Market research company iSuppli has predicted a grim future for the flash memory sector in 2008, blaming falls in consumer spending and decimated business orders.

The firm has revised its prediction of a 27 per cent rise in global Nand flash revenue in 2008 to a new projection of single-digit growth.

Last year’s global revenue for Nand flash ­ used in flash storage cards, MP3 players and USB flash drives ­ was $13.9bn (£7.1bn). But as consumer and business confidence plummets, growth in 2008 will reach single digits at best, according to iSuppli.

“Unless the economy recovers vigorously, last year’s DRam market disaster could be repeated in Nand this year,” said Nam Hyung Kim, director of memory for iSuppli.

Apple’s reduced 2008 Nand order forecast has had a huge impact, according to iSuppli sources. The popularity of iPods made Apple the world’s third-largest OEM buyer of Nand flash memory in 2007, with purchases of $1.2bn ­13.1 per cent of the global market.

Capital spending on Nand production will rise by more than 20 percent this year. Sources at iSuppli suggest Nand prices are already below suppliers’ fully loaded costs.

“Nand suppliers are likely to go into the red in the first quarter, and are not likely to recover in the second,” Nam warned.
The last quarter of 2007 was a warning of desperate market conditions to come, the researcher said. Global Nand revenue in the fourth quarter fell $4.1bn, down 2.4 per cent on the previous quarter. Six of the top eight Nand suppliers suffered sequential declines in revenue.

The DRam market offers no solace for Nand suppliers. Although some memory suppliers, such as Samsung, Hynix and Micron, can shift production to DRam from Nand, many could suffer. DRam suppliers are due a grim year, predicted iSuppli, following a marginal four per cent revenue increase last year.

“The only hope for the Nand industry is a quick recovery in pricing of DRam. And that is not going to happen soon,” said Nam.

The long-term outlook for the Nand flash market is better. Toshiba is investing heavily in Nand flash manufacturing plants, according to Japanese stock analyst Nikkei.net.

The capacity of flash memory data storage devices has already surpassed that of Blu-ray. Although costlier, Nand flash memory has been predicted by some as the next storage standard.