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Researcher Cuts Revenue Growth From NAND Flash

Analysts with iSuppli also predict Apple will not be spending a record amount this year on flash memory for use in its iPods, iPhones, and MacBook Air laptops.

Market researcher iSuppli on Monday slashed by two-thirds its 2008 forecast for revenue growth in the global NAND-type flash memory market.

ISuppli lowered its prediction to $15.2 billion, or 9% higher than 2007 revenues of $13.9 billion. The researcher had expected revenues to increase by 27% to $17.9 billion.

"The major factor behind the diminished outlook is weakening consumer spending," iSuppli analyst Nam Hyung Kim said in a statement.

NAND flash is used heavily in MP3 players, USB flash drives, and digital still cameras, which are driven by retail sales to consumers, iSuppli said. Spending growth in these items is expected to slow this year due to the U.S. sub-prime mortgage crisis and its impact on consumers and economies worldwide.

Signs pointing to a slowdown include press reports from Asia indicating that Apple has yet to make the large-scale orders to NAND suppliers in 2008, as it did in 2007. Also, Intel, a supplier of NAND flash to Apple, has issued a financial warning that cited weakening prices for the memory. Finally, Hynix, the third-largest supplier of NAND, said it was reducing its output due to weak market conditions.

ISuppli lowered its forecast for Apple spending on flash memory to $1.4 billion, a 12% increase from 2007. The researcher had predicted a more than 32% increase in spending to $1.6 billion. Apple uses flash memory in iPods and iPhones, as well as in solid-state drives that are an option in the recently released MacBook Air notebook.

Apple is not the only flash memory buyer expected to spend less than previously forecast. SanDisk, the world's largest buyer last year, is now expected to spend $2.2 billion, up 8.4% from 2007. ISuppli had predicted SanDisk would spend 33% more on flash memory than in 2007.

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