© grzegorz kula dreamstime.com Analysis | June 30, 2014
1H’June NAND Flash Contract Prices Grow by 2-4%
The 1H'June NAND Flash contract prices showed a slight 2-4% increase, according to DRAMeXchange, the memory and storage research division of TrendForce.
Factors propelling the price growth include smartphone manufacturers’ increased restocking momentum as well as the reduced short term supplies resulting from the NAND Flash suppliers’ accelerated technological migrations. Looking at the third quarter, DRAMeXchange believes that the upward contract price momentum will continue as the rising demands for new Apple products, Chinese smartphones, and SSDs begin to limit the amount of NAND Flash supplies available to the channel clients. Other than Samsung’s Xian Plant, which boosted its capacity slightly in the second half of the year, the other NAND Flash manufacturers appear to have no plans to expand their production; SK Hynix’s total capacity for 2H 2014, for example, is expected to remain unchanged following the Wuxi plant’s complete recovery from last year's fire; Micron will not be looking to expand its capacity either at the moment, since the company's Singapore Fab 7 recently completed its transition from DRAM to NAND Flash in 2Q 2014; Toshiba's Fab 5 facility, whose new equipment for the second phase construction are not expected to be deployed until 4Q 2014, will likely only begin small-scale test productions during 2015. Even with a good majority of the industry’s production growth likely to come from the 1znm migrations in 2H 2014, DRAMeXchange's Assistant Vice President, Sean Yang, believes that a period oftime will still be needed to improve the 1znm process’s production yield rate and efficiency. Considering that the bit growth rate for the entire third and fourth quarters are only expected to be 10% QoQ and 9% QoQ, respectively, the 2014 output growth rate has been lowered to approximately 36%. From the perspective of the supply chain, Apple’s upcoming new iPhone announcement, expected to take place in the early third quarter, has already begun to stimulate NAND Flash restocking momentum in June. Moreover, the NAND Flash demand momentum will likely be strengthened even further by the release of Apple’s newest Macbook and iPad devices in late 3Q. Judging by the way market anticipation for the larger iPhone model, is expected to stimulate future consumer interest and Apple's existing momentum in the industry, Yang predicts that the shipments for iPhones will grow by as much as 40% in 2H 2014 compared to 1H 2014. The 2H 2014 Chinese smartphone shipments, on the other hand, are anticipated to improve by 16% from the first half of the year due to the Chinese government's efforts to push for higher 4G/LTE standards in the Chinese smartphone market and the growing popularity of Qualcomm and Mediatek's 4G/LTE products. For the entire 2014, DRAMeXchange projects that the Chinese smartphone shipments will rise by 52.5% YoY to 446 million units and believes that the shipment momentum will help boost the quarterly demand for NAND Flash components such as eMCP.