Supply Shortage of NAND Flash Worsens


The supply shortage of NAND flash has worsened in the fourth quarter of 2016 due to higher demand in the smartphone and SSD industries.

This is according to the report from DRAMeXchange, a price and supply-monitoring organisation that covers the CPU, memory and storage silicon markets.

The short supply, coupled with strong demand, has contributed to rising prices and lengthened lead times of NAND flash wafers and memory cards, as well as increased margins to suppliers at the expense of buyers.

Prices are also expected to rise for eMMC, eMCP and SSD products.

Key reasons for this shortage include:

  • Continued high levels of demand for smartphones - in particular a doubling of storage capacity in new iPhone 7 options and an increase in demand from Chinese smartphone makers
  • Increased demand from manufacturers for SSDs and the growing frequency of flash storage deployment by datacentre hardware makers
  • Difficulties NAND flash manufacturers are experiencing in switching to 3D NAND production. 3D NAND flash stacks memory cells vertically, unlike 2D or planar flash, boosting storage capacity and density
  • High demand for PCs and notebooks, with average flash adoption in notebooks expected to exceed 30% for the first time in 2016
  • Increasing levels of SSD deployment in personal computing and datacentre hardware are driven by the growing competitiveness in price between flash drives and spinning HDD drives, which are thought to achieve parity at some point in 2017

Paul Norbury, chief executive, Cardwave Services LTD, and board member, SD Association, commented: "Although NAND supply has tightened this quarter, the supply situation should improve next year as new 3D capacity comes online. The supply chain can be managed more effectively with good forecasting but companies should also be prepared to accept an increase in their lead times and anticipate that they may have to accept multiple part-deliveries until supply improves."