Market research firm iSuppli announced it's cut its outlook for global NAND flash revenue growth in 2008 to the single digit percentage range, a major drop from the 27 percent it projected for 2008.
And just like the FBR Capital Markets research note earlier this month that reported a slowdown due to a major drop in Apple part orders, iSuppli is basing its projections on Apple's parts orders which are way down.
iSuppli ranks Apple as the number three consumer of NAND (define) flash memory behind SanDisk and Sony, purchasing $1.2 billion in flash memory last year for 13.1 percent of the market. However, memory firms tell iSuppli that Apple has significantly cut its memory orders for 2008, pretty much confirming what FBR said.
"There is a possibility it could turn around if economy gets better," Nam Hyung Kim, director and chief analyst for memory at iSuppli, told InternetNews.com. "A lot of consumers already have iPods. So their motivation to upgrade their iPod in the current economic situation isn't all that great compared to last year."
iSuppli said NAND flash memory revenue grew 12 percent in 2007, but it now expects it to grow by only four percent in 2008. Granted, they still don't know what Sony and SanDisk are up to, and it's only February. Also, Apple could come back with some big announcements later this year. Apple enthusiast sites have been rife lately with rumors of an event in New York next week.
Analyst Kim said he's open to the chance that projections could change. But right now, he feels the bad economy stands to hurt companies like Apple and others who make expensive gadgets.
"Consumer confidence has dropped a lot. So a lot of economic indicators are saying we are really in recession," he said. Before word of Apple's reductions, iSuppli had predicted the company's NAND flash purchases would rise by 32.2 percent this year.
Signs of weakness first emerged in the fourth quarter of 2007, when global NAND revenue declined to $4.1 billion, down 2.4 percent from $4.2 billion in the third quarter of 2007. Of the top eight NAND memory suppliers, six suffered sequential declines in revenue. Only Micron and Intel saw revenue gains.
Memory prices were a constant sore spot in 2007 because as much as memory was being consumed in new devices, memory manufacturers were building capacity even faster. That will continue into 2008, with capital spending on NAND production expected to rise by more than 20 percent this year, but that is a reduction over 2007, said Kim.
"Memory makers cut capital expenditures for 2008, so there will be some meaningful impact in second half of the year. They can't afford the same growth span as the previous year," he said.
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