Apple warns flash memory suppliers of growth slowdown

[AppleInsider]

In an early warning sign of consumer weakness, Apple Inc. has reportedly slashed its 2008 NAND flash memory order forecast significantly and informed suppliers that its demand growth will slow in 2008 compared to 2007.

The move will have huge ramifications on the overall NAND market, says market research firm iSuppli, as the iPod maker was the world's third largest OEM buyer of NAND flash memory in 2007, with purchases of $1.2 billion, representing 13.1 percent of the global market.

Much of Apple's order reduction is attributed to weakness in consumer spending spurred by macro-economic concerns including the U.S. subprime mortgage crisis.

"Unless the economy recovers vigorously later this year, last year’s DRAM market disaster could be repeated in NAND this year," said Nam Hyung Kim, director and chief analyst, memory, for iSuppli.

Before word of Apple's warning, iSuppli had predicted the company's NAND flash purchases would rise by 32.2 percent this year, helping drive significant market growth. The Cupertino-based company employs the solid-state memory in its iPhone, nearly all of its iPod models, and most recently began offering it as an option on the MacBook Air sub-notebook.

Despite the softness in demand, capital spending on NAND production will reportedly rise by more than 20 percent this year, ensuring easy availability of parts and causing prices to decrease. iSuppli said these factors are likely to compound problems for NAND suppliers who are already dealing with prices below their fully loaded costs.

"In light of these factors, NAND suppliers are likely to go into the red in the first quarter, and are not likely to recover in the second," Kim said.

[ View this article at AppleInsider.com ]

[brianus]

All I care about: does this mean higher capacities becoming affordable sooner than expected?

[stevemost]

Seems like this is from iSuppli whomever they are, not apple. Has this been confirmed with APPLE?

[nagromme]

Originally Posted by brianus

All I care about: does this mean higher capacities becoming affordable sooner than expected?

No. Later or the same, but not sooner (As for confirmed--no, sounds like this is "reportedly" the case.)

Note, however: "demand growth" is expected to slow. Not "demand." Slower demand growth is still INCREASING demand. Just not as fast as may have been hoped for without the recession.

People will misread that and decide that demand is DECREASING. I thought I'd save some time

[stevemost]

In fact there is a release FROM iSuppli Not APPLE entitled -

iSuppli Warns of NAND Flash Slowdown in 2008

What's your Apple source?????

[abrooks]

Agreed, the title is very misleading.

Apple has not warned anyone, an analyst has.

[crees!]

Originally Posted by AppleInsider

Before word of Apple's warning, iSuppli had predicted the company's NAND flash purchases would rise by 32.2 percent this year, helping drive significant market growth.

I'd mark this as inaccurate since Apple didn't issue any warning. Reports,nothing official - remember that.

[echosonic]

This article is monumental bullshit. This is what the media and the goddam analysts do all the time. Look at the deliberately misleading, negligent language used here.

Originally Posted by AppleInsider

... early warning sign of consumer weakness ...

... slashed its 2008 NAND flash memory order forecast significantly...

... huge ramifications on the overall NAND market...

... weakness in consumer spending spurred by macro-economic concerns including the U.S. subprime mortgage crisis...

...DRAM market disaster could be repeated in NAND this year...

... word of Apple's warning ...

... the softness in demand ...

... NAND suppliers are likely to go into the red in the first quarter ...

These f--king bastards. iSuppli predicted 32.2% growth, and growth is now loking to be only 20%, which is still PHENOMINAL growth year-over-year. These whores need to be investigated, because this bullshit is an attempt to manipulate the market and probably short the stock.

[Kasper]

Originally Posted by abrooks

Agreed, the title is very misleading.

Apple has not warned anyone, an analyst has.

Guys,

iSuppli is reporting that Apple has warned NAND suppliers. That's the point of the story. We're not picking an Apple spin out of mid air. It was printed clear as day in the iSuppli report that

QUOTE

"With consumer confidence taking a dive due to the U.S. subprime mortgage crisis, the NAND market outlook has diminished considerably in 2008.
“Unless the economy recovers vigorously later this year, last year’s DRAM market disaster could be repeated in NAND this year,” said Nam Hyung Kim, director and chief analyst, memory, for iSuppli.
In an early warning sign of consumer weakness, Apple Inc. has slashed its 2008 NAND order forecast significantly and has informed suppliers that its demand growth will slow in 2008 compared to 2007, according to iSuppli sources. "

END QUOTE

Thanks,

Kasper

[mdriftmeyer]

Originally Posted by brianus

All I care about: does this mean higher capacities becoming affordable sooner than expected?

It means Apple is going more conservative on it's iPod demand projections.

[aaarrrgggh]

Has iSupply completely forgotten about the market for SSD's?! That is clearly what will drive growth in 2008, not portable consumer devices. Likewise, HDD iPods will likely end production by the end of the year as SSDs come down in price.

As for the impacts to Apple, well... it isn't anything not already well understood: iPod unit growth will slow. The only question is if iPhone sales and a higher iPod average selling price will compensate for the loss in units.

If there is oversupply in NAND chips, prices will likely fall somewhat, although development of next generation devices might stall-- they will keep running the foundries with current chips. I could imagine 2.5" form factor SSDs coming down in price for larger capacities soon where the biggest chips aren't required, but I doubt it will hit the thin 1.8" drives soon enough to help Apple.

[willrob]

Or it means Apple is switching suppliers. Since the emphasis is shifting to Wi-Fi enabled iPods, a corresponding shift to higher priced lower volume sales is inevitable. Apple will make as much (or more) profit by selling iPod Touches as opposed to iPod Shuffles eeven through the latter will sell more units.

[zanshin]

...a gazillion Touch, Nano, shuffle and iPhone sales might be recorded within two days of everyone getting their income tax credit this summer!

Or maybe Apple wants lower prices, so they're warning suppliers that they might not use as much as they first thought in order to gain negotiation leverage.

[MacLemming]

Originally Posted by echosonic

This article is monumental bullshit. This is what the media and the goddam analysts do all the time. Look at the deliberately misleading, negligent language used here.






These f--king bastards. iSuppli predicted 32.2% growth, and growth is now loking to be only 20%, which is still PHENOMINAL growth year-over-year. These whores need to be investigated, because this bullshit is an attempt to manipulate the market and probably short the stock.

Has anyone ever called you a drama queen? I guess all your foul language is for emphasis?
You sound like someone who is invested long at a price higher than the current quote, and you are trying to debunk news that may have an adverse effect on the price. The forces that are driving AAPL lower are beyond your control and any possible "short" activity. Would you like to buy a clue, Pottymouth?

[JeffDM]

Originally Posted by aaarrrgggh

Likewise, HDD iPods will likely end production by the end of the year as SSDs come down in price.

End of the year? As in expecting a 128GB solid state iPod this year? That's almost impossibly optimistic. Fantasy land, if you will. Even 64GB might be a stretch, it depends. The cost of flash drops quickly, but doesn't drop that quickly.

[echosonic]

Originally Posted by MacLemming

Has anyone ever called you a drama queen? I guess all your foul language is for emphasis?
You sound like someone who is invested long at a price higher than the current quote, and you are trying to debunk news that may have an adverse effect on the price. The forces that are driving AAPL lower are beyond your control and any possible "short" activity. Would you like to buy a clue, Pottymouth?

I was hoping to win the award for "Best Performacnce in a Market-Driven Downturn".

Hater.

[e1618978]

We already knew from the last quarterly report that iPod unit growth was 5% year over year - isn't this the inevitable result of that slowing growth, which is an old story?

[tbsteph]

Quick -What does the term "slashed" mean to you? A significant reduction right. Well, according to an article found on CNet, iSuppli has indicated Apple reduced their 2008 projected orders for NAND from a 32% increase over 2007 to a 28% increase. This is the same way government calculates budget cuts.

[McDave]

Originally Posted by aaarrrgggh

Has iSupply completely forgotten about the market for SSD's?! That is clearly what will drive growth in 2008, not portable consumer devices. Likewise, HDD iPods will likely end production by the end of the year as SSDs come down in price.

As for the impacts to Apple, well... it isn't anything not already well understood: iPod unit growth will slow. The only question is if iPhone sales and a higher iPod average selling price will compensate for the loss in units.

If there is oversupply in NAND chips, prices will likely fall somewhat, although development of next generation devices might stall-- they will keep running the foundries with current chips. I could imagine 2.5" form factor SSDs coming down in price for larger capacities soon where the biggest chips aren't required, but I doubt it will hit the thin 1.8" drives soon enough to help Apple.

iPods etc were fuelling demand and price reductions to make SSDs affordable - to 'enable' that market. As soon as that happened PC manufacturers would surely switch to SSDs. Even though the reduced demand will cause a last price-drop is it enough to make SSDs affordable and transition the largest device in the storage market? Or did we just fall short? (& wouldn't the HDD manufacturers drop their prices to cover the glitch)

McD

[TBaggins]

Originally Posted by Kasper

Guys,

iSuppli is reporting that Apple has warned NAND suppliers. That's the point of the story. We're not picking an Apple spin out of mid air. It was printed clear as day in the iSuppli report that

QUOTE

"With consumer confidence taking a dive due to the U.S. subprime mortgage crisis, the NAND market outlook has diminished considerably in 2008.
“Unless the economy recovers vigorously later this year, last year’s DRAM market disaster could be repeated in NAND this year,” said Nam Hyung Kim, director and chief analyst, memory, for iSuppli.
In an early warning sign of consumer weakness, Apple Inc. has slashed its 2008 NAND order forecast significantly and has informed suppliers that its demand growth will slow in 2008 compared to 2007, according to iSuppli sources. "

END QUOTE

Thanks,

Kasper

Thanks for the heads-up, Kasper. That does make sense.


.

[wizard69]

Originally Posted by aaarrrgggh

Has iSupply completely forgotten about the market for SSD's?! That is clearly what will drive growth in 2008, not portable consumer devices. Likewise, HDD iPods will likely end production by the end of the year as SSDs come down in price.

I don't think SSD amount to a hill of beans right now. It is a good technology that is just a bit to expensive for most tastes.

As to HDD iPods I think it will be a very long time before Apple drops hard drive based devices completely. The price advantage for a given capacity can't be ignored!

As for the impacts to Apple, well... it isn't anything not already well understood: iPod unit growth will slow. The only question is if iPhone sales and a higher iPod average selling price will compensate for the loss in units.

Interestingly everybody thinks this is an issue with the iPods. Maybe it is more of an issue with AIR's expensive SSD. In any event if Apple trys to go the higher average selling price I think they will screw themselves royally. Especially with consumer targeted devices. It is one thing to have a high price on a machine that has business uses it is another thing to have high priced consumer products in a depression.

By the way I'm not saying don't make a profit either, rather Apple just needs to be careful not to leave a sour taste in the consumers mouth due outlandish pricing schemes. Besides this was described as a decrease in unit sales but rather growth.

If there is oversupply in NAND chips, prices will likely fall somewhat, although development of next generation devices might stall-- they will keep running the foundries with current chips.

Actually the next generation of devices are already in the pipe line. These should lead to dramatically better SSD. That is SSD that are better than HDD in every way. I suspect that when such devices hit mass production stage we will see very high performance SSD. Still expensive but you will be getting a lot more performance for that expense.

I could imagine 2.5" form factor SSDs coming down in price for larger capacities soon where the biggest chips aren't required, but I doubt it will hit the thin 1.8" drives soon enough to help Apple.

The price of all SSD need to come in line with the chips contained within. Better yet the mind set of the consumer needs to change and should become more accepting of FLASH soldered right onto the motherboard. A 1.8" drive in something like the AIR is really an expensive way to implement a SSD. Better to simply solder the electronics in place and use that way. TOUCH is a good example as is the iPhone.

Dave

[abrooks]

Originally Posted by Kasper

Guys,

iSuppli is reporting that Apple has warned NAND suppliers. That's the point of the story. We're not picking an Apple spin out of mid air. It was printed clear as day in the iSuppli report that

QUOTE

"With consumer confidence taking a dive due to the U.S. subprime mortgage crisis, the NAND market outlook has diminished considerably in 2008.
“Unless the economy recovers vigorously later this year, last year’s DRAM market disaster could be repeated in NAND this year,” said Nam Hyung Kim, director and chief analyst, memory, for iSuppli.
In an early warning sign of consumer weakness, Apple Inc. has slashed its 2008 NAND order forecast significantly and has informed suppliers that its demand growth will slow in 2008 compared to 2007, according to iSuppli sources. "

END QUOTE

Thanks,

Kasper

In that case I'll let you off