© beisea dreamstime.com Components | November 21, 2012
1HNov. NAND Flash MLC contract prices decline by 1-5%
Although NAND Flash makers are continuing the strategy of tightening supply, with the passing of the peak replenishment demand period related to system products for Thanksgiving and Christmas, NAND Flash contract prices have dipped by approximately 1-5% for the first time in two months.
As the UFD and memory card markets remain sluggish, TLC contract prices also took a hit, declining by approximately 4-5%. As DRAMeXchange believes, the noticeably softening demand following November is a major reason for the NAND Flash’s apparent pricing downtrend. Analyzing from both the supply and demand perspectives, the state of the current NAND Flash market is likely to be influenced by the following factors: 1. Supply side: Given that the market will likely become sluggish from 4Q12 to the first half of 2013, and assuming decreased demand visibility for 2013, NAND Flash manufacturers are expected to temporarily put a halt to their capacity expansion plans. With Toshiba announcing to extend the 30% production cut initiatives to 2Q13, whether production capacities are able to return to full levels will depend on the demand status within the market. Total production volumes for 2013, as such, will be mainly affected by the progress associated with the manufacturing process migrations. At present, many manufacturers have been actively switching from system products manufactured with the 25nm process to those produced using the 20nm process. However, with production yield problems preventing the manufacturing procedures from being efficiently utilized, and with issues arising from the application of the 16nm process, system product releases have been subject to several delays. With the abovementioned issues taken into account, DRAMeXchange has trimmed the total production growth for next year from the originally anticipated 45% to approximately 41%. Production growth for 1H13, similarly, is expected to be less than expected. 2. Demand side: Factors such as the momentum sparked by major branded system products during 4Q12, the ongoing replenishment trend from September to the end of October, and the market demand for various low priced smartphone and tablet PC products have all been helpful to NAND Flash contract price in terms of sustaining its uptrend. However, following 1HNov, which marked the passing of the peak replenishment demand period within the European and US markets, overall market momentum has gradually begun to diminish. System product makers are showing reservations towards the prospects for the 1Q13 global market as well as the ability of the Chinese New Year holiday to stimulate demand, whereas the performance of notebooks, smartphones, and tablet PCs are all expected to show a sluggish performance in 1Q13 compared to 4Q12. We believe these factors will lead to weakened NAND Flash demand from December to 1Q13, which may in turn restrict the upward NAND Flash price momentum and cause prices to plummet. With the supply and demand perspectives in mind, given how NAND Flash prices are expected to weaken following the peak replenishment period, even if manufacturers continue to stick to the supply control strategies, the conservative attitude within the NAND Flash market will be difficult to change. As such, from the second half of November to December, TrendForce projects that mainstream NAND Flash contract prices will go on a gradual downtrend, and that the prospects for 1Q13 should be viewed with caution.
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