industry performed well in what is normally considered a slow period. Overall revenue was up for Samsung, as well as for No. 3-ranked Micron TechnSology Inc. of Idaho and No. 4 Hynix Semiconductor Inc of South Korea. Together, the three companies achieved gains in the second quarter at the expense of Toshiba, expanding their individual share of market.

In particular, Samsung was able to solidify its lead during the period, growing its market share from                

38.8 percent to 41.6 percent. In the fi rst quarter, Toshiba’s 34.9 percent share came to within 4 percent­age points of its primary rival’s market, but Toshiba’s misfortune in the most recent period has slashed its share to 28.7 percent.

For Hynix, the company continues to make gains by leaps and bounds, bringing itself within 2.5 per­cent of the No. 3 spot now controlled by Micron. Among the major NAND participants, Hynix was the hardest hit during the 2008 market downturn, with the company’s high debt and low cash balance placing substantial restraints on capital investment. By the end of 2009, the company was no longer a serious contender for the No. 2 spot and had to relinquish the third-place ranking to Micron.

Since the first quarter of 2010, however, Hynix has been able to gradually increase market share, now at 13.5 percent. Hynix also grew NAND bit shipments by a whopping 36 percent in the second quar­ter, compared to 5 percent growth for Micron and expansion in the low teens for Samsung. As a result, though Micron is ahead at present with 16.0 percent share, the race for third place will continue to heat up between it and Hynix.

A fifth player, Powerchip Technology Corp. of Taiwan, accounted for the remaining piece of the NAND memory market, but only with a negligible 0.2 percent share.

Continued shifts in market share will occur as the rest of the year plays out, IHS predicts. Toshiba is expected to rebound and prove itself a tough competitor to Samsung after resolving production and supply chain issues. Meanwhile, Hynix is catching up on technology, reporting more than half of its capacity now at the 2x-nanometer level.

For their part, Samsung, Micron and Toshiba are ramping up new fabs to meet demand for the shop­ping season, likely shaking up things even more.

Read More > Samsung Domi­nates the NAND Market in Q2 2011

Research by Market
Memory & Storage
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