Managing NAND shortages

Simms 1Simms explains the driving forces behind NAND flash shortages and offers advice on how to manage.

A report from DRAMeXchange predicted a shortage of NAND flash in the third quarter 2016 would be exacerbated in the fourth quarter due to higher demand in the smartphone and solid-state drive (SSD) industries. The short supply, coupled with strong demand, also will contribute to rising prices of NAND flash wafers and memory cards. DRAMeXchange also expects prices to rise for eMMC, eMCP and SSD products.

Demand from SSD manufacturers continues to increase as SSDs approach price parity with HDDs. DRAMeXchange expects the SSD adoption rate for notebook computers worldwide will exceed 30 percent for the first time, reaching nearly 33 percent, in 2016. Demand is also growing significantly for enterprise-grade SSDs. Demand has been mainly driven by server manufacturers and data centres in the US and China. The NAND flash shortage is predicated to last well into Q1 2017.

Production capabilities are limited for NAND flash and as a result lead times are getting longer. With shortage of supply comes obsolescence issues. With limited production capabilities inevitably NAND manufacturers are forced to concentrate on supply for the most popular and profitable technologies. Over the longer term this can have a devastating effect on critical applications as new replacements need to be sought when less popular technologies are no longer supported.

To overcome potential obsolescence issues, Simms suggests users: investigate and understand their short and medium term demand for NAND based products (0 to 12-months); highlight cost sensitive requirements and remove the volatility aspect by forward ordering; take stock provisions or work with a supplier who can manage this on their behalf; ensure JIT and call-off facilities are in place with suppliers.

The NAND flash market is experiencing its biggest technology transition (to 3D NAND) in an effort to continue cost reductions, increase performance and satisfy demand.

Today’s NAND is mainly 2D so production levels have been significantly reduced as 3D NAND development takes priority. This has led to periods of under supply and created shortages which are unprecedented. The release of mobile phone technologies for the Tier 1 manufacturers has also added to over demand. As Tier 1 customers, these manufacturers are allocated vast amounts of 2D NAND wafer which restricts availability for other partners.

Driving forces
NAND flash is created in wafer form and sliced to produce individual chips. However, not all NAND is created equally and characteristics vary across the wafer. Raw NAND is cut from wafers to provide die. Due to the production process, each die is different, with slightly different properties. On a wafer there are known positions for die of differing specifications and tolerances.

Die in locations with specifications in the middle of the tolerance range can be used in industrial applications, as they have the best endurance, wide temperature suitability and power efficiency. Others may be better suited to consumer applications, where tolerances and endurance are less critical. After sorting, die outside published specifications are sold for non-critical and low cost applications.

The test process is either performed by the manufacturer or another company which performs its own sorting by testing prior to packaging. In this case the wafer vendor will normally provide a map of the expected
best die.

In summary as all types of NAND come from the same wafers, a shortage of NAND wafer impacts all markets.