Online storage reduces memory requirements in smart phones and tablets

Report points to new concerns for flash memory makers as latest technologies reduce the need for memory capacity in cell phones

Smart phones and tablets continue to drive growth in the electronics supply chain, but a new report from industry analyst IHS iSuppli points to slowing growth in shipments of NAND flash memory to makers of these products.

Growth in the average amount of NAND flash memory in each smart phone and tablet shipped is slowing this year due to rising availability of cloud storage and streaming services, both of which are reducing the need for physical storage in mobile devices, the report shows. Memory capacity per cell phone, for example, has declined to 12.8 gigabytes (GB) on average this year compared with 13.2 GB for the same period in 2012. IHS iSuppli’s Teardown Analysis Service studied a sampling of handsets and tablets for the research. The current decline stands in contrast to the nearly threefold increase between the first half of 2011 and 2012, when flash memory in phones surged from 4.6 GB to 13.2 GB, IHS explains.

Tablets tell a similar story. From the first half of 2011 to the same time a year later, flash memory loading in tablets dipped 25% from 32.1 GB to 24 GB on average. The fall during the first few months of this year is even greater, IHS explains, down 42% as tablet memory slips to 14 GB.

“The increasing prevalence of cloud and streaming services has reduced the requirement for large amounts of NAND flash in smart phones and tablets,” says Ryan Chien, analyst for memory and storage at IHS. “Mobile device brands increasingly are offering their own application ecosystems and online storage benefits that perform the same functions as onboard NAND flash. With mobile platforms a leading growth driver for the NAND industry, this trend represents a major cause of concern for flash memory makers.”

In response, some are turning to more promising markets such as solid state drives. The iSuppli report points to Idaho-based Micron Technology and SanDisk of California as examples. The companies are aggressively exploring NAND flash options in the solid state drive market and are nearing the goal of deriving 10 percent of their revenue from SSDs, with plans to expand further, according to the report.

The flash memory data follows a more upbeat report earlier in February pointing to double-digit growth in the microelectromechanical (MEMS) motion sensor market thanks to smart phones and tablets. Revenue this year for MEMS motion sensors used in cell phones and tablets will amount to $1.5 billion, IHS says—up 13% from $1.3 billion in 2012. Although those figures will be down from the robust 21% increase in 2012 and the 85% boom in 2011, the analysts say it represents bright spot in the market compared to the tepid growth expected for most electronic components this year. The IHS report points to two more years of double-digit increases before the market starts to moderate in 2016.

“The growth of MEMS motions sensors in wireless devices is being driven by four key factors: the robust sales of smart phones and tablets; the boom of Chinese smart phone makers; the fast adoption rate of pressure sensors; and the addition in some cases of a second gyroscope in the camera modules for optical image stabilization,” says Jérémie Bouchaud, director and senior principal analyst for MEMS and sensors at IHS.

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