DigiTimes estimated this week that flash memory chips for smartphones will remain in high demand throughout 2017 because supply shortages are reportedly “worse than expected” as chip makers are currently transitioning from older 2D NAND to newer 3D NAND technology.

According to a report Friday in The Korea Herald newspaper, citing Mirae Asset Daewoo Securities analysts, Toshiba may spin off of its lucrative NAND flash unit and sell the stake to Western Digital, narrowing the technology and market share gap with its bigger rival Samsung Electronics.

“If the spin-off is confirmed, the financial condition of Toshiba’s chip unit will be improved,” said Do Hyun-woo, an analyst at Mirae Asset Daewoo Securities.

“This will allow the firm to secure more capacity in development and thus narrow the technology gap with Samsung.”

Toshiba apparently lost the leadership in 3D NAND technology that rival makers are currently transitioning to. The firm is currently churning out 48-layer 3D NAND chips using U-shaped structure and Bit-Cost Scalable technology. Volume production of 64-layer 3D NAND chips from Toshiba is expected in the first half of this year.

Should the company merge with Western Digital, their combined shares should exceed that of Samsung, which currently dominates the 3D NAND flash market and is the top player in the global NAND flash market with a 36.6 percent share.

Toshiba and Western Digital have a DRAMeXchange-estimated 19.8 percent and 17.1 percent share each. Western Digital, Micron Technology and SK Hynix round out the list of the top five global NAND flash chip providers.

Apart from Western Digital, other companies like SK Hynix may also show an interest in investment, Do predicted. Repair site iFixit has found Toshiba-made NAND flash components in both iPhone 7 and iPhone 7 Plus.

The two smartphones also use NAND flash from longtime Apple supplier SK Hynix. Flash memory in 128-gigabyte versions of the phones is a 16-die stack of 128-Gb parts with EMI shielding, fabricated in 15-nanometer process technology.

iPhone 7 teardown image courtesy iFixit.

Source: The Korea Herald