Big NAND Demand

Moon Ihlwan

The popularity of music and video on the go is leading to explosive growth in demand for flash memory, especially the stuff the geeks call NAND. That's the kind that is best for storing large numbers of songs, video clips, or photos. (The other kind, NOR, can be read much more quickly, so it's better for tasks such as loading operating systems, but it costs a lot more than NAND).

In fact, last year NAND demand outstripped supply, forcing some of Asia’s smaller MP3 player makers to scale back production. The supply-demand imbalance has stopped because the sudden demand for the chips from Apple for its iPod Nano eased.

Now, chipmakers are rushing to get in on the fun, which will likely lead to oversupply soon. Hynix, Micron Technology, Infineon, Renesas, and STMcroelectronics have all joined market leaders Samsung Electronics and Toshiba in making NAND flash chips. That will likely accelerate the use of NAND chips as prices will almost certainly keep falling by about 50% annually. One important development is Intel’s announcement last November to form a joint venture with Micron to make NAND chips.

Intel may be sensing that its near-total dominance of the PC microprocessor biz isn't enough to keep it atop the chip industry. PCs are no longer the only major factor deciding the supply and demand of processors and memory chips. Handheld gadgets such as music and video players, gaming consoles, and cell phones, are becoming more important swing factors--and they all need NAND chips. The number of cell phones will soon reach 900 million against just over 200 million PCs. Intel’s entry in the NAND scene will make the memory chip industry more interesting.

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