Avian Securities was out with some interesting comments on the NAND market on Friday:
We shifted to a negative view on Micron Technology (MU) and SanDisk (SNDK) two weeks ago. Additional data points we have encountered since our change in opinion have only reinforced our cautious view on the memory space. Specifically, evidence of additional expected NAND wafer starts as well as data suggesting further acceleration in NAND process transitions has caused us to increase our estimates around bit supply growth in 2011.
Additional data we have encountered suggest further acceleration in NAND supply than the street has modeled. Our bit growth assumption are now for 101-120% bit growth while street estimates are for 80% bit growth. Second point, the street anticipates avg. of 40GB of NAND in new tablets while ex Apple we are seeing a MAX of 32GB but our checks indicate only 16GB or less of NAND. Bottom line is much more supply coming online than anticipated and demand side could be too high as well.
Additionally, negative data points around non Apple tablet penetration as well as stabilizing memory content have led us to question whether consumption of NAND will be as robust as we had previously expected. Thus, we believe potential for forward pricing pressure is increasing as the gap between 2011 NAND supply and demand projections grows wider. In light of further deterioration in our outlook, we are reiterating our negative outlook for SNDK and MU.
Conservatively, 250 additional WSPM will be online by Q4 2011.
The transition to 2xnm is accelerating with MU/INTC leading the way in 2010 and 11.
Continued expansion in 2012 will add 200k+ WSPM as Samsung begins to flex Line 16’s muscle.
Android based tablets reduce embedded NAND capacity to compete with iPad’s price.
Smart-phone embedded capacity shrinks as Android outpaces iOS.
INTCs decision to reduce investment with MU potentially opens the door for a new capital infusion partner in IMFS.
Notablecalls: Avian guys are good, very often ahead of the curve. I thought you would enjoy their recent views on the NAND space.
(If you’re dabbling in the NAND/HDD space, you should check them out.)
It’s worth noting, Avian was uber bullish on Acme Packet (APKT) since single digits. What a ride guys.
Disclaimer: I have no affiliation with Avian Securities