The flattening of demand for flash memory in smartphones and tablets has implications for Boise's Micron Technology Inc., where NAND flash memory overtook dynamic random-access memory (DRAM) in 2011 as the top-selling type of memory sold.
Memory capacity per cellphone has declined to 12.8 gigabytes on average so far this year, compared with 13.2 GB in the first half of 2012, according to a sampling of handsets and tablets studied by the IHS iSuppli, a market research company. Flash memory capacity nearly tripled a year ago, from 4.6 GB in the first half of 2011.
Tablets tell a similar story. From the first half of 2011 to the first half of 2012, flash memory dipped 25 percent from 32.1 GB to 24.0 GB on average. The decline during the first half of this year has been even greater, down 42 percent as tablet memory skids to 14.0 GB.
"The increasing prevalence of cloud and streaming services has reduced the requirement for large amounts of NAND flash in smartphones and tablets," says Ryan Chien, analyst for memory and storage at IHS. "Mobile device brands increasingly are offering their own application ecosystems and online storage benefits that perform the same functions as onboard NAND flash. With mobile platforms a leading growth driver for the NAND industry, this trend represents a major cause of concern for flash memory makers."
NAND is a computer-logic term that means not-and. NAND flash chips retain data when the devices are off. In contrast, DRAM, the most common type of memory in personal computers, including laptops and workstations, loses data without power. DRAM is still Micron's No. 2 product class,
The prevalence of smartphones is still having the effect of driving up the total amount of NAND flash memory being used in cellphones, though growth in memory usage overall is flattening. For instance, the Apple iPhone 5 and the Samsung Galaxy S III had the same storage options as their predecessors.
With tablets, many consumers appear to find the experience of using new, smaller tablets undiminished from larger models. That has exacted a toll on the NAND industry, because the smaller-sized tablets in IHS's teardowns average just 50 percent of the flash loading of their larger 10-inch counterparts.
The preferred memory configuration for 10-inch tablets is between 16 and 32 GB. For 7-inch tablets, the sweet spot is dominated by 16-GB products, with 8-GB units also popular.
The advantages of the cloud have also diminished consumer use of the microSD memory card - another major source of revenue for NAND flash makers. A removable device that can be plugged into phones at will, the microSD card still plays a big role in providing additional storage for entry-level smartphones as well as lower-end handsets known as feature phones. But the detachable cards can no longer be used in many high-end cellphones, which instead have opted for embedded storage, doing away with any sort of card slot on the phone.
The slowdown is driving manufacturers to seek sales elsewhere. Micron and California's SanDisk are aggressively exploring NAND flash options in the solid-state drive market - a faster-growing segment with more opportunities to add value. Both are nearing the goal of deriving 10 percent of their revenue attained from SSDs, with plans to expand further.