WW NAND Flash Revenue Suffered 1% Quarterly Decline

After persevering through a devastating earthquake and two major revenue declines in 2011, Toshiba Corp. in the first quarter of 2012 made a noteworthy comeback in the NAND flash memory business, achieving market-leading double-digit growth that defied an industry-wide contraction in revenue.

Toshiba of Japan posted NAND sales revenue of $1.71 billion in the first quarter, up 19% from $1.43 billion in the fourth quarter of 2011.That growth performance – the best among all suppliers – gave the company a 34% share of the worldwide market, up from 28% in the fourth quarter, according to an IHS iSuppli Flash Market Brief report from information and analytics provider IHS.

In contrast, the overall NAND flash market suffered a 1% sequential decline in revenue, and all the other suppliers experienced sales decreases, most by double-digit percentages.

"Toshiba’s improved performance in the first quarter came after a troubling 2011," said Dee Nguyen, memory analyst at IHS. "Last year the company’s NAND market share saw two major declines. The first drop came during the second quarter because of disrupted production stemming from the Japan earthquake-tsunami disaster in March. The second decline arrived during the fourth quarter when uncertain market conditions necessitated a carryover of inventory into the first quarter this year. Toshiba’s strong results show that the company has regained its footing and has put a tumultuous year behind it."

The inventory carryover from the fourth quarter allowed Toshiba to outship its competitors in the first quarter.

With its strong performance, Toshiba was able to hold on to the NAND market’s No. 2 rank, second to Samsung Electronics Co. Ltd. of South Korea.

NAND Market’s Woes
The market for NAND flash in the first quarter was dragged down by weak pricing, which reflected the mismatch between an industry-wide growth in supply and a seasonally slow quarter for consumer demand. NAND flash is used in a wide range of products, including smartphones, tablets and solid state drives that form part of the storage systems of faster and thinner laptop computers, including the MacBook Air from Apple Inc. and ultrabooks championed by Intel Corp. But with the exception of Toshiba, NAND suppliers experienced revenue declines that ranged from a soft landing for Samsung to a steep drop-off for Powerchip Technology Corp.

Samsung Remains No. 1
Samsung maintained its lead with a 37% share despite lower revenue in the first quarter of $1.86 billion, down sequentially from $1.94 billion. U.S.-based Micron Technology Inc., SK Hynix Semiconductor Inc. of South Korea and Powerchip of Taiwan rounded out the rest of the tightly held NAND market. Overall first-quarter NAND flash sales amounted to $4.99 billion, down 1% from $5.05 billion in the fourth quarter last year.

For Samsung, the electronics giant posted the highest total revenue among the decimated group, even though its quarterly share of the market inched down by a%age point. Samsung’s quarterly revenue decline was just 4%, compared to double-digit drops ranging from 14% in Micron’s case to a sharp 35% tumble for Powerchip, with Hynix somewhere in the middle with its 17% contraction.

Samsung’s decline was due to a 10% fall in the ASP of its NAND product, as well as because of the company throttling production in one of its fabs while preparing to transition to the firm’s System LSI division that makes processors and chipsets. The company is optimistic, however, about a better environment in the second quarter, as handset and PC manufacturers launch new products for the upcoming high-demand seasons.

          WW 1Q12 NAND Revenue and Market Share Estimate
                                     (in $million)

 (Source: IHS Suppli Research, June 2012)

NAND the Rest …
Micron maintained its place at No. 3 with revenue of $846 million, equivalent to a 17% market share. The only U.S. maker of memory semiconductors, Micron reported a 23% retreat in its NAND ASP during the period. However, the Idaho-based maker should be able to grow market share in the coming quarter after purchasing the remainder of a joint-venture stake it holds with Intel Corp. in managing fabs in Virginia and Singapore.

At No. 4 was SK Hynix with revenue of $556 million for an 11% share of market. The company recorded tepid shipment growth of 2%, amid an ASP decline in of 16% in light of weak seasonal demand. SK Hynix also has maintained a cautious outlook for the second quarter, guiding ASP declines in the midteens out of concern for possible oversupply as a result of industry capacity growth.

The fifth-ranked player, Powerchip, had NAND revenue of $17 million for approximately 0.3% market share.

Overall, Toshiba continues to narrow the gap with NAND market leader Samsung, with the race for No. 1 expected to further heat up during this year. The battle for third place will also continue between Micron, currently comfortable in its lead, against Hynix, which now appears willing to spend its way to the top and tackle competitors head on to remain a viable player in the space.