NAND flash prices drop 20% following lackluster demand from Apple, others
Contract prices for NAND flash -- the solid-state memory found in devices like the iPhone and iPad -- is said to have fallen "rapidly" in May following lackluster demand from major purchasers like Apple.
Chip prices for NAND declined more than 15 percent, and about 20 percent in the spot market, in May following "lackluster demand," according to Taiwanese industry publication DigiTimes. Apple remains the largest buyer of NAND flash, but demand did not pick up "as aggressively as usual in the second quarter," the report said.
In addition to Apple, other vendors are also said to be slowing orders for NAND flash. Sales of USB drives and memory cards were reportedly "stagnant" in the month of May.
The average price for a 32 gigabit multi-level cell NAND chip was down 15.8 percent in May to $4.85. A 16 gigabit cell dropped 11.4 percent to $3.12, while 64 gigabit parts are $9.39.
The news of fewer orders for NAND flash comes as iPhone sales are said to remain strong, and demand for the new iPad 2 is also significant, making it unclear why orders are less than expected.
The iPad 2 features the same capacity levels as the first-generation model introduced in 2010, maxing out at 64GB of solid-state memory. Apple has not increased the storage offered in its iOS products for a few years, leaving the iPhone at a maximum of 32GB. The high-end MacBook Air, released late last year, features 256GB of flash memory.
NAND flash memory has become an important component of Apple's best-selling mobile products, making Apple the world's largest consumer of solid-state memory from providers like Samsung. In fact, Apple has, on a number of occasions, caused a worldwide shortage of flash storage.
Last month it was reported that makers of NAND flash memory are working to transition their manufacturing processes to below 30nm, but such changes must still be granted certification by Apple in a validation process that now takes about nine months. Smaller manufacturing processes increase the density of memory in NAND flash, allowing for higher capacities, faster speeds, and lower manufacturing costs.
Chip prices for NAND declined more than 15 percent, and about 20 percent in the spot market, in May following "lackluster demand," according to Taiwanese industry publication DigiTimes. Apple remains the largest buyer of NAND flash, but demand did not pick up "as aggressively as usual in the second quarter," the report said.
In addition to Apple, other vendors are also said to be slowing orders for NAND flash. Sales of USB drives and memory cards were reportedly "stagnant" in the month of May.
The average price for a 32 gigabit multi-level cell NAND chip was down 15.8 percent in May to $4.85. A 16 gigabit cell dropped 11.4 percent to $3.12, while 64 gigabit parts are $9.39.
The news of fewer orders for NAND flash comes as iPhone sales are said to remain strong, and demand for the new iPad 2 is also significant, making it unclear why orders are less than expected.
The iPad 2 features the same capacity levels as the first-generation model introduced in 2010, maxing out at 64GB of solid-state memory. Apple has not increased the storage offered in its iOS products for a few years, leaving the iPhone at a maximum of 32GB. The high-end MacBook Air, released late last year, features 256GB of flash memory.
NAND flash memory has become an important component of Apple's best-selling mobile products, making Apple the world's largest consumer of solid-state memory from providers like Samsung. In fact, Apple has, on a number of occasions, caused a worldwide shortage of flash storage.
Last month it was reported that makers of NAND flash memory are working to transition their manufacturing processes to below 30nm, but such changes must still be granted certification by Apple in a validation process that now takes about nine months. Smaller manufacturing processes increase the density of memory in NAND flash, allowing for higher capacities, faster speeds, and lower manufacturing costs.
Comments
That's not taking into account the savings Apple makes by pre-buying in bulk.
I love Apple's products but disgraces like this do leave a bad taste in the mouth.
Oh, it's VERY clear: the drop in demand has nothing to do with Apple and is due entirely to reduced PC desktop and portables sales and a total failure of non-iOS tablets to gain any traction in the market.
I thought that Apple almost never bought on the spot market. Their NAND supplies come almost entirely from direct, long-term contracts, and thus would have no impact whatsoever on the price of NAND in the spot market. Can someone with more knowledge of this issue clarify this point, please?
Apple's long-term contracts will have an effect on the market as those contracts have to be met by the manufacturers, tying up capacity and maintaining an increased price for other buyers for the duration of Apple's contracts.
Whether Apple cares what the current price of NAND flash is from day to day is less clear because they seem to have pre-paid for theirs as you say. Other factors impacting the price will be of concern to Apple as they may still be present when Apple's contracts come up for renewal/renegotiation.
Can someone explain to me how a 64Gb module that costs Apple just $6.27 more than the 16Gb module cost the consumer $200.00 more!?!
That's not taking into account the savings Apple makes by pre-buying in bulk.
I love Apple's products but disgraces like this do leave a bad taste in the mouth.
I have to agree with you on this. Hopefully on Monday with the announcement of iCloud they give up a cheaper, more viable option to having large amounts of storage with us at all times.
Like SJ said when revealing ATV2, "people don't want to manage their libraries/Hard-drives"
I am really looking forward to a slick solution, because currently there is not a great option for actually owning itunes movies and bringing them with me.
"The news of fewer orders for NAND flash comes as iPhone sales are said to remain strong, and demand for the new iPad 2 is also significant, making it unclear why orders are less than expected."
Oh, it's VERY clear: the drop in demand has nothing to do with Apple and is due entirely to reduced PC desktop and portables sales and a total failure of non-iOS tablets to gain any traction in the market.
Quite right.
As in "JP Morgan: Apple's iPad rivals reduce build plans after 'early dose of reality'" article from yesterday.
Can someone explain to me how a 64Gb module that costs Apple just $6.27 more than the 16Gb module cost the consumer $200.00 more!?!
That's not taking into account the savings Apple makes by pre-buying in bulk.
I love Apple's products but disgraces like this do leave a bad taste in the mouth.
Its called capitalism. If you as the consumer think the benefits of the additional memory is worth paying $200 for, it doesn't matter how much it cost Apple. You either don't buy the more expensive model, or you buy a competitor's product.
E.g., Compare them to MS. The many different versions of Windows cost them exactly the same to produce (the fixed costs are the same, and the recurring costs are largely the cost of printing the CD). Windows Pro costs them exactly the same as Windows Home. However, there is still a much larger differential in consumer pricing, because the features they charge for Professional, are valued at that much, or more by a sufficient number of users.
I am really looking forward to a slick solution, because currently there is not a great option for actually owning itunes movies and bringing them with me.
You're right. I've always found it incongruous that SJ talks about iTunes movies etc. and how great it is to be able to watch them anywhere and then charges the earth for the flash memory in iOS devices. As you quote, he says people don't want to manage their storage. In that case, don't make 16Gb of storage the only option the majority of your customers can afford thereby forcing them to constantly manage their storage!
Apple ... demand did not pick up "as aggressively as usual in the second quarter," the report said.
Translate into a headline saying:
...lackluster demand from Apple...
So Apple demand picked up, just not as aggressively as some people thought it would. That is "lackluster" how, exactly?
Oh yes, not as many of us would have clicked on the headline if it hadn't been misleading.
"The news of fewer orders for NAND flash comes as iPhone sales are said to remain strong, and demand for the new iPad 2 is also significant, making it unclear why orders are less than expected."
Oh, it's VERY clear: the drop in demand has nothing to do with Apple and is due entirely to reduced PC desktop and portables sales and a total failure of non-iOS tablets to gain any traction in the market.
Well, I think its also possible that NAND makers were expecting a huge ramp up, based on the June iPhone delivery schedule. However, now thats been delayed, they got caught flatfooted?
@ AI : This is not the first time you got it wrong.
You're right. I've always found it incongruous that SJ talks about iTunes movies etc. and how great it is to be able to watch them anywhere and then charges the earth for the flash memory in iOS devices. As you quote, he says people don't want to manage their storage. In that case, don't make 16Gb of storage the only option the majority of your customers can afford thereby forcing them to constantly manage their storage!
If Apple was not differentiating based on Memory, you wouldn't have a $500 iPad.
The $500 iPad ONLY exists because Apple can makeup the loss of margins by making much larger margins on higher priced products.
This is VERY STANDARD practice across EVERY industry. Its just that you guys don't follow other industries/companies as closely as you do Apple (also, Apple is unique in being a complete class apart from every competitor, reducing competitive pressure).
How does the statement:
Translate into a headline saying:
So Apple demand picked up, just not as aggressively as some people thought it would. That is "lackluster" how, exactly?
Oh yes, not as many of us would have clicked on the headline if it hadn't been misleading.
I read this to mean that, typically, Apple has started ordering in advance of an iPhone refresh by now.
The delay of the launch until September has probably meant excess capacity for the quarter.
Like SJ said when revealing ATV2, "people don't want to manage their libraries/Hard-drives"
I don't want to manage my library either, but I'd prefer the solution was higher capacity flash in Apple's devices. The only reason I have to manage my library now is because Apple hasn't increased the storage in any of their devices for a long time now. It's fine for the AppleTv to stream from my own computer. My home network is far faster and far more reliable than any consumer ISP or cell carrier can provide me.
But for my mobile devices, the cloud is going to come crashing down if/when everyone starts streaming all of their content. You think the carriers are struggling with capacity now, just what do you think is going to happen? Here's a hint: tiered data plans with higher prices. I think it would be cheaper in the long run to pay for higher capacity in my device than to pay the extra bandwidth charges which are inevitably coming soon.
Its called capitalism. If you as the consumer think the benefits of the additional memory is worth paying $200 for, it doesn't matter how much it cost Apple. You either don't buy the more expensive model, or you buy a competitor's product.
E.g., Compare them to MS. The many different versions of Windows cost them exactly the same to produce (the fixed costs are the same, and the recurring costs are largely the cost of printing the CD). Windows Pro costs them exactly the same as Windows Home. However, there is still a much larger differential in consumer pricing, because the features they charge for Professional, are valued at that much, or more by a sufficient number of users.
It's called greed and make no mistake. A 3090% markup speaks for itself.
You can't compare this to Windows. This is a simple transaction. They buy for x and sell for y. We have no idea what MS' costs are and the Pro versions of Windows are not generally bought by consumers.
Can someone explain to me how a 64Gb module that costs Apple just $6.27 more than the 16Gb module costs the consumer $200.00 more!?!
That's not taking into account the savings Apple makes by pre-buying in bulk.
I love Apple's products but disgraces like this do leave a bad taste in the mouth.
To try and put it as simply as possible, you are looking at it as if the lowest tiered product is an ideally priced to meet Apple'd profit margin. If you consider it's an introductory price to hopefully upsell you to a higher capacity that balances out the loss in aveage profit
You mention Apple buying in bulk but prices are static. If they buy comsiderably more of the lower priced NAND they likely get even better pricing.
There are other factors besides those. Do anyone sell you and 48GB more for an extra $6?
E.g., Compare them to MS. The many different versions of Windows cost them exactly the same to produce (the fixed costs are the same, and the recurring costs are largely the cost of printing the CD). Windows Pro costs them exactly the same as Windows Home. However, there is still a much larger differential in consumer pricing, because the features they charge for Professional, are valued at that much, or more by a sufficient number of users.
That's a bad analogy. There is an incurred R&D cost associated with creating the additional features that you get with the more expensive versions of windows. The cost of switching out standardized components is pretty much nil aside from the cost of the component itself.
Because it should be Gb not GB. That is b for bits and B for Bytes. That is 8 times different.
@ AI : This is not the first time you got it wrong.
Exactly what I was going to say... Right down to admonishing AI for botching it again.
While I won't expect a 512GB SSD for $80 next week, lol, I do hope this price drop trickles into the SSD market quickly.
If Apple was not differentiating based on Memory, you wouldn't have a $500 iPad.
The $500 iPad ONLY exists because Apple can makeup the loss of margins by making much larger margins on higher priced products.
This is VERY STANDARD practice across EVERY industry. Its just that you guys don't follow other industries/companies as closely as you do Apple (also, Apple is unique in being a complete class apart from every competitor, reducing competitive pressure).
You make that sound reasonable but one glance at rival tablets shows this up as false.
The Motorola Xoom costs $15 more than the 16GB iPad and comes with 32GB of memory standard.
I don't want the Xoom - I think it's grotesque - but it shows my point.