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OCZ announces NAND chip shortages [U]

updated 01:52 pm EDT, Mon September 10, 2012

Industry-wide shortage could be iDevice driven

[Updated with correction] The CEO of OCZ Technology Group, a solid state drive manufacturer, announced last week that the company would not be able to produce enough of its products to meet industry demand. As EE Times reports, the shortage in NAND components -- the chips that allow for smartphones and mobile devices to have high-density, low-power internal memory -- is said to be industry-wide and an outgrowth of the increasing demand for NAND supplies. The company believes that the supply situation will resolve itself, but it is moving to reorganize its production processes to account for supply considerations.

The announcement came in the midst of OCZ's most recent financial results reporting. OCZ experienced a significant shortage in the month of August, and the company was unable to acquire sufficient amounts of the 2X-nm MLC NAND featured in its Vertex and Agility line of products. OCZ is currently developing new process nodes with an eye toward strengthening its production infrastructure.

OCZ has, since last year, narrowed its focus to SSDs and abandoned production of RAM modules, as SSD production yields much higher revenues for the company.

As a result of the NAND shortage, the company warned that its fiscal Q2 revenues would be lower than expected. Shares in the SSD manufacturer dropped $1.07, or nearly 20 percent, to $4.29. As of today, they have recovered somewhat, though the stock still closed down 1.06 percent at $4.68.

As the company's announcement stated, OCZ is not alone in its struggle to meet industry demand for flash-based products. In April, Toshiba announced that it was building a new NAND flash plant in order to cope with demand. Construction on that plant began this summer, but it is not expected to be completed until 2013. Flash component supply is thought to be heavily influenced by Apple's product cycle, as the popularity of that company's iDevices plays a large role in how much is left over for other manufacturers. Apple draws its NAND resources from a number of suppliers, including Samsung, though it has recently been cutting its orders of Samsung's flash products.

Update: A previous version of this article incorrectly characterized OCZ as "a major supplier of NAND flash components." Electronista regrets the error and has corrected this article's contents.

By Electronista Staff
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  1. lgerbarg

    Mac Enthusiast

    Joined: 10-01-00

    You misunderstood the eetimes article. OCZ does not produce flash memory, the make products that use flash memory (SSDs) and flash controllers (Indilinx) as a fabless semiconductor company. What they were saying is that their revenues are going to be below estimates because they cannot BUY enough flash in order to fulfill all the SSD orders they have. They may also be seeing a reduction in orders for their controllers due to the customers who use them also having trouble procuring flash, though that is not mentioned specifically in the linked article.

    edit: Also, at a total valuation of ~$400 million OCZ is nowhere near large enough to even own a modern flash fab, which cost several billion dollars for any recent process nodes.

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