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Memory/Storage

NAND spot pricing on the rise, says analyst

Posted: 07 Mar 2007 ?? ?Print Version ?Bookmark and Share

Keywords:flash memory? NAND device? NAND memory? iPhone? SanDisk?

Spot prices for NAND flash memory chips have begun to trend upward against contract pricing for the first time since January, according to an analyst.

Citing information available on the DRAMeXchange's Website, Sayta Chillara, an analyst with Pacific Growth Equities LLC, said in a research note that spot pricing for 16Gbit and 8Gbit multi-level cell (MLC) parts are both demonstrating an 18 to 20 percent premium versus contract prices.

"While it is too early to suggest the supply/demand is improving radically, we feel this data is encouraging," Chillara wrote.

Prices for NAND chips have fallen rapidly through 2006 and early 2007. Analysts say the average selling price (ASP) for the parts could fall by 65 percent this year after dropping by some 60 percent in 2006.

Blaming the challenging market conditions, SanDisk Corp. last month announced a series of cost-cutting measures, including the reduction in the company's overall workforce by about 10 percent and the decrease in executive salaries. At its annual analyst day last week, SanDisk told attendees it would emphasize becoming a vertically integrated consumer electronics supplier.

Chillara, who maintains a "buy" rating on SanDisk's stock and supports the move toward becoming more of an end-product supplier, said Monday that Pacific Growth believes the near-term tribulations facing SanDisk should pass by the end of the second quarter. The second half of this year and fiscal 2008 "represent potential upside to the stock," Chillara wrote.

"We continue to think that products like Apple's iPhone will help promote adoption of NAND flash in cellphones and spur demand for 2007," Chillara wrote.

Chillara noted that SanDisk is the leader in flash for the cell phone market with 80 to 90 percent market share, and cell phone revenue for SanDisk grew 180 percent in 2006 to $850 million. Pacific Growth believes that SanDisk could see cell phone revenue rise by 100 to 125 percent in 2007, Chillara said.

- Dylan McGrath
EE Times




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