NAND flash chipmakers are gearing up for transition to a newer 16nm process in 2013, according to industry sources. Nonetheless, the schedule for mass production on the node will likely be pushed back due to yield challenges, the sources indicated.

Compared to their previous transition to 19/20nm processes, mass production yields on 16nm will be more difficult to achieve, the sources said. NAND flash chipmakers are expected to go through a period of time to improve the process yields to a satisfactory level, the sources believe.

The anticipated supply constraint for 16nm-made chips, however, will help the NAND flash industry return to a healthier supply-demand dynamic, the sources noted. Accordingly, chip prices will become more stable allowing downstream module companies to focus on developing new products and applications, the sources said.

NAND flash prices had been dragged down significantly in the first half of 2012, due to sluggish end-market demand, as well as poor quality chips pumped into the market, the sources pointed out. Prices stopped falling and became stable starting the second half, thanks to major suppliers' output cutback, the sources observed.

Toshiba has scaled back its NAND flash production by 30%, while other major chip firms select customers and orders to control supply and stabilize prices, the sources said.

In addition, global supply for NAND flash memory will grow at a slower pace in 2013, the sources commented. The bit growth for 2013 is estimated at as low as 40% compared to the larger increases usually seen in previous years, the sources said.