Analysis

posted on 21 February 2008 10:46

The US credit supply problems have caused Apple to reduce its flash memory order forecast. It thinks that growth in its flash demand will be significantly slower this year than last. As Apple is a huge flash buyer and as flash suppliers have lots of fabrication plant capacity then it seems almost certain that flash prices will tumble as suppliers struggle to keep plants operating at optimum efficiency.

It was supposed that Apple would need almost a third as much flash memory again this year compared to last year, when it spent $1.2 billion on flash products. The various iPods and iPhones are not going to see sales increase as much as Apple had hoped.

Forecaster iSuppli thinks flash suppliers will go into the red for a while. Revenues will go down although unit shipments will stay constant or rise.

Samsung and Hynix are identified as flash suppliers already suffering.

There is more capacity coming on stream and the likelihood is that this revenue slowdown will encourage flash prices to decline faster on a price/GB basis and create more difficulties for small format hard drive suppliers.

In other words it is an accelerative factor regarding the transition from hard disk drive technology to flash drives.