NAND Flash chip contract prrice drops 4-30% cumulatively

June and July are the traditional down season for the memory card and UFD retail market and OEM clients of system products. With the addition of the end-of-quarter effect at the close of 2Q, downstream clients’ main priority was clearing their excess on-hand inventory, and they were not eager to restock. Therefore, NAND Flash chip price has cumulatively decreased about 4-30% in the past two months. However, looking at it semi-monthly, the average decline each period for the past two months still fell within the reasonable range for the down season. While both parties are still not completely seeing eye-to-eye, they have settled on the negotiated compromise. As for the future of the NAND Flash market, industry concerns about uncertainties in global circumstances may weaken expected demand recovery in the peak season of 2H11. However, recently the financial standstills taking place in European and American regions are finally seeing the light at the end of the tunnel. Europe and the United States have been plagued by a chronic financial disease ever since the global financial tsunami, the lingering ripples of which are still being felt today. While the parties disagree on the proper prescription to cure the suffering of the populace whose livelihoods have been endangered, they have fortunately found different means to achieving the same end after mediation and negotiations between major political figures has tidied up the political scene. All parties should be happy to see the financial impasses thaw, as global economies set foot on the road to recovery in 2H11. Therefore, TrendForce predicts that the traditional peak season in 2H11 will see NAND Flash restocking increase as clients’ inventory levels decrease and certain system product OEM clients begin to make their move in late August. At that time, contract price will likely cease falling and stabilize. The 3Q11 restock peak season effect will likely be delayed until September. However, new NAND Flash end application products set to hit the market in 4Q11 will hopefully be the main driving force behind increasing year-end holiday sales. The new product launch effect should make up for relatively weak demand from the memory card and UFD retail market, as well as partly absorb increasing bit output from NAND Flash suppliers due to new 2xnm process technology products and new capacity expansion in 4Q11. Currently, since most downstream clients are unclear about future market demand, the uptrend momentum of NAND Flash price will still depend on actual market conditions in 4Q11.