NAND flash prices to fall 56%, NOR flash to fall 42% due to oversupply

The flash memory market has enjoyed an exceptional period of growth over the past two years, but as the new year starts, IDC expects oversupply to be the major theme. In 2005, revenue is expected to decline due to oversupply from the leading suppliers and the entrance of new players in the NAND space. After a short period of correction, IDC expects the flash memory market will grow at a more subdued pace through 2008 with a compound annual growth rate in the single digits.

NOR and NAND flash memory will continue to be driven by mobile devices, such as mobile phones, digital still cameras, and USB flash drives. Incremental demand will come from broader-based markets, such as DVD, storage, PC, set-top box, and digital TV. Oversupply in NAND and NOR markets in 2005 will result in average selling price erosion of 56% and 42%, respectively. NAND will grow its penetration in applications that NOR has played a strong role in, which will allow the NAND market to grow at a faster pace and reach almost the same level in revenue by the end of 2008.