The key for the flash industry is iPod sales, in addition to mobile phone sales, according to DRAMeXchange Technology Inc. The fourth quarter is usually the strongest time of year for handset and iPod sales due to the holiday season, and Apple will need to start stocking up on flash memory in the third quarter to make sure its ready for such heavy demand. If, on top of expected iPhone and iPod demand, Apple puts out new iPods that use only flash memory, Apple could account for 25 percent of quarterly flash memory output, the industry researcher says. That kind of demand could really solve the glut problem in the industry and send flash memory prices higher.
What's more troubling for users is this may be the start of a longer term trend with regard to higher NAND flash memory prices.
Many analysts expect the iPhone to cause a few changes in the mobile phone industry, including the use of more multimedia applications on handsets, hence the need for more NAND flash memory for the storage of pictures, songs, video clips and other data. The amount of NAND flash memory used in handsets is expected to grow dramatically, according to the Semiconductor Industry Association, by a compound annual rate of more than 200 percent through 2010.
NAND flash memory prices have been relatively tame for the past several months due to a glut in the industry. The iPhone, upcoming iPod products and the continued popularity of the chips as the storage of choice for digital cameras and other devices will likely ensure users don't see as many bargains in the future. Most analysts estimate that prices will start rising in the third quarter, which is now, and when companies start making such purchases in the memory chip industry, it only takes a few weeks to a month for the impact to trickle down through the market to end users.
Sales Estimates for Apple's iPhone
Company First weekend of Sales Unit sales in 2007 Unit sales in 2008
American Technology Research Inc. 250,000 n/a n/a
Lehman Brothers Inc. 270,000 10 million total in 2007 and 2008 n/a
Piper Jaffray & Co. 500,000 3.25 million n/a
Goldman Sachs Group Inc. 700,000 5.25 million 12 million
Credit Suisse Group n/a 5 million 15 million
Deutsche Bank AG n/a 7.5 million 12 million
Citigroup Inc. n/a 3.5 million 8.5 million
iSuppli Corp. n/a 4.5 million 13.5 million
DRAMeXchange Technology Inc. n/a 4 million 12 million