Components | September 02, 2011
2HAug. NAND Flash contract price with stabilizing signs
Demand from certain system product clients is expected to gradually pick up in September, due to inventory replenishment in response to the unveiling of new products. Thus, most NAND flash contract price for 2HAug. has stayed flat.
However, memory card and UFD retail market demand remained weak, and 128Gb TLC contract ASP fell by 5%. Furthermore, as some suppliers have shifted a portion of production from 32Gb to 64Gb MLC, 32Gb MLC contract ASP increased by a slight 3% due to the decrease in supply. TrendForce indicates that NAND flash market demand from some tablet PC and smart phone system clients’ OEM orders will be relatively strong in 4Q11. Thus, suppliers are making efforts to increase embedded product and SSD shipments to partially make up for the memory card and UFD retail market’s relatively weak demand. Furthermore, major NAND flash suppliers are sticking with their original capex and bit output growth figures for 2011. Beginning in 3Q11, 2xnm node technology will gradually replace 32nm node technology as the mainstream process, and many suppliers will begin production on 2ynm products in 4Q11. While a significant increase in bit supply and weaker-than-expected peak season effects have resulted in market oversupply in 2H11, price already fell significantly during this year’s weak season. Thus, in 4Q11 both system products’ built-in NAND flash storage capacity as well as NAND Flash content of memory cards and UFDs should be further boosted, in turn increasing bit consumption and helping to partially ease market oversupply. If the recovery of the global economy and NAND flash end-application demand are weaker than expected in 1H12, resulting in severe price decreases, most NAND flash suppliers will adopt contingent alternatives to commence production cuts. For instance, adjusting utilization downward or transferring a portion of capacity to non-memory IC products, etc., in order to decrease market supply and ease the oversupply situation. Recently, major countries have discussed collaborative solutions to improve short and mid-term issues such as slower economic growth, financial deficits, and higher unemployment rates, with alternatives for flexible mix of monetary or fiscal policies and measures, and the restructure plan of industrial development policy. In light of these efforts, it is generally believed that the global economy will gradually be back on the road to recovery after 3Q11. Furthermore, the recent release of the ultrabook platform will bring new opportunities for the NAND flash market. In consideration of BOM cost and performance to price ratio, related manufacturers will begin introducing NAND flash cache (over 20GB) plus HDD combination ultrabooks beginning in 4Q11. In 2H12, as 2ynm process technology matures, the market should see ultrabooks with hybrid HDD or pure SSD (over 128GB). Additionally, new smart phone and tablet PC products based on Android or Windows OS will be continually introduced starting in 4Q11, providing healthy competition for iOS-based portable devices. The new diversity of NAND flash products will hopefully bring a breath of fresh air to market demand in 1H12 and partly ease 1H weak season effects. As for the short-term NAND flash price trend, 3Q11 inventory replenishment is weak compared to previous years. However, as downstream clients’ inventory levels decrease, replenishment should begin sometime in September and October in preparation for the Thanksgiving and Christmas peak sales season. NAND flash price will hopefully stabilize from the year-end demand inventory replenishment. However, TrendForce states that current order visibility is not high for 4Q11, and the follow-up upward momentum of NAND flash price will still depend on actual market demand conditions during the year-end holiday sales season.
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