Micron Wonders: How Price Sensitive Can NAND Demand Get?



NAND demand forecast

Micron Technology (MU) expects NAND demand to grow at a CAGR (compounded annual growth rate) of 40% between 2016 and 2019, driven by reduced costs and the higher performance of 3D NAND. But the company believes that 40% is still a conservative estimate because NAND demand is more sensitive to prices than DRAM.

Micron Wonders: How Price Sensitive Can NAND Demand Get?

Given the current market scenario, however, NAND prices are falling, indicating that the demand is hitting a tipping point in some market segments. This is because NAND has been introduced early in the storage space as a replacement for hard drives, and it has not been used to its full potential until now. This leaves a huge market for NAND as the adoption of the technology accelerates.

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Diversified demand and intensifying competition

While overall NAND demand is expected to grow up to 40%, maximum demand growth is expected to come from server and storage (at 60%), followed by PCs (at 50%), smartphones (at 40%), and automotive (at 30%).

Micron expects NAND demand to grow faster than supply in the long-term, and this growth potential has attracted new players to the market. Intel (INTC), for example, is building a non-volatile flash memory plant in China. SSD (solid state disk) manufacturer SanDisk (SNDK) has also entered the NAND space and is building a 3D NAND facility in Japan (EWJ) in collaboration with Toshiba (TOSBF).

Micron prepares to tap NAND growth

Micron claims that its 3D NAND structure is less costly and delivers a higher level of performance than other 3D NAND structures. The company will expand production of NAND fab depending on the ROIC (return on invested capital). This means that future production will depend on what happens to the current level of production.

Now let’s shed some light on Micron’s forecast for NAND and DRAM supply growth.


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