iSuppli: issues ‘gloomy’ NAND flash outlook, says Apple slashed 2008 NAND order forecast

“Citing order reductions and weakness in consumer spending, iSuppli Corp. is cutting its outlook for global NAND flash revenue growth by a wide margin,” Mark LaPedus reports for EE Times.

“The NAND flash market is projected to grow in the single digit percentage range in 2008, down from iSuppli’s previous outlook of a 27 percent rise. Global NAND revenue in the fourth quarter of 2007 declined to $4.1 billion, down 2.4 percent from $4.2 billion in the third quarter of last year,” LaPedus reports. “With consumer confidence taking a dive due to the U.S. subprime mortgage crisis, the NAND market outlook appears gloomy.”

“Apple Computer Inc. has slashed its 2008 NAND order forecast ‘and has informed suppliers that its demand growth will slow in 2008 compared to 2007,’ according to iSuppli,” LaPedus reports. “Apple was the world’s third largest OEM buyer of NAND flash memory in 2007, with purchases of $1.2 billion, representing 13.1 percent of the global market, according to iSuppli.”

More in the full article here.

16 Comments

  1. So all Apple is said is that it won’t increase it’s demand for Flash as much as it did last year over 2006. Meaning Apple will still buy more than last year…LOL…is the author trying to be negative intentionally.

  2. Bad writing. Apple ‘slashes’ their order in the headline makes one assume negative growth but when you read the article, Apple’s demand is indeed growing but not as high as predicted. There can be many reasons for that including negotiating supplies from different sources.

  3. I think this move signals Apple’s plans to abandon the I-Pod and I-Phone markets altogether. Cupertino simply couldn’t handle the onslaught of the Zune and flash-based Windows Mobile devices and will soon exit these markets instead of being embarrassed further.

    What’s left for Apple is to try and sell overpriced proprietary toy computers that can’t play games and need a complete redesign of the OS to accomodate 2-button mice. Things look very bad for Apple indeed. Buh-bye Apple.

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  4. It sounds like Apple is fishing for better NAND contract pricing with more favorable and reliable shipment timing, they do a lot of JIT manufacturing. They maybe looking to cut out some big mouth suppliers or at least make them clam up about their business, too.

  5. Apple is cutting their orders because of the current flux in capacities. Why get stuck with a large inventory of small modules when in two months the capacities will double and prices will be the same? Then the typical slow months for Apple will be behind them.

  6. I find it difficult to believe that Apple would be slashing their order due to lower sales when new models requiring this type of memory chip (iPhone, iPod touch, iPod nano) have been introduced and Apple is phasing out mechanical hard drives in its products (iPod, MacBook Air). It’s more likely that Apple wants to get better prices or has other options.

    If you’re the third biggest purchaser, why not change things up so that the manufacturers are coming to you asking you to buy their product, rather than the other way around?

  7. @ a lot of people – Apple did not slash their orders – just their yearly forecast. This means nothing.

    I work for a distribution company and deal with one of the worlds largest OEM for back up generators and large air compressors..

    You have marketing people generating these ‘highly educated’ guesses AKA forecasts of what they are going to SELL for the year. These are never right – infact they are typically 10-20% over production forecasts. Then you have production forecasts – These are generated by a few things – History of the product(if available), actual customer orders, and some #s from the marketing forecasts. Some of it may be seasonal as well – as in my business, generators pick up around hurricane season – if there are any. Then you have the # of units you atually build.

    So lets say your forecasts say you are going to sell 100,000 of X. Then your production forecast on the year will be somewhere around 80,000-90,000 of X. (becasue we all know marketing people are full of *hit) More than likely, the actual # of built units is going to be somewhere between 72,000 and 81,000 of X.

    All Apple is doing is covering themselves from paying finance charges on these parts from suppliers and having 1000s of millions of dollars in inventory on their books. (yes, I know that is a billion dollars, go read a financial statement and see how it’s laid out.) Apple is just like any other OEM – they aim to have their product built and sold before they have to pay their supplier for the parts in that product.

    This is a lame article that just firms up the fact that marketing forecasts are crap. Even if they only grow 10% that means they are still gaining a huge chunk of market share.

  8. This is total FUD bullshit

    1. As old man pointed out Apple are probably having different suppliers and their requirement is still more than the prevoius year.

    2. Revenue could well be down becuase unit prices are plummenting. They may well sell 10 times more units, but if the price is more than 10x lower their revenue will be lower.

    3. What brokers are focusing on is growth. They expect Apple to grow at the same rate, which is ridiculous considering the MP3 is maturing.

    4. Apple’s market share is still good and their component costs are lower than ever. That means their profit per unit is higher than before.

    5. Apple have expanded the iPod into the phone arena. This is very successful already and once more countries are included, the rate of growth will take off like it did for the iPod.

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