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Flash shortage worsens
San Francisco- The flash memory shortage is growing far worse than
observers predicted six months ago, according to several industry executives,
who warned last week that the situation could persist for another three years.
Several vendors, including Advanced Micro Devices Inc. and Atmel Corp.,
last week emphasized the scarcity of flash-memory chips, especially
high-density parts, at separate company presentations made at the
BancBoston Robertson Stephens Semiconductor Conference here.
Citing strong demand from set-top box and cellular phone makers, Atmel is
"booked out" [of high-density devices] for the rest of the year, said B. Jeffrey
Katz, vice president of marketing at Atmel.
In fact, suppliers are quoting distributors lead times of between 18 and
20-plus weeks, said Jan Salsgiver, president of Arrow Electronics Inc.'s
North American Components Operation.
"I think you'll find that Atmel is not the only one who's sold out," said Alan
Niebel, analyst for Semico Research Corp., Phoenix. "Demand is hot.
Granted, pricing is not going up across the board, but for most densities there
are certain devices for which prices are increasing."
According to NECX, AMD's 8-Mbit TSOP product, for example, was
priced at a $3.35 low in the open market in early May. By June 25, the price
had risen to $5.50, and by July 23, $5.87 (see chart).
"If you look at [non-AMD] 8-meg products, you'll see they are starting to
level off," said Frank Cavallaro, director of worldwide sales for NECX's
Exchange. "Intel's for example was on a sharp incline and has in recent weeks
started to stabilize, and other comparable parts have also shown pricing
stability."
Even though customers are starting to see some relief in prices, there's little left
to buy. "Most everybody is sold out of Q3 and many are selling out of
Q4-both NOR and NAND," Niebel said.
Samsung is out of stock of 32- and 128-Mbit flash, Intel is already taking
orders for the second quarter of 2000, and AMD is pushing orders into the
fourth quarter, he added.
"Going by fabs being put in place now, the industry is going to be hard
pressed to meet demand," said Ben Anixter, vice president of external affairs
at AMD, Sunnyvale, Calif.
Anixter told investors last week that the company predicts a
two-to-three-year shortage, despite chip makers' efforts to ramp production
and increase capacity.
In addition, vendors underestimated demand for flash-memory chips; orders
from cellular-phone makers alone outstripped industry estimates by between
50% and 100%, Anixter said.
With that kind of momentum, worldwide flash-memory chip revenue is
expected to reach $9 billion in 2003 compared with $2.9 billion this year,
according to AMD's estimates.
"Demand is accelerating in the areas of cell phones, PCs, hard drives, and
network applications, and the new one is MP3, which is taking the
NAND-flash market by storm," Niebel said.
Following a similar move by Fujitsu Ltd., Toshiba America Electronic
Components Inc. (TAEC) is shifting production capacity from DRAM in favor
of 128- and 256-Mbit NAND-based flash chips. Toshiba plans to boost the
non-DRAM ratio of its memory products, including NAND, to 50% of
memory output, from 35% today.
"We are positioning NAND flash devices as one of our core memory
products, in addition to DRAM, in response to increasing demand for NAND
flash products," said Bob Brown, president and chief operating officer of
TAEC, Irvine, Calif.
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