DRAMeXchange: Inventory Restocking Demand Inadequate, 2HOct. Average NAND Flash Contract Price Decreases Further

November 1st, 2011--According to DRAMeXchange, a research department of Trendforce, mainstream NAND flash contract price for 2HOct. fell by 4-8% due to lower than expected demand for year-end retail sales. Demand for high-density products remained weak as well due to sluggish smartphone and tablet PC sales; UFD and memory card sales were weak as well. Not only did the lackluster sales affect suppliers’ inventory restocking, but contract price declined as well.

Looking ahead, the HDD shortages created by the flooding disaster in Thailand should temporarily increase interest in SSD products. However, as the price gap between SSD and HDD remains high, and the process of redesigning models to equip SSD will require approximately 2-3 months, SSD adoption will mostly occur in the high-end corporate market; specifically, models that were designed to support both HDD and SSD. Therefore, the Thailand flooding incident will have a relatively limited effect on SSD demand in 4Q11. If the HDD inventory shortage continues into 1Q12, although the proportion of SSD-equipped models may increase, DRAMeXchange believes that ultimately, the extent of the effect on the NAND flash market will depend on the level of consumer acceptance. Therefore, due to limited impact of HDD replacement by SSD, low restocking demand from makers, and increased supply due to continual technology migration to 2ynm-class processes, NAND flash contract price is expected to decrease further in November and December.