WDC recently stated that certain materials were contaminated in late January at NAND Flash production lines in Yokkaichi and Kitakami, Japan which are joint ventures with Kioxia, according to TrendForce’s investigations. Before this incident, TrendForce had forecast that the NAND Flash market will see a slight oversupply the entire year and average price from Q1 to Q2 will face downward pressure. However, the impact of WDC’s material contamination issue is significant and Samsung’s experience during the previous lockdown of Xi’an due to the pandemic has also retarded the magnitude of the NAND Flash price slump.  Therefore, the Q1 price drop will diminish to 5~10%. In addition, according to TrendForce, the combined WDC/Kioxia NAND Flash market share in the 3Q21 was as high as 32.5%. The consequences of this latest incident may push the price of NAND Flash in Q2 to spike 5~10%.

The contaminated products in this incident are concentrated in 3D NAND (BICS) with an initial estimate of 6.5exabytes (approximately 6,500M GB) affected. According to TrendForce, damaged bits account for 13% of the group’s output in 1Q22 and approximately 3% of the total output for the year. The normal production schedule for the entire line has yet to be confirmed. It is worth noting that the damages announced by WDC likely do not account for total losses stemming for this event and the number of damaged Kioxia parts has not been aggregated, so the total number of affected bits may increase further.

Production primarily focused on Client SSD and eMMC, subsequent spot pricing may climb

Currently, WDC and Kioxia are focused on supplying PC client SSD and eMMC products. Since WDC is the number two and number one supplier in the client SSD and eMMC markets, respectively, subsequent supply will inevitably be hampered. Therefore, even if production demand for PC OEM is revised downward in Q2, client SSD prices may remain resistant to decline. In terms of enterprise SSD, Kioxia PCIe 4.0 has been verified by a number of customers and the company’s market share in 2022 was originally forecast to increase. However, this incident will impact Kioxia’s ability to ship product and further affect subsequent customer procurement. Therefore, in order for buyers to satisfy their own production requirements, a Q2 decline in enterprise SSD product pricing will be largely restrained.

In addition, as buyers and sellers in the spot market are still clarifying events and incident assessments, they mostly responded by suspending quotations, with no new quotations having been generated. However, TrendForce’s assessment indicates that subsequent events will obviously stimulate spot price appreciation. Judging from contract pricing, any orders negotiated on a whole quarter basis should be unaffected in the near-term but there may be an immediate price increase in wafer quotations this February and March.

For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms. Latte Chung from the Sales Department at lattechung@trendforce.com

Demand for NAND Flash products will undergo a noticeable and cyclical downward correction in 1Q22 as major smartphone brands wind down their procurement activities for the peak season and ODMs prepare for the New Year holidays, according to TrendForce’s latest investigations. As such, the NAND Flash market will remain in an oversupply situation, with prices continuing to undergo downward corrections accordingly. However, PC OEMs have been reinstating certain orders for client SSDs since early November in response to improvements in the supply of upstream semiconductor materials. By fulfilling these orders, suppliers are able to keep their inventory level relatively low, meaning they are not under as much pressure as previously expected to reduce inventory by lowering prices. Taking these factors into account, TrendForce expects NAND Flash ASP to undergo a 10-15% QoQ decline in 1Q22, during which NAND Flash prices will experience the most noticeable declines compared to the other quarters in 2022.

Regarding the price trend of NAND Flash products across the whole 2021, TrendForce further indicates that suppliers have actively transitioned their output to higher-layer technologies, resulting in a bit supply growth that noticeably outpaces demand, though the tight supply of components such as controller ICs and PMICs has constrained the production of NAND Flash end-products. Hence, the decline in contract prices of NAND Flash products has not been as severe as previously expected. Moving ahead to 2022, however, the supply of relevant components is expected to gradually improve, so the market for various NAND Flash products will also likely shift towards a noticeable oversupply. As a result, prices of NAND Flash products will steadily decline before the arrival of the peak season in 3Q22.

Client SSD prices will maintain a downward trajectory in 1Q22, by about 5-10% QoQ

While PC OEMs aggressively push out shipments in 4Q21, demand also remains strong for commercial notebooks, in turn propelling the overall volume of notebook production for 4Q21 to 3Q21 levels, surpassing prior expectations. Moving into 1Q22, however, notebook demand from the consumer segment and education segment is expected to moderate, and client SSD buyers’ procurement activities for the quarter will therefore become more conservative. Suppliers, on the other hand, continue to shift the bulk of their client SSD output to 128L and higher layer products as they release the next generation of client SSDs to both capture market share and increase the consumption of these higher-layer products. The average storage capacity of client SSDs will expand to 567GB next year, with WD releasing QLC products alongside existing QLC manufacturers Intel and Micron, in turn intensifying suppliers’ pricing competition. TrendForce therefore expects contract prices of client SSDs to maintain their existing downward trajectory and undergo a 5-10% QoQ decline in 1Q22.

Prices will decrease by about 3-8% QoQ for PCIe enterprise SSDs but hold flat for SATA enterprise SSDs

North American hyperscalers saw their inventory levels rising throughout the fourth quarter as their production capacities for servers were negatively affected by component gaps. In addition, some of these issues are expected to persist in 1Q22, so server shipment for the 4Q21-1Q22 period will experience continued declines, thus putting downward pressure on the growth of enterprise SSD bit demand. As for the supply side, not only has the issue of insufficient PMIC production capacity become gradually alleviated, but hyperscalers have also cut down on their enterprise SSD orders somewhat due to their focus on inventory reduction. Hence, the production capacities for enterprise SSDs with PCIe interface have slowly returned to normal, and room for price negotiations with suppliers is also beginning to surface. Regarding enterprise SSDs with SATA interface, their supply has become relatively tight because manufacturers prioritize the production of high-density PCIe SSDs over SATA SSDs, which feature an older interface and lower density. As such, contract prices of SATA SSDs are unlikely to drop. For 1Q22, TrendForce forecasts an overall 3-8% QoQ decline in enterprise SSD prices, with contract prices of SATA enterprise SSDs mostly holding flat and prices of PCIe products declining by 3-8% QoQ.

eMMC prices will decrease by 5-10% QoQ

TVs, Chromebooks, and other categories of consumer products that carry eMMC solutions have been experiencing sluggish demand in the second half of this year as related subsidies and tenders in the US wind down. The seasonal fluctuations of the demand for consumer products will return to the pre-pandemic pattern next year. Chromebook production is forecasted to show a small rebound in 1Q22 and climb to the year’s peak in 2Q22 in accordance with the traditional seasonal pattern. Even so, the annual total Chromebook production for 2022 will still register a significant decline from the previous year. Turning to TV production, a QoQ decline is projected for 1Q22. Taking account of these demand-related projections, TrendForce expects the demand for eMMC solutions to be fairly weak in 1Q22. The overall production capacity for low-density 2D NAND Flash products has remained relatively constant. Some suppliers continue to scale back 2D NAND Flash production capacity, but they have slowed down the pace of reduction. Regarding the price trend of eMMC solutions, it is now adjusting downward to a stable level after the surge in 2Q21. TrendForce forecasts that contract prices of eMMC solutions will drop again by 5-10% QoQ for 1Q22.

UFS prices will decrease by 8-13% QoQ due to rising supply and falling demand

Component gaps in the upstream sections of the supply chain are still a serious issue affecting smartphone brands’ device production. Despite the contribution from the traditional peak shipment season in the second half of the year, the YoY growth rate of the total smartphone production in 2021 is expected to once again fall short of earlier projections. Looking ahead to 1Q22, Apple is expected to scale back its smartphone-related demand due to seasonality. This, in turn, will negatively affect NAND Flash suppliers’ bit shipments and further weaken mobile storage demand as a whole. The latest examination of product shipments from NAND Flash suppliers indicates that 1XX-L technologies are now mainstream, and 1YY-L technologies will gradually be adopted during 1H22. Micron has skipped 128L in its stacking technology migration and thereby advanced from 96L directly to 176L. To lower production cost and raise bit output, suppliers continue to increase the layer number of their 3D NAND technologies. This means that supply growth will further outstrip demand growth in 1Q22 as the off-season sets in. Hence, TrendForce forecasts that prices of UFS solutions will also register steeper QoQ declines of 8-13% for 1Q22.

NAND Flash wafer prices will decrease by 10-15% QoQ as oversupply becomes more severe

Sales of retail storage products such as UFDs and memory cards have been weak through this entire year. The promotional activities initiated by e-commerce companies for the special events and festivals near the end of the year have generated only a marginal amount of demand. Looking ahead to the early part of 2022, the demand for retail storage products is not expected to gain noticeable momentum before the arrival of Lunar New Year holiday. Additionally, the cryptocurrency market has been energetic, so the demand for graphics cards from cryptocurrency miners has been outpacing supply for the most part. This development has been impacting shipments of DIY PCs and thereby suppressing the demand for retail client SSDs during 2021. In sum, the aforementioned factors have significantly impeded the consumption of NAND Flash wafers. In view of the demand situation in the different application segments, NAND Flash suppliers will likely ramp up wafer shipments to prevent excess inventory. Moving into 1Q22, even if there is sustained demand for storage components in the PC and server segments, smartphone-related demand will shrink further and exacerbate the oversupply situation of the NAND Flash wafer market. TrendForce forecasts that contract prices of 3D NAND Flash wafers will fall by 10-15% QoQ. Among the various NAND Flash products, 3D NAND Flash wafers will suffer the sharpest price drop. It is worth noting that the growing gap between supply and demand is already exerting considerable pressure on some suppliers, so there is a possibility that suppliers could begin dumping products earlier than expected at the end of this year. Such development could help moderate the magnitude of the price downtrend in 1Q22.

For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms. Latte Chung from the Sales Department at lattechung@trendforce.com

The growth of the NAND Flash market in 3Q21 was primarily driven by strong demand from the data center and smartphone industries, according to TrendForce’s latest investigations. More specifically, NAND Flash suppliers’ hyperscaler and enterprise clients kept up their procurement activities that began in 2Q21 in order to deploy products based on new processor platforms. Major smartphone brands, on the other hand, likewise expanded their NAND Flash procurement activities during the quarter as they prepared to release their new flagship models. As such, clients in both server and smartphone industries made significant contributions to the revenue growth of the NAND Flash industry for 3Q21. At the same time, however, suppliers also warned that orders from PC OEMs began showing signs of decline. On the whole, the industry’s quarterly total NAND Flash bit shipment increased by nearly 11% QoQ for 3Q21, and the overall NAND Flash ASP rose by nearly 4% QoQ for the same quarter. Thanks to rising prices and expanding shipments, the quarterly total NAND Flash revenue increased by 15% QoQ to a new record high of US$18.8 billion in 3Q21.

Moving into 4Q21, the impact of the ongoing component gaps has widened to numerous application segments of the NAND Flash market as the capacity crunch in the foundry market remains unresolved. Currently, NAND Flash components are in abundance relative to other kinds of key components. For OEMs and ODMs, the differences between the NAND Flash inventory level and the inventory levels of other components have been growing over the past several months. Therefore, they have to scale back orders and reduce stock for NAND Flash. As inventory adjustments are happening, NAND Flash contract prices will start to drop and thus bring about an end to the several quarters of strong revenue growth enjoyed by suppliers.

Samsung

Owing to procurement demand from hyperscalers and smartphone brands, the NAND Flash market generally remained in shortage in 3Q21, thereby driving up Samsung’s ASP by 10% QoQ. Even so, Samsung’s NAND Flash bit shipment increased by only about 5% QoQ due to weakening demand from PC OEMs and low inventory levels of certain other components carried by Samsung’s clients. Samsung’s NAND Flash revenue for 3Q21 reached US$6.51 billion, a 16.5% QoQ increase.

Kioxia

Although orders from PC OEMs began to wane, Kioxia still benefitted from orders from its major smartphone and data center clients in 3Q21, during which Kioxia’s NAND Flash bit shipment underwent a major QoQ increase exceeding 15%. As the NAND Flash market remained in a shortage situation, Kioxia’s ASP increased by about 4% QoQ, resulting in a revenue of US$3.64 billion, which represents a 20.8% QoQ increase and the highest single-quarter revenue in Kioxia’s history.

SK hynix

Among all NAND Flash suppliers in 3Q21, SK hynix registered the highest growth in bit shipment at more than 20% QoQ. This performance can be attributed to several reasons: the cyclical upturn in procurement activities from smartphone brands, persistently strong demand from the data center segment, and inventory-clearing by SK hynix in anticipation of weak demand in the upcoming off-season. Thanks to an ASP increase of about 5% QoQ, SK hynix’s NAND Flash revenue for 3Q21 reached US$2.54 billion, a 25.6% QoQ increase.

Western Digital

Although Western Digital’s PC OEM clients reduced their SSD orders due to supply chain disruptions, and demand from the retail end also remained weak, Western Digital was able to increase its NAND Flash bit shipment by 8% QoQ in 3Q21 due to enterprise SSD demand from the data center segment and NAND Flash demand from smartphone brands for the release of new smartphone models. Nevertheless, Western Digital’s ASP fell by 3% QoQ because the company increasingly focused on major clients and high-density products. Western Digital’s NAND Flash revenue for 3Q21 reached US$2.49 billion, a 2.9% QoQ increase.

Micron

Demand from the data center segment remained strong, and clients continued to adopt Micron’s 176L products. However, Micron’s shipment share in the smartphone market lagged behind that of other NAND Flash suppliers. Furthermore, its PC OEM clients were starting to be affected by the uneven supply of semiconductor chips. In light of these factors, Micron’s NAND Flash bit shipment increased by a modest 4% QoQ. On the other hand, the NAND Flash market remained in a severe shortage in 3Q21, thereby driving up Micron’s ASP by about 5% QoQ. Hence, Micron’s NAND Flash revenue for 3Q21 reached US$1.97 billion, an 8.8% QoQ increase.

Intel

Although persistently strong demand from the data center segment led to a massive price hike for enterprise SSDs and a nearly 6% increase in Intel’s ASP in 3Q21, the company was unable to fully meet its client demand since it could not procure sufficient upstream components. This lack of upstream components resulted in a severe decline of about 5% QoQ in Intel’s NAND Flash bit shipments and offset the upward momentum generated by an increase in Intel’s ASP. Intel’s NAND Flash revenue for 3Q21 reached a mere US$1.11 billion, a slight 0.6% QoQ increase.

For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms. Latte Chung from the Sales Department at lattechung@trendforce.com

Contract prices of NAND Flash products are expected to undergo a marginal drop of 0-5% QoQ in 4Q21 as demand slows, according to TrendForce’s latest investigations. Hence, the current cyclical upturn in NAND Flash prices will have lasted for only two consecutive quarters. Looking ahead, NAND Flash suppliers’ capacity expansion plans will be affected by the outlook on future trends and the supply of other non-memory components. At the same time, attention will have to be paid to the demand projection. At the moment, NAND Flash suppliers appear likely to downsize their capacity expansion activities for 2022, resulting in a 31.8% YoY increase in NAND Flash bit supply next year. Annual bit demand, on the other hand, is projected to increase by 30.8% YoY. With demand being outpaced by supply and competition intensifying among suppliers for higher-layer products, the NAND Flash market will likely experience a cyclical downturn in prices in 2022.

YoY Growth of bit supply for 2022 is projected to reach 31.8% as competition for higher-layer NAND Flash remains fierce

With demand surging for a significant part of this year, customers have accelerated their adoption of higher-layer NAND technologies. Suppliers have also revised their production plans several times so as to raise output, reaching a YoY growth of nearly 40% in total NAND Flash bit supply in 2021. In light of the somewhat high base for comparison and the relatively weak demand outlook next year, TrendForce expects annual NAND Flash bit supply to increase by only about 31.8% YoY in 2022.

NAND Flash bit demand will grow by just 30.8% due to high base for comparison and factors related to arrival of post-pandemic era

The analysis of the demand side of the NAND Flash market finds that the shipment volumes of smartphones, notebook computers, and servers have been undergoing robust growths in 2021, resulting in a relatively high base period for comparison against next year’s figures. Hence, substantial YoY increases in device production or shipment in 2022 will be difficult. In addition, the procurement side still suffers from mismatched availability of components. With NAND Flash supply being relatively healthy and device manufacturers carrying a growing NAND Flash inventory, NAND Flash procurement for the upcoming period will likely be limited. TrendForce expects NAND Flash bit demand to increase by 30.8% YoY in 2022, which represents a slower growth compared with the increase in NAND Flash bit supply.

Regarding the smartphone market, the persistent shortage of components, including chipsets and driver ICs, is expected to exacerbate the decline in smartphone shipment during the traditional off-season of the first quarter. As for the average storage capacity of handsets, one driver of growth is the iPhone series, which is adopting a 1TB solution for the first time with this year’s line-up (i.e., iPhone 13 Pro/Pro Max). This will encourage brands in the Android camp to follow suit and have a 1TB solution featured in the future flagship models that are released in 2022, thus slightly increasing the shipment share of high-density solutions. Furthermore, brands in the Android camp will be focusing on pushing models with 256GB or 512GB in response to Apple’s storage upgrade for this year’s iPhone lineup. TrendForce forecasts that the NAND Flash bit demand related to smartphones will rise by around 28.5% YoY in 2022, which is noticeably lower than the growth rates that approached almost 30% for the years prior to 2021.

Regarding the notebook market, orders for notebook computers will enter a period of downward correction in 2022 compared to the peak growth that took place in 2021 as increasingly widespread vaccinations lead to a gradual easing of border restrictions. Although the workforce’s return to physical offices has now generated some upside demand for commercial notebooks, the demand for consumer notebooks and Chromebooks, which are highly contingent on the education sector, will undergo a sharp decline. Taking these factors into account, TrendForce forecasts a modest 23.2% YoY growth in client SSD bit demand in 2022, which falls short of the growth in 2021 by a considerable margin.

Regarding the server market, CSPs’ continued procurement of servers in 2022 is expected to drive up annual server shipment by about 4.5% YoY. In particular, the average storage capacity of enterprise SSDs is expected to experience a more significant growth next year compared to previous years due to the gradual release of new server CPU platforms with PCIe Gen 4 support, which features more PCIe lanes allocated to SSD data transfer. These new CPUs will also come with substantial upgrades in terms of both core count and processing power. Adoption of large-capacity enterprise SSDs enables servers equipped with such CPUs to achieve improved computing performance and in turn allows CSPs to cut down on the number of server nodes required, thereby optimizing the cost of data center build-out. In terms of applications, computing demand from AI and big data will continue growing, and this growth will also contribute to the increase in the average storage capacity of enterprise SSDs next year. In addition to the aforementioned developments, the release of Intel’s Sapphire Rapids platform, which supports PCIe Gen 5, will bring about a further bump in enterprise SSD data transfer speed, as well as average storage capacity, which is expected to increase by 33.5% YoY in 2022.

Annual NAND Flash revenue is projected to increase by merely 7% YoY in 2022 while falling quotes offset growth in bit shipment

NAND Flash ASPs have not shown significant downturns for two consecutive years since 2020. At the same time, as the COVID-19 pandemic drives up the demand for electronic products and cloud services, the overall growth in NAND Flash bit demand has been remarkable, resulting in an annual NAND Flash revenue growth of more than 20% YoY in both 2020 and 2021. Looking ahead to 2022, the YoY increase in NAND Flash bit demand will diminish due to the high base for comparison this year. The NAND Flash market is projected to enter a period of price downturn, with an over 18% decline in NAND Flash ASP. While such a decline offsets the rise in bit shipment, annual NAND Flash revenue will likely increase by merely 7% in 2022, the lowest YoY growth in three years.

For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms. Latte Chung from the Sales Department at lattechung@trendforce.com

NAND Flash suppliers’ Clients in the data center segment were gradually stepping up enterprise SSD procurement after finishing inventory adjustments, according to TrendForce’s latest investigations. Moreover, the adoption rate of 4/8TB products in the enterprise SSD market increased substantially on account of the releases and adoption of the new server processor platforms from Intel and AMD. Although the recent wave of COVID-19 outbreaks that struck Southeast Asia weakened smartphone sales in 2Q21, the quarterly total NAND Flash bit shipments rose by nearly 9% QoQ, as PC OEMs still had plenty of component orders in 2Q21 due to the fairly robust notebook demand during the period. On the other hand, the shortage of controller ICs became more severe during the period, and the winter storm that battered Texas this February affected the operation of Samsung’s foundry fab Line S2 in Austin. As demand for NAND Flash products rose, the overall ASP also rose by nearly 7% QoQ, and the quarterly total NAND Flash revenue rose by 10.8% QoQ to US$16.4 billion in 2Q21.

Moving into 3Q21, clients in the data center segment will gradually become the main growth driver as they expand procurement of high-density enterprise SSDs. Furthermore, notebook demand is expected to remain at a fairly high level in 3Q21, thereby sustaining NAND Flash demand bit growth and the ongoing rise in contract prices of NAND Flash products. Hence, TrendForce currently forecasts that the quarterly total NAND Flash revenue will not only again register a QoQ increase but also hit a record high for 3Q21.

Samsung

For 2Q21, Samsung’s bit shipments grew by around 8% QoQ thanks to the strong demand from PC OEMs and hyperscalers aggressively building up their enterprise SSD inventories. The energetic stock-up activities and the shortage of controller ICs also caused Samsung’s ASP to rise by about 5% QoQ. As a result, Samsung’s NAND Flash revenue went up by 12.5% QoQ to US$5.59 billion in 2Q21.

SK hynix

Smartphone storage solutions account for the largest portion of SK hynix’s sales mix. Nevertheless, SK hynix’s sales performance during 2Q21 still benefitted from hyperscalers’ rising demand and the brisk flow of orders related to notebooks. Hence, SK hynix grew its bit shipments by 3% QoQ. Its ASP also rose by about 8% QoQ because of the general tightening of NAND Flash supply and the shortage of controller ICs. All in all, SK hynix’s NAND Flash revenue went up by 10.8% QoQ to US$2.025 billion for 2Q21.

Kioxia

Kioxia benefitted from strong notebook demand and resurging procurement activities from its enterprise clients in 2Q21. In addition, Kioxia’s major clients in the smartphone segment once again kicked off their NAND Flash procurement during the quarter. As a result, Kioxia’s bit shipment grew by about 7% QoQ in 2Q21, while its ASP entered an upward trajectory for the first time in four quarters with a QoQ growth of more than 10%. However, in light of the trailing performance of its SSSTC subsidiary (formerly Liteon’s SSD business) as well as the impact of unfavorable exchange rates, Kioxia’s revenue for 2Q21, when converted into USD, reached a mere US$3.011 billion, an 8.5% QoQ increase.

Western Digital (WDC)

Western Digital put up a remarkable revenue performance for 2Q21 thanks to robust demand from the notebook segment, an upswing in enterprise SSD demand, and the shipment of its second-gen NVMe enterprise SSD, which resulted in a 39% QoQ increase in Western Digital’s enterprise SSD revenue. On the other hand, while products related to Chia cryptocurrency mining gained significant media spotlight at the end of April, they made limited contributions to Western Digital’s quarterly bit shipment, which underwent a mere 4% QoQ increase in 2Q21, though its ASP increased by 7% QoQ. All in all, Western Digital’s NAND Flash revenue reached US$2.419 billion, an 11.2% QoQ increase, in 2Q21.

Micron

Owing to strong demand from the data center and notebook segments, Micron grew its quarterly bit shipment by nearly 7% in 2Q21. In particular, Micron’s QLC client SSDs enjoyed a growing penetration rate in the PC segment. With the shortage in the SSD market leading to a 3% QoQ increase in Micron’s ASP for 2Q21, its NAND Flash revenue reached US$1.812 billion, a 9.8% QoQ increase.

Intel

Intel’s quarterly bit shipment for 2Q21 underwent a near 10% QoQ decline in spite of strong enterprise SSD demand from the data center segment. This decline can primarily be attributed to the shortage of such key components as controller ICs and PMICs. Compared to other major NAND Flash suppliers, Intel mainly procures some of these components from a single source, thereby exacerbating the impact of the component shortage on its operations, including the shipment of enterprise SSDs. Nevertheless, its ASP still grew by about 9% QoQ on the back of persistently strong demand from clients. Intel’s quarterly revenue from its NAND Flash business reached US$1.098 billion, a 0.8% QoQ decline, in 2Q21.

For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms. Latte Chung from the Sales Department at lattechung@trendforce.com