Price erosion spurs NOR flash revenue decline in 2005

Cutthroat competition is spurring continued price erosion for NOR-type flash memory, resulting in a significant decline in market revenue this year, according to iSuppli Corp.

Worldwide high-density NOR flash memory revenue will decline to $5.2 billion in 2005, down 7.4 percent from $5.6 billion in 2004, iSuppli predicts. Average Selling Prices (ASPs) for high-density NOR will decline to an average of $4.85 in 2005, down 24 percent from $6.40 in 2004.

iSuppli defines high-density NOR parts as devices ranging from 64Mbit to 1Gbit.

"NOR leaders Intel Corp. and Spansion have been engaged in a tough price war over the past few years as they fought to gain market share. The price erosion has reached the point where suppliers must ship high-density flash using actual or effective two-bit-per-cell technologies in order to maintain acceptable profit margins," said Mark DeVoss, senior analyst for iSuppli.

Examples of such actual or effective two-bit-per-cell technologies include StrataFlash from Intel and MirrorBit from Spansion.

The battlefield for the NOR price war is the mobile-phone market, where demand for higher and higher densities of flash continues to grow.

Of the top-three NOR flash suppliers to the mobile phone market, i.e. Intel, Spansion and STMicroelectronics, only Intel has been shipping such products for a prolonged period of time. Spansion and STMicroelectronics over the past six to nine months have been serving this demand by selling products consisting of two or three Single-Bit-per-Cell (SLC) 128Mbit NOR flash memories packaged together in one MCP. However, the price erosion for these 128Mbit SLC MCPs is now severe enough to preclude profitable shipping any longer. 

iSuppli forecasts shipment revenue for high-density NOR flash will rise to $7.1 billion by 2009. 

www.iSuppli.com