News Article
Production outage to causes mixed reactions for NAND flash market
The production outage at certain Samsung Electronics Co. fabs has delivered an upside for the global NAND flash memory market by causing the current shortage of such parts to linger through the first half of August—potentially boosting prices, according to iSuppli Corp.
The production outage at certain Samsung Electronics Co. fabs has delivered an upside for the global NAND flash memory market by causing the current shortage of such parts to linger through the first half of August—potentially boosting prices, according to iSuppli Corp.Samsung's NAND-flash production lines 6, 7, 8, 9, 14 and system LSI line S have been impacted by electrical blackout, which has caused a cessation of production. production was returned to full levels a few days later.With production restored quickly, iSuppli doesn't believe this will have a major impact on Samsung's financial results.However, the production interruption by Samsung could extend the current market shortage through at least the first half of August. iSuppli Corp. previously predicted that the shortage would evaporate near the start of August as memory manufacturers shifted production from DRAM to NAND.The affected Samsung fabs account for 35 percent of global NAND wafer output.Samsung was the dominant supplier of NAND flash in 2006, accounting for a 48.5 percent share of global revenue. Toshiba Corp. was second at 24.5 percent and Hynix Semiconductor Inc. was third at 14.7 percent.Beyond potentially boosting overall flash revenue, the Samsung outage will have a direct benefit for those other major NAND suppliers. However, iSuppli is not prepared to raise its rating of near-term market conditions for suppliers. iSuppli is keeping the "neutral" rating it has maintained since late March.The major reason iSuppli does not see a justification for raising its rating is the expected production increases among Samsung's competitors. Samsung's South Korean rival, Hynix, plans to increase its NAND output by 100 percent sequentially in the third quarter. This will limit the impact of the Samsung outage by increasing the amount of parts in the market. The major factor to watch now is how quickly Samsung actually recovers from this outage.If the return to production is delayed, it could adversely impact Samsung's NAND customers—including Apple Inc., which uses a large proportion of Samsung's NAND output for its iPhone and iPod lines. The Samsung outage comes at a critical juncture in the NAND market, when conditions are set to shift from shortage to oversupply.
