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May, 2016 |ALL RIGHTS RESERVED. REPRODUCTION PROHIBITED WITHOUT WRITTEN PERMISSION.

NAND Flash Market Trend-2016 and Beyond-

Sean Yang

NAND Flash Team

Memory & Storage Division, TrendForce


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2009 2010 2011 2012 2013 2014 2015 2016E

USD$bn

� 2016 NAND market momentum is softened amid the macro economy noise and steeper ASP erosion from over-supply dynamics.

NAND Flash Market: 2016 is a Challenging Year

Source: DRAMeXchange, May, 2016

2009-2016 CAGR: 11%

ASP($/GB)

$2.12 $1.80 $1.25 $0.74 $0.60 $0.44 $0.32 $0.22

YoY -32% -15% -31% -41% -18% -27% -27.3% -31.3%

-0.2%1.3%

5.8% 6.0%2.6% 1.9% 1.8%

5.1%

-Market Sufficiency-


-

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40,000

50,000

60,000

70,000

2009 2010 2011 2012 2013 2014 2015 2016E

Bit Supply Shipment Bit Demand Shipment

� With accelerated 15nm/3D-NAND migration and weak demand, supply bit growth exceeds demand bit growth (46% vs. 42%). 2016 NAND market is doomed to be over-supply.

Unit: 2GB M equiv.

Macro Supply&Demand: Still Over-Supply

-Supply Bit Growth-

-Demand Bit Growth-

54%

80%75%

59%41%

39%

47%

46%

74%

77%68%

58%

45%40%

47%

42%



-8%

-4%

0%

4%

8%

12%

16%

20%

0

5,000

10,000

15,000

20,000

1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16E3Q16E4Q16F

Supply Vol. Demand Vol. Sufficiency

Unit: 2GB M Equiv.

Quarterly Supply&Demand: Imbalance Eased in 2H16

� 2H16 market imbalance will be eased.� NAND capacity upgrade is likely doubled in iPhone7 (32GB/128GB/256GB).� eMMC/eMCP: Content growth is significantly increased in smartphones.� Client-SSD: NB attached rate and capacity continue to hike. � Enterprise-SSD: Strongly grow with server/data center demands.



Channel TLC-Wafer Contract Price Trend


$0.8

$1.2

$1.6

$2.0

$2.4

$2.8

$3.2

Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16

32Gb TLC-Wafer 64Gb TLC-Wafer 128GB TLC-Wafer

� TLC-Wafer is the indicator about channel market. NAND makers start to re-allocate the NAND capacity to OEM product, resulted in stable TLC wafer pricing from late Q1.� Upward pricing trend likely continue in Q316 corresponding with balanced market

dynamics.


eMMC Pricing Forecast

� eMMC ASP down 14-16%/7-8% in Q1/Q2 respectively, 2H16 pricing will be stabilized. � 16GB-128GB eMMC pricing is expected to down 36-40%yoy, reflecting of the over-

supply conditions and increasing TLC-eMMC portion.� Steeper ASP erosion in high density helped to drive the content per box growth.

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1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16E 4Q16F

8GB eMMC 16GB eMMC 32GB eMMC 64GB eMMC 128GB eMMC



Client-OEM SSD Pricing: Sweet Point is Coming

� Accelerated client-OEM SSD price erosion is from 3D-NAND and 15/16nm TLC-SSD.� 128GB SSD price will crossover 500GB HDD after 3Q16, while price gap between

256GB SSD and 1TB HDD is less than $5 in 4Q16.� 2016 notebook SSD attach rate is 33%, mostly contributed from commercial models.� More than 50% of notebook storage will be in SSD from 2018.


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1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16E4Q16F128GB SSD 256GB SSD 500GB HDD 1000GB HDD

0%

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-

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2011 2012 2013 2014 2015 2016E 2017F 2018F

Notebook Vol. SSD(%)

(Unit: Million)


NAND CAPEX: All In for 3D-NAND

Unit: US$M

� 2016 CAPEX is majorly for 3D-NAND migration and new fab construction. Except for Samsung, other NAND makers have booked 30-40k/m 3D-NAND capacity facility from equipment suppliers. � Limited investment from 4Q15, Planar NAND will be tight supply.

Capacity (10K WSPM) Cost

New 3D-NAND $700-800M

New Planar NAND $300-400M

3D-NAND Conversion from Planar $400-500M

Planar NAND migration $100-200M

3D vs. Planar Measurement

Wafer Processing Time 3-4 Times

Space for tooling 3-5 Times

Wafer Cost >80%

+20%



Unit: KPCs,12”equiv.

NAND Flash Capacity Forecast: 3D Era is Coming

� 2016 total capacity is up ~10%YoY.

� Samsung: XiAn fab is fully loaded after 2Q16 at 100k/m.

� TSB/SNDK: New Fab 2, dedicated at 3D-NAND, production kicked off from 1Q16.

� Hynix: 3D-NAND conversion takes place in M12. 3D-NAND in M14 is pushed out to 2017.

� MU/INTL: New added 3D-NAND capacity in Fab10X from 3Q16 while conversion in Fab 10 is ongoing; Dalian fab MP schedule for 3D-NAND is from 4Q16.

Fab 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16E 3Q16F 4Q16F

Fab12 120 120 120 120 120 120 120 120

Fab16 190 190 190 190 190 190 190 190

Xian 30 40 70 80 85 100 105 105

Samsung 340 350 380 390 395 410 415 415

Fab2(New) 10 10 15 15

Fab3 160 160 160 160 160 160 160 160

Fab4 210 210 210 210 210 210 210 210

Fab5 60 65 80 100 100 105 120 120

TSB/SNDK 430 435 450 470 480 485 505 505

M11 130 130 130 130 130 130 130 130

M12 30 40 60 70 75 75 80 90

M14 0

Hynix 160 170 190 200 205 205 210 210

Manassas 40 40 40 40 40 40 40 40

Lehi 70 70 70 70 70 70 70 70

Fab10 72 75 80 90 80 75 70 65

Fab7 55 55 55 55 55 55 55 55

Dalian 25

MU/INTL 237 240 245 255 245 240 235 255



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1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16E 3Q16F 4Q16F

SLC MLC TLC

NAND Architecture: TLC is Over 50% from 2Q16

iPhone 6S/Plus

� iPhone6S/Plus: 128GB is all in TLC, 80% for 64GB. Higher TLC usage in iPhone7 is up to 256GB. � eMMC is 48% in TLC while Client-SSD is also 56% in TLC. � 3D-NAND for client SSD and eMMC/eMCP will be mostly in TLC basis, TLC portion

reaches ~60% existing 2016.

iPhone 7/Plus, 3D-NAND SSDs



� 2D-NAND: 14/15nm tech node is the last generation.� 3D-NAND: Samsung is still leading. other competitors find it difficult to compete in

terms of commercialization in eMMC/eMCP and SSDs.� Despite of introduction in early 1H16, 3D X point sample schedule will delay to 1Q17.

2015 2016 2017

1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q

NAND Technology Trend

16nm

32 Layers(MLC/TLC)

Source: Company data, complied by DRAMeXchange, May, 2016

14nm

48Layers(MLC/TLC) 64 Layers(MLC/TLC)

A19nm 15nm

64 Layers(TLC)

16nm

36 Layer(MLC)/48 Layer(TLC)

16nm

32 Layer(MLC/TLC)

14nm

2D-NAND 3D-NAND

48 Layers(TLC)

72 Layer(MLC/TLC)

64 Layer(MLC/TLC)

3D X Point


Node Migration: 3D-NAND Hikes from 2H16

� Mainstream node for eMMC/eMCP and client SSD in 2016 is 15/16nm.� 2016 3D-NAND competition will still be dominated by Samsung.� 3D-NAND portion will reach 30% existing 2016.

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1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16E 3Q16F 4Q16F

90nm 6X & 7X nm 5Xnm 4Xnm 3Xnm 2xnm 20nm-Class ≤1xnm-Class 3D-NAND



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1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16E 3Q16F 4Q16F

<8Gb 8Gb 16Gb 32Gb 64Gb 128Gb 256Gb 384Gb

Density Migration: Larger is Better

� 15nm/16nm planar NAND main device is 128Gb, minimum is 64Gb.� All 48 layer 3D-NAND chips starts from 256Gb. � 128Gb is already >70% from 1Q16.� 256Gb will reach almost 20% of total output in 4Q16.



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1Q112Q113Q114Q111Q122Q123Q124Q121Q132Q133Q134Q131Q142Q143Q144Q141Q152Q153Q154Q151Q16

Samsung SK Hynix Micron Toshiba

NAND Flash Financials: Steady Margins

� 2016 NAND OPM is likely squeezed due to sharper ASP erosion and limited cost reduction from migration.� OPM difference among NAND makers varies from product matrix, customer portfolio,

and pricing strategy.

NAND Flash Operating Margin



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2011 2012 2013 2014 2015 2016E

Handset SSD Tablet PMP USB Drive DSC Others

Unit: 2GB M equiv.

NAND Flash Demand Outlook

� 2016 demand bit growth is 42%. smartphone, tablet and SSD accounts more than 90% of total demand.

� SSD segment, represented 34% of total demand, is the strongest end-demand application in 2016.

� NAND applications show long-term committed growth through years.



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2011 2012 2013 2014 2015 2016E

eMMC Market Overview

Unit: 2GB M equiv.

3% 15%

25%24%

32%

33%

� eMMC market is slowing down with matured smartphone growth and declining tablet. � Content growth is the key to drive the market.� With >70% in 64GB/128GB for iPhone6S/Plus, other smartphone brands are forced to

raise content to compete.

-Other Demand--eMMC Demand-


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1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16E 3Q16F 4Q16F

2GB 4GB 8GB 16GB 32GB 64GB 128GB


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1Q14 3Q14 1Q15 3Q15 1Q16 3Q16F

Unit: Million

eMMC/eMCP in Smartphone

� 2016 smartphone market growth is a history-low 2.3%YoY but content growth is stronger from market competition and hardware spec requirement. (i.e. camera, O.S., panel)� Higher 64GB/128GB exposure in high-end smartphone while 16GB is the minimum.

eMMC % in Smartphone Smartphone and eMMC content

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2012 2013 2014 2015E 2016F

Smartphone eMMC Content (GB)

Unit: Million

78%

82% 81%

72%

78%

83% 86%

79%84%

84%

82%82%



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1Q14 3Q14 1Q15 3Q15 1Q16 3Q16F

Unit: Million

eMMC in Branded Tablet

� Except for proprietary NAND for iPad, eMMC is the standard storage design for tablets.� Tablet shipment declines, content growth is also slower than smartphone.

eMMC % in Branded Tablet Tablet and eMMC content

54%

56%62%

54%56%

58%

62% 60% 63%55%

65%65%

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2012 2013 2014 2015E 2016F

Branded Tablet eMMC Content (GB)

Unit: Million



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2014 2015 2016E 2017F 2018F2D NAND-MLC 2D NAND-TLC 3D NAND-MLC 3D NAND-TLC

eMMC Technology Trend: Faster and Cheaper

� Smartphone OEMs continue to squeeze BOM cost from storage and memory amid the performance and price. � TLC-eMMC and eMMC5.1 is the trend for middle to low end segments.� With >10% price premium of eMMC, UFS still remains in high-end smartphones.

More AP platforms will start to support UFS from 2017.


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2014 2015 2016E 2017F 2018FeMMC 4.5 eMMC 5.0 eMMC 5.1 eMMC 5.X UFS


eMMC for More Applications

eMMC Price per GB

Chromebook and 2-in-1 notebook

1. Chromebook is changing storage media to eMMC. 2015 Chromebook is 7.5mn units, 2016 is estimated at 8-9mn units.

2. eMMC-based notebook popularity increases, market share is 15% in 2016.

Smart TV &STB

1. Smart TV eMMC density is moving to above 4GB. 8-16GB is for high-end models.

2. High-end STB is moving to eMMC from SLC for more content loaded. (Apple TV and MI box are good examples.)

Wearable Device

1. New Apple Watch NAND density is moving up to 16GB/32GB/64GB from 4GB/8GB in previous model.

2. Premium wearable devices are catching up for eMMC usage.

� eMMC is expanding the frontier to consumer electronics and emerging devices.

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1Q14 3Q14 1Q15 3Q15 1Q16 3Q16F

Unit: 1GB M equiv.

$0.53 $0.51

$0.48 $0.45

$0.42 $0.39

$0.36

$0.32

$0.27 $0.25

$0.23

$0.21



2015

Samsung

Toshiba

SK Hynix

SanDisk

Kingston

Micron

Others

2016E

Samsung

Toshiba

SK Hynix

SanDisk

Kingston

Micron

Others

2016 Preliminary Consumer eMMC/eMCP Market Share

~1,300 million units ~1,390 million units

� 2016 eMMC market share remains similar to 2015 level given the stable smartphone and tablet OEMs shares. � Samsung is outperforming, benefited from robust in-house smartphone demand and

over 50% eMCP market share in China.

Notes: Industrial, automotive, etc is not included in this table.



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2011 2012 2013 2014 2015 2016E

Industrial Enterprise Client-Retail Client-OEM

Unit: Million

SSD Market Over View

� Client-OEM and Client-Retail remain biggest shipment portions but enterprise SSD growth outperforms the industry.

� Client SSDs: 15/16nm TLC-SSD and 3D-NAND will accelerate the price erosion in 2016. SSD NB adoption rate hikes.

� Enterprise SSDs: High growth/margin and stable pricing trend, benefited from surging cloud computing demand as well as booming datacenter infrastructure.



2013 2014 2015 2016E 2017F 2018F

HDD $0.08 $0.07 $0.06 $0.06 $0.05 $0.05

SSD $0.68 $0.55 $0.39 $0.26 $0.17 $0.11

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2013 2014 2015 2016E 2017F 2018F

1TB

512GB

256GB

128GB

64GB

32GB

16GB

Client SSD Market: Price Parity is Even Closer

Client-OEM SSD vs. HDD ($/GB)

� The price gap between HDD and SSD is narrowing to x4 times in 2016. 3D-NAND SSD will drive the SSD price down even further in next years. � Most PC-OEMs are moving to 256GB spec, average SSD content is 246GB this year

and more than 300GB in 2017.



Client SSD Technology Trend: 3D NAND with PCIe

� 15/16nm TLC and 3D-NAND SSDs provide strong pricing incentive for PC-OEMs. 2016 together is 56% shares. 3D-NAND TLC is a perfect fit for client SSDs. � Despite of lack support and few options in 2015 and 2016, PCIe portion eyes at 30%

in 2017 with Intel new Kaby-Lake platform in 2H16 and more PCIe SSDs introductions.


0%

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2014 2015 2016E 2017F 2018F

2D NAND-MLC 2D NAND-TLC 3D NAND-TLC 3D NAND-MLC

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2014 2015 2016E 2017F 2018F

SATA III PCIe Gen2 PCIe Gen3 Others


2015

Samsung

Hynix

Intel

Toshiba

SanDisk

Micron

Lite-On

Kingston

Others

2016E

Samsung

Hynix

Intel

Toshiba

SanDisk

Micron

Lite-On

Kingston

Others

2016 Preliminary Client-OEM SSD Market Share

~42 million units ~53 million units

� Samsung is outstanding from aggressive pricing, diversified product portfolio as well as product quality. In 2016, Samsung shares remains since most PC-OEMs intend to raise shares from other suppliers. � Other SSD vendors are accelerating Planar TLC-SSDs and 3D-NAND SSD to shorten

the gap with Samsung.



� Strong Enterprise-SSD catalyst is benefited from surging cloud services and e-commerce demand. Booming hyper-scale and data center infrastructure will help enterprise-SSD segment outperforming other NAND applications in next years.

� Content growth is also strong with more 3D-NAND product lines join after 2017.

Enterprise-SSD market: Strong Catalyst


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2016E 2017F 2018F 2019F 2020F

PCIe SATA SAS

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2016E 2017F 2018F 2019F 2020FSAS SATA PCIe

Unit: Million Unit: GB


Enterprise SSD Technology: 3D NAND with PCIe


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2016E 2017F 2018F 2019F 2020F

2D NAND-MLC 2D NAND-TLC 3D NAND-MLC 3D NAND-TLC

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2016E 2017F 2018F 2019F 2020F

SAS SATA PCIe

� Samsung is leading in 3D-NAND enterprise-SSD, followed by Intel. Other NAND makers will be ready in 2017. 3D-NAND will be cost efficient for high-capacity products.� SATA remains biggest portion while PCIe growth outperforms. SAS demand is stable

for SAS HDD replacement.


China Casting in NAND Industry-1

� Unigroup shows ambition investing in memory related companies ranged from manufacturing IP, backend and Flash controller houses. More potential investment cases are expected.

XMC

SMIC

XMC developed 3D-NAND technology with Spansion, target for MP schedule in early 2018.

SMIC developed self-own 38nm NAND Flash, SLC, already under production and sales

� Central government also encourages local companies developing in-house technology or collaborate with international memory makers.

WD

Uni-group

Manufacturing IP

SNDK

100% Acquired

Other NANDMaker

Packaging & Testing

SPIL

15% Shares 25% Shares

PTIChipmos

Potential memory related films

??

??


� China domestic controller houses are rising to the surface with focus on PCIe products in enterprise and industrial area. Taiwan controller makers also have different approaches to China markets.

� China module houses strategically align with SSD controller houses to enhance the competitiveness.

Phison 合肥兆芯 focus on NAND storage opportunity in China market.

合肥兆芯

Silicon Motion

SMI invested in Shannon , focus on enterprise SSDs

Shannon-Sys

JMicron 聯芸 also focus on SSD business with local opportunities

聯芸(杭州)

China domestic controller houses

Mostly focus on PCIe interface, ASIC capability is needed, so far FPGA is the common form.

LongsysLongsys built SSD turnkeys back-ends facility in Suzhou for more SSD business

Marvell



Samsung Xian Fab 100% dedicated for 3D-NAND, fully loaded from 2Q16Xian Fab

IntelDalien Fab is converting to 3D-NAND from Chipsets, MP from 4Q16

Dalien Fab

MUDRAM/NAND and SSD back-end fab, JV with Micron.

Xi An Back-end Fab PTI


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2015 2016E 2017F 2018F 2019F 2020F

Others China

� International NAND makers also show the great interest to invest memory manufacturing and back-end facility in China with the subsidy from central or local governments. 9% of worldwide NAND wafers will be produced in China this year. Over 20% will be produced in China by 2020.


� 2016 NAND supply big growth is 46%YoY, wafer capacity increases 10%YoY.� Planar NAND supply maybe constraint due to wafer conversion to 3D-NAND.� TLC-eMMC and TLC-SSD continued to gain more shares.

Key Takeaways

Supply

� 2016 NAND demand growth rate is 42%. Smartphone, tablet and SSD play the important role for growth engine.� eMMC market momentum is slowing down due to maturity of smartphone and tablet.� SSD is the strongest application, market shares up to 34% in 2016 from 28% last year.

Demand

� Despite of over-supply dynamics in 1H16, imbalanced supply&demand will be eased from warming mobile and SSD demands in 2H16.� China will plays important role in future NAND/storage industry with more coming

M&A and investments.� 2017 NAND market dynamics could be critical with more 3D-NAND capacity joins.

Market

nand flash market trend - trendforceseminar.trendforce.com/compuforum/2016/us/pptdownload/market...

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