Multifunction USB Flash Drives

Mainland China, Taiwan and South Korea ship over 95% of the world's multifunction USB flash drives. Production is set to climb by over 30% this year as demand grows.
With this 142-page report, you'll learn how to make the right choices in this huge supply market and begin to narrow down the long list of USB flash drive suppliers.

You'll also see how manufacturers plan to gain a competitive advantage by launching new models with more value-added features and higher storage capacities.

Benefit from profiles of 58 major suppliers, plus forecasts and a comprehensive industry overview to help you source more efficiently and profitably in the years ahead.

What you'll get

In-depth profiles of 27 key suppliers that provide a close look at production capacities, export markets, quality standards, product development initiatives and price forecasts. Based on personal factory visits and interviews with senior managers, this information is available nowhere else

Brief profile tables of 31 additional producers, with key information such as manufacturing capabilities, R&D plans and facts on technology partners

A product gallery of 223 of the most popular export USB flash drives with key specifications and full-color pictures

An impartial overview of the companies that serve leading brands such as Carrefour, Dell, HP, Imation, LG, Samsung, Verbatim

This report covers: standalone flash drives, pen drives, flash drives with MP3 player, watch drives and flash drives with other features

How you'll benefit

Learn about the different manufacturing hubs in mainland China, Taiwan and South Korea and determine which offers the best sourcing opportunities for you

Discover how fluctuating flash memory prices will impact the FOB prices of your orders for the next 12 months

Be among the first to know which makers are rolling out models with larger storage capacities, higher transmission speeds, integrated data security, improved software integration and add-on functions

Benefit from quick-to-use summary listings covering all featured suppliers, with easy-to-compare statistics, as well as verified contact details

Executive summary

After several years of rapid growth, the market for USB flash drives has stabilized over the last 12 months. Growth, however, will be sustained through 2008 as such devices continue their proliferation across multiple applications.
According to research firm Gartner Dataquest, the global market revenue of the USB flash drive industry is expected to reach US$2.9 billion by 2008, a 51 percent increase over US$1.4 billion in 2004. In terms of production volume, manufacturers are expected to deliver 67.2 million units in 2005. By 2008, global production will total 98.2 million units, or a 54 percent increase.

There are six trends to look out for in product development: larger storage capacity, higher transmission speed, fancy external designs, increased data security, software integration and add-on functions. Buyers can thus expect multifunction USB flash drives to be equipped with a host of innovative features such as VoIP and WLAN capabilities.

Based on a survey of 35 mainland China makers, 19 Taiwan makers and four South Korea makers, Global Sources presents the following findings:

Production centers
In mainland China, there are about 100 makers of multifunction USB flash drives, and 80 percent of those surveyed by Global Sources are based in Shenzhen. The number of makers has decreased significantly, in part due to the thinning profit margin of USB flash drives.

The main production centers for the 150 Taiwan makers of multifunction USB flash drives (including those with MP3 player functionality) are Taipei and Hsinchu. A few Taiwan makers also have factories in Shenzhen in mainland China.

All four profiled South Korea makers have factories located in their own country.

Production capability
The surveyed suppliers are projected to produce a total of 64.8 million standalone and multifunction USB flash drives in 2005. This represents only 28 percent of their overall production capacity.

Most of the profiled mainland China makers are planning to increase their production capacity in the next six to 12 months, even though six out of every 10 suppliers' factories are running at less than half of capacity.

In Taiwan, the surveyed makers are projected to produce 27.39 million USB flash drives in 2005, out of an annual capacity of 63 million units.

The four profiled South Korea suppliers have a combined annual production capacity of 34.8 million units. They are expected to produce 3.4 million units in 2005.

The majority of surveyed suppliers carry out R&D, final assembly and packaging in-house. Many makers subcontract SMT, while mold making is generally outsourced.

Export capability
Thirteen of the 58 profiled suppliers derived their entire 2004 sales from exports. About 39 percent of the makers generated more than 75 percent of their revenue from exports in 2004. This ratio is likely to increase to 65 percent in 2005.

Eastern Europe, Western Europe, North America and Asia are cited as makers' major export markets.

Industry overview

The global market for multifunction USB flash drives in 2004 witnessed continued expansion into several market segments, including full-speed, high-speed, On-The-Go and wireless USB. The latest products often integrate a wide range of multimedia features, such as card reader, USB hub, voice recording, digital imaging and security.
A few important factors will influence the USB flash drive industry in terms of product development and price trend. For instance, the introduction of lead-free manufacturing and the addition of new production lines may lead to higher costs. However, adding production lines is crucial to increase capacity and competitiveness of makers.

Most of the interviewed makers in this report have plans to increase their production capacity within the next six to 12 months, although their actual output of multifunction USB flash drives may remain at the same level. This is because USB flash drives and flash MP3 players often share the same production lines and equipment. Hence, makers may utilize the increased capacity for the production of flash MP3 players instead.

The oversupply and falling costs of NAND flash memory are expected to drive further growth of the multifunction USB flash drive market. According to Marty Kung, a researcher at Taiwan's Market Intelligence Center (MIC), the smaller price difference between hard disk drives (HDDs) and flash memory and the higher stability of flash memory are two major factors that will boost demand of flash memory ICs and flash-based storage devices. Makers are also taking advantage of the low component costs to divert their investments to R&D projects focusing on external designs, faster transfer speed and higher storage capacities. Cynthia Wang, a researcher at Topology Research Institute (TRI), said that with the introduction of higher storage capacities to the market, video function will gradually be incorporated into multifunction USB flash drives that have larger displays.

Mainland China
Currently, there are about 100 makers of multifunction USB flash drives in mainland China. Most of them are located in the cities of Dongguan, Guangzhou, Shenzhen and Zhuhai in Guangdong province, Suzhou in Jiangsu province, as well as Beijing and Shanghai.

Samples of supplier profile

A-Data Technology Co. Ltd
A-Data Technology Co. Ltd, a privately owned supplier in Taiwan, was established in 2001. It started producing USB flash-based products in 2003. USB flash drive is one of its main products. In 2005, average monthly output is expected to reach 1.5 million units.

Seventy-nine percent of total sales of USB flash drives are generated by the company's own brand business. OEM sales account for about 16 percent and off-brand business accounts for 5 percent of sales.

Overall exports in 2004 reached $609 million, with USB flash drives raking in US$46 million.

A-Data's main markets are in North America, Europe and Asia, which account for 23.5 percent, 26 percent and 20 percent of shipments, respectively.

The company attends major international trade shows such as CeBIT, Computex and CES.

Manufacturing capability
A-Data has two ISO 9001:2000- and ISO 14000-certified factories. The 10,209-square-meter main factory in Northern Taiwan produces USB flash drives and memory cards. It has 12 SMT lines and four assembly lines. The other factory is located in Suzhou, Jiangsu province in mainland China. Both factories adopt lead-free manufacturing.

Aside from mold and PCB making, A-Data conducts most manufacturing processes in-house including R&D design, SMT, assembly, quality control and packaging. Its Taiwan factory has one warehouse for components and soldering materials. Its front-end SMT manufacturing process is automated.

There are auto vacuum loaders that send PCBs for surface mounting. Auto print machines apply solder onto the board, and auto mounting machines integrate small components, such as BGA chips, onto the boards. Red light sensors detect whether sizes of the components are right and have been put in the right places.

The boards are then sent to the next auto mounting machines for large component mounting. Manual inspection is conducted on each SMT line. Following the mounting procedure, one worker equipped with a computer performs manual inspection. Afterwards, the boards are sent to reflow machines, where hightemperature solder is applied on components.

The back-end production is semiautomated. After SMT and manual inspection, the boards are sent to the subassembly line. A-Data has one manual soldering line to fix pin and signal components on four-layered PCBs.

Prior to packaging, workers carry out QC testing.

The QC staff checks controller ICs by testing the firmware. Other workers carry out functionality tests, including reading, writing, deleting and formatting, using computers. After testing, ultrasonic plastic welding machines are used to weld the covers of products. Finished products are then sent for packaging.

A-Data employs 30 QC workers. It applies strict QC procedures from IQC to OQC. Total inspection is done at the end of SMT and function tests before packaging.

Products and prices
A-Data invests about 0.12 percent of sales revenue on R&D. It has 12 R&D engineers. Three engineers are involved in industrial and mechanical design.

Sample of product gallery

Standalone USB flash drives A-Data Model: Smart BCD USB Flash Drive Dimensions (mm): 76x24.5x12 Packaging options: Blister pack Delivery time (days): 7 to 10 Release date: August 2005 Other key features: 128MB to 2GB capacities; LCD for personal ID display and capacity status; blue LED; patented firmware

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