© Swissbit Analysis | March 16, 2020
TrendForce: COVID-19 risks to distress memory industry
The DRAMeXchange research division of TrendForce says that the memory market may take a turn for the worse and go into a slump earlier than expected.
Despite the apparent slowdown of the COVID-19 outbreak in China, the virus is now rapidly multiplying across the Middle East, Europe, and the United States. Earlier, the World Health Organization declared the COVID-19 outbreak a pandemic, which poses dire, system-wide risks for the global economy. Similarly, the memory market may take a turn for the worse and go into a slump earlier than expected, says TrendFroce. Regarding market demand, the pandemic’s rapid proliferation will severely impede economic and social activities and subsequently hinder consumer purchasing power. On the other hand, lowered electronic product shipments will bring about a corresponding drop in memory demand. DRAM and NAND Flash ASPs are able to maintain their growths in 1Q20 and 2Q20 primarily because of relatively low client inventory levels. Provided that the current ASP uptrend continues, clients may have a strong incentive to raise their stock of memory products. Nevertheless, TrendForce believes the true challenge facing the memory industry will surface in 3Q20, when sluggish consumer demand will encumber device manufacturers’ inventory reduction efforts, massively weakening client-side memory procurement and resulting in limited ASP growth. Worse yet, rising NAND Flash prices may make a turnaround into a decline instead. As the global economy cools down, and consumer confidence dips, demand for electronic devices will continue to decrease As the global economy cools down due to the pandemic, there are two implications facing the consumer electronics industry:
For more information visit TrendForce.
- The general public begins allocating relatively conservative amounts of its income to personal spending, in turn deferring the demand for consumer electronics and diminishing the average spending in the market.
- The pandemic results in higher logistics and human resource costs within the consumer electronics supply chain while lowering revenues, potentially triggering an industry-wide reorganization and reshuffle.
For more information visit TrendForce.
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