Electronics Production | August 20, 2012
TrendForce: NAND contract prices are stabalizing
According to DRAMeXchange, a research division of TrendForce, NAND contract prices are continuing to stabilize, with average contract prices remaining either flat or showing small signs of increase.
As buyers and sellers remain divided over the future pricing trend, vendors of memory cards and universal flash drives (UFD) display a conservative attitude towards market prospects. This, as a result, is encouraging NAND Flash manufacturers to commence with their strategy of restraining supply. With regard to NAND Flash pricing and market outlook, the supply side shows that major NAND Flash manufacturers like Samsung and Toshiba are continuing to impose tighter supply strategies towards memory card and UFD vendors. Looking at various NAND Flash vendors' 2Q12 financial reports, it is revealed that both the revenue and profit margin figures are tighter than those exhibited in the previous quarter. As such, NAND Flash vendors have adopted stricter price standards to prevent profits from slipping, whereas for the less profitable memory card and UFD markets, tighter production control is being imposed in order to amend the supply-demand imbalance. From the buyer's perspective, given that memory card and UFD product performance has yet to peak in 3Q12, and taking into account the conservative outlook for 4Q12, stock levels have been regulated more cautiously, which in turn weakened the incentive to purchase further inventory. Trendforce believes that buyers and sellers will have split views on price movements, and are hence less likely to come to a consensus regarding price. Apart from Toshiba, which recently undertook a 30% production cut, other manufacturers have yet to announce their production plans. However, as product shipments have fallen below expectations, the annual shipment growth rate has been adjusted downwards to 60-65%. This, in a sense, shows how NAND Flash vendors remain reserved about demand prospects for next year's peak season. From the demand side, although Windows 8 is confirmed for an October release, under the influence of the weakening economy, along with the crowding-out effect brought by the release of numerous tablet PCs and smartphones, the PC market will not adhere to traditional seasonality patterns. The fact that ultrabook shipment numbers have fallen below expectation is also contributing to the PC industry’s negative annual growth rate. In the smartphone market, manufacturers are also faced with the prospect of making downward shipping adjustments. With the exception of Samsung and Apple, both of which have stable market shares, many brands must significantly lower their shipment quantities. Aside from the weakening performance of memory cards and UFDs, the lower than expected shipments of system products are also driving NAND Flash vendors to impose extra measures to combat plummeting prices. On the whole, it seems that demand is likely to remain conservative in 2H12. However, TrendForce believes that with NAND Flash vendors continuing with their supply control strategies, and with the release of new products in 3Q12 expected to stimulate inventory replenishment, NAND Flash contract prices will likely remain stable in the short term. Given low visibility of end product orders, 4Q12 price movements will depend on the state of future demand.
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