Last year was unprecedented for the semiconductor industry and wider components space. Companies are still struggling to deal with the ramifications of what happened at this time in 2020. As supply chains were broken and manufacturing facilities halted, the world rushed to buy components.
Now, many companies are still sifting through that industry. As a result, NAND Flash revenue dropped quarter over quarter during the final frame of 2020, according to data from TrendForce.
Evertiq reports that the industry saw a 2.9 percent drop in quarterly revenue, bringing in a total of $14.1 billion.
It isn’t all bad news, however. Total bit shipments in the NAND Flash space rose by nearly nine percent in last year’s fourth quarter.
There are a number of factors that contributed to the NAND Flash industry’s fourth-quarter dip. As noted, the biggest problem is the fact that many manufacturers are still sorting through inventory they purchased earlier in the year.
Evertiq points out that this trend began in the third quarter of 2020 and continued into the latter portion of the year. It is mostly applicable to companies in the server and data center industries but is occurring across all sectors.
Inventory reduction efforts also had a domino effect on the price of NAND contracts. Like the industry’s overall revenue, they declined in Q4 2020.
On the bright side, strong demand for new smartphones helped mitigate the decrease in demand from the data center sector. With the initial wave of the pandemic long gone, consumers are less hesitant to spend money on a new device. Indeed, as the global rollout of 5G continues, it’s likely that smartphone demand will increase further in the coming months.
Smartphones weren’t the only devices that sold well in 2020. The need remote work and learning drove more consumers to purchase a new laptop. Evertiq notes that Chromebook devices were the strongest sales drivers for NAND Flash components in the fourth quarter of 2020.
Fortunately, it appears that things are beginning to stabilize. Although the pandemic is still ongoing, 2021 looks to be a more positive year than its predecessor. For the NAND Flash industry, manufacturing capacity expansion is a key trend to watch.
A number of companies, including Samsung and YMTC, are working to rapidly scale-up their production capacities. This will help manufacturers increase their bit output of NAND Flash components over the course of the year.
However, the effects of 2020 can’t be written off just yet. Since companies in the server and data center segments haven’t yet resumed normal levels of purchasing, it’s likely that contract prices for NAND Flash products will continue to decline in the first frame of 2021. This will almost certainly mean another quarter of decreased revenue for the industry to start the year.