By Mark LaPedus
Spot shortages - and possible price increases - for NAND flash
have suddenly surfaced in the market amid recent production cuts by
major memory suppliers.
The shortfall in NAND emerged this week, when solid-state drive (SSD) vendor OCZ Technology Group Inc. lowered its quarterly forecast. OCZ disclosed it could not obtain enough NAND parts for its SSDs.
Other OEMs are expected to see similar NAND shortages in the market, especially small- to mid-sized companies with no secure source of supply. On the other hand, Apple may be able to get an ample supply of parts.
The NAND shortfall is somewhat predictable. Micron, Samsung, SK Hynix and Toshiba have recently cut NAND production amid lackluster demand.
Besides supply for NAND, there are also some pricing issues for these parts. Prices for NAND hit $0.31/GB in June, but they went back up to $0.36/GB in August, according to Jim Handy, an analyst with Objective-Analysis, a research firm.
“We believe ASPs thus far in the quarter have been flattish versus the significant declines in 1H ‘12. Both 64-Gbit MLC and 32-Gbit MLC are declining flat to 5-7% thus far in the quarter,” added Vijay Rakesh, an analyst with Sterne Agee.
OCZ feels the pinch
Meanwhile, at OCZ, the shortfall of NAND impacted the company’s Vertex and Agility line of SSDs. OCZ itself expects preliminary revenue for the second fiscal quarter of 2013 to be approximately $110 to $120 million, compared to the previously guided revenue range of $130 to $140 million. This preliminary revenue range compares to $113.6 million for the first fiscal quarter of 2013 and $78.5 million for the second fiscal quarter of 2012.
"Despite achieving bookings in excess of our expectations for our second fiscal quarter, we were not able to meet our previously stated revenue guidance due primarily to constraints in NAND flash supply," said Ryan Petersen, CEO of OCZ Technology.
“OCZ is not the only company that is affected by the supply shortages,” he said during a conference call. "While we believe that the situation will resolve itself, subject to market conditions, we plan to hasten our transition to new process nodes in order to help ease these supply constraints."
Hans Mosesmann, an analyst with Raymond James & Associates, said OCZ’s NAND shortfall involves select parts. “The shortages were primarily in 25nm MLC or consumer focused NAND, which OCZ partially resolved by using SLC or enterprise NAND at the expense of gross margins. Despite using SLC, the company depleted its inventory and expects to be 30-50% short on its NAND orders through November,” Mosesmann said.
OCZ blamed the problems on recent NAND production cuts at Micron, Samsung, SK Hynix and Toshiba. But OCZ may have also dropped the ball, as the company apparently failed to secure a steady source of NAND parts.
“The company's lack of a strategic NAND deal is clearly being negatively felt as volatility in the NAND market continues to challenge independent vendors, especially a vendor focused on a high-volume business through the channel,” said Alex Kurtz, an analyst with Sterne Agee.
“Looking forward, visibility remains challenging on the NAND front as OCZ believes the reported iPhone 5 launch is sapping supply out of the market and that transitioning to the Barefoot 3 controller, which uses a lower node flash with better availability, will also help address this issue,” Kurtz said.
The Barefoot 3 is a SSD controller, based on the SATA-2 interface. It was designed by Indilinx Co. Ltd. In 2011, OCZ acquired Indilinx, a fabless provider of flash controller semiconductors and firmware for SSDs.
The shortfall in NAND emerged this week, when solid-state drive (SSD) vendor OCZ Technology Group Inc. lowered its quarterly forecast. OCZ disclosed it could not obtain enough NAND parts for its SSDs.
Other OEMs are expected to see similar NAND shortages in the market, especially small- to mid-sized companies with no secure source of supply. On the other hand, Apple may be able to get an ample supply of parts.
The NAND shortfall is somewhat predictable. Micron, Samsung, SK Hynix and Toshiba have recently cut NAND production amid lackluster demand.
Besides supply for NAND, there are also some pricing issues for these parts. Prices for NAND hit $0.31/GB in June, but they went back up to $0.36/GB in August, according to Jim Handy, an analyst with Objective-Analysis, a research firm.
“We believe ASPs thus far in the quarter have been flattish versus the significant declines in 1H ‘12. Both 64-Gbit MLC and 32-Gbit MLC are declining flat to 5-7% thus far in the quarter,” added Vijay Rakesh, an analyst with Sterne Agee.
OCZ feels the pinch
Meanwhile, at OCZ, the shortfall of NAND impacted the company’s Vertex and Agility line of SSDs. OCZ itself expects preliminary revenue for the second fiscal quarter of 2013 to be approximately $110 to $120 million, compared to the previously guided revenue range of $130 to $140 million. This preliminary revenue range compares to $113.6 million for the first fiscal quarter of 2013 and $78.5 million for the second fiscal quarter of 2012.
"Despite achieving bookings in excess of our expectations for our second fiscal quarter, we were not able to meet our previously stated revenue guidance due primarily to constraints in NAND flash supply," said Ryan Petersen, CEO of OCZ Technology.
“OCZ is not the only company that is affected by the supply shortages,” he said during a conference call. "While we believe that the situation will resolve itself, subject to market conditions, we plan to hasten our transition to new process nodes in order to help ease these supply constraints."
Hans Mosesmann, an analyst with Raymond James & Associates, said OCZ’s NAND shortfall involves select parts. “The shortages were primarily in 25nm MLC or consumer focused NAND, which OCZ partially resolved by using SLC or enterprise NAND at the expense of gross margins. Despite using SLC, the company depleted its inventory and expects to be 30-50% short on its NAND orders through November,” Mosesmann said.
OCZ blamed the problems on recent NAND production cuts at Micron, Samsung, SK Hynix and Toshiba. But OCZ may have also dropped the ball, as the company apparently failed to secure a steady source of NAND parts.
“The company's lack of a strategic NAND deal is clearly being negatively felt as volatility in the NAND market continues to challenge independent vendors, especially a vendor focused on a high-volume business through the channel,” said Alex Kurtz, an analyst with Sterne Agee.
“Looking forward, visibility remains challenging on the NAND front as OCZ believes the reported iPhone 5 launch is sapping supply out of the market and that transitioning to the Barefoot 3 controller, which uses a lower node flash with better availability, will also help address this issue,” Kurtz said.
The Barefoot 3 is a SSD controller, based on the SATA-2 interface. It was designed by Indilinx Co. Ltd. In 2011, OCZ acquired Indilinx, a fabless provider of flash controller semiconductors and firmware for SSDs.
