NOR Flash revenue to decline in 2011?

The market analyst says that following the strong 2010 results, this is the first sign of 'difficult years' that lie ahead as the industry confronts a range of challenges. It forecasts that while NOR shipments will continue to rise, average selling prices (ASP) are weakening as a whole. As a result, IHS says NOR revenue will continue to suffer and decline in the future. NOR Flash memory is used in a broad range of consumer electronics, including mobile handsets, pcs and hard disk drives. But it has been losing a share of the market to NAND technology, which is cheaper and has a higher memory capacity. IHS' research indicates that strong results of NOR came in 2010 when manufacturers cut back supply after demand for the product recovered. In particular, the first half of 2010 was strong as NOR suppliers were optimistic that a rebound in pc shipments would carry NOR revenue higher. This resulted in a shortage of NOR Flash chips, a boost in ASPs and led suppliers to report record revenues. However, the market advance was short lived and NOR performance in the second half weakened. According to IHS optimism for the pc market evaporated, with shipment growth of 6.4% in Q4, falling short of the expected seasonal double digit percentages. As a result, IHS says that supply caught up with to demand and pricing weakened. With the success of tablets, the sector was also affected as fewer chips are required. The market analyst believes that the future of NOR is heading for a decline because of two trends: the use of more serial parallel interface NOR chips that have lower ASPs compared to parallel switches, cutting further into manufacturers' revenue; and the shift in handsets, NOR's largest application, to the use of NAND Flash technology.