NAND contributed 32% towards overall revenues
In fiscal 3Q15, NAND contributed 32% towards Micron’s (MU) overall revenues. NAND flash memory is a key component in media tablets, ultrabooks, smartphones, and e-readers. The robust demand for smartphones and tablets from the SMAC (social, mobile, analytics, and cloud) revolution has provided a great boost to the NAND flash memory business.
Micron forecasts NAND industry supply growth to be in the high 30% range in 2015 and in the mid-30% range in 2016. Micron also stated in its presentation that 3D NAND production will start in the second half of 2015. 3D NAND is a new advanced type of flash memory that can store 16 times more than NAND memory chips used in smartphones, cameras, and other mobile devices to store music, pictures, and other data.
The above pie chart shows the market share of flash memory vendors in 2014. According to IHS, a market research firm, among the top four companies (Samsung, Toshiba, SK Hynix, and Micron), Micron registered the highest growth in 2014.
According to IHS, the average selling prices of NAND flash products fell by 28.4% in 2014. Prices are also expected to fall ~20% in 2015. Although NAND prices are on a continuous decline, relatively high unit prices of NAND products used in SSDs are expected to push up average pricing of NAND products for Samsung (SSNLF) and Micron. SSDs are storage units that have several benefits over traditional hard drives, as they do not have any moving parts and are faster, quieter, and use less energy. Increased adoption of cloud computing applications and SSD devices has increased the demand for NAND flash chips.
As a result, companies that produce both NAND products and SSDs experience higher profitability in SSDs when the NAND product prices fall. It is a consensus that the SSD margins of Samsung Electronics and Micron are approximately 30% to 40%.
In February 2015, Micron entered into a partnership with Seagate (STX) to develop flash storage solutions.
Moreover, Samsung has increased the share of highly productive triple level cell (or TLC) NAND products by more than 50% of its overall production from 2014. TLC has low write cycle levels that make it particularly suitable for consumer flash devices like USB sticks and camera cards.