EMMC, eMCP and SSD growth was higher on average in the third quarter than in the first half of the year on the back of robust demand for the iPhone 6 and healthy OEM shipments. Additionally, NAND flash prices were stable, resulting in a 12.2% quarterly increase in suppliers’ earnings, bringing total NAND flash revenue to US$8.58 billion in the July-September period. 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, a division of Taiwan-based market intelligence firm TrendForce. As new iPhone sales are expected to remain strong in the fourth quarter and new products will be hitting shelves, the outlook is rosy for the NAND flash market.
NAND flash prices were stable throughout the third quarter, resulting in a 10% quarterly increase in Samsung’s NAND flash bit shipment volume. As average selling price only experienced single-digit decline, the South Korean electronics giant’s revenue increased by 8.2%, although operating margins stayed flat. Looking ahead to the fourth quarter, demand for the iPhone 6 will continue to boost the high-density eMMC and eMCP market. Samsung’s enterprise SSD business is also expected to stabilize. As a result, quarterly NAND flash bit growth is expected to approach 10%, and Samsung’s yearly bit growth for 2014 slightly should be slightly higher than the industry average of 40 to 45%. In 2015, as V-NAND SSD matures, Samsung will increase capacity at its Xian fab. That manufacturing facility will be the main driver of Samsung’s NAND flash bit growth for the year. Samsung plans to use V-NAND in various SSD product lines next year to maintain its competitive advantages in the sector.
With robust demand for strategic clients’ new devices and growing OEM inventory restocking momentum, Toshiba performed well in the second quarter of 2014 with over 25% shipment growth. As the average selling price decline eased, Toshiba’s quarterly NAND flash revenue increased by 23.7% and operating margins stayed flat. Although competition is heated for client SSD and NAND flash products in China’s smartphone market, the Japanese manufacturer is maintaining its high-density product market share. As the output ratio of 15nm products continues to rise and TLC-based system product sales increase, Toshiba’s cost structure will improve, helping maintain stable profit.
SanDisk’s NAND flash revenue increased by 6.5% in the third quarter and bit shipment growth 9% in the July-September period. Furthermore, due to product mix optimization and the stabilization of NAND flash supply and demand balance, average selling price only fell by 3% on a quarterly basis. As a result, SanDisk’s gross margin was the same as in the previous quarter, 46-47%. Regarding product strategy and planning, the 1ynm product ratio hit 60% and became the market mainstream in the second half of the year, but previous generation 19nm products continue to be shipped for certain applications. Volume production will begin on next-generation 15nm technology in the first quarter of next year. SanDisk has seen successful adoption of TLC-based eMMC and eMCP in OEM client smartphones and tablets, while client testing has begun for TLC-based SSD. With 2.8% annual increase in wafer capacity forecast for 2014, SanDisk’s yearly bit output is projected to grow by approximately 25% on year.
SK Hynix revenue increased by 21.7% in the third quarter, marking the second consecutive quarter the supplier has seen earnings grow by over 20%. Bit shipment volume increased by 26% while average selling price only fell by 2%, bringing SK Hynix’s operating margins out of the red. In the fourth quarter, as restocking momentum from OEM clients continues to grow and SK Hynix strategically focuses on inventory consumption, NAND flash bit growth is projected to reach 25%. Looking at SK Hynix’s products, the supplier is hard at work on client and enterprise SSD development. Shipment volumes are expected to gradually increase next year, which will improve product mix and margins. Volume production of TLC-based eMMC, eMCP, and SSD will begin in the first half of 2015.
As Micron’s shipment volume increased by 13% in the third quarter, its NAND flash revenue increased by 5.9% in its fourth fiscal quarter of 2014. Average selling price fell by 6% due to increased competition in the client and enterprise SSD markets, while average bit cost only dropped by 2% as 16nm products are still being certified by OEMs. Looking at the next quarter, as Micron’s SSD business improves and the ratio of 16nm products continues to increase, bit output is projected to maintain 15-20% quarterly growth, while the average selling price decline is expected to shrink. Regarding product development, after clients finish testing 16nm TLC-based products, components will be shipped, while the development of TLC-based SSD products will be completed in the second half of 2015.
As server and hyper scale shipments stimulated enterprise SSD growth in the third quarter, Intel’s NAND flash revenue increased by 10.1% to US$554 million. In addition to SATA interface products, Intel has accelerated the development of PCI-E and other high-speed interface products to solidify its position in the enterprise SSD industry. Intel is also expected to unveil 16nm SSD products in the first half of 2015.