TrendForce: 2HMay Mainstream NAND Flash Contract Price Falls 6-9%, Q3 Might See Delayed Demand Pickup

According to DRAMeXchange, a research division of TrendForce, affected by the end of manufacturers’ financial quarters and demand that continues to fall short of expectation, 2HMay mainstream NAND flash contract price decreased by 6-9% compared to the first half of the month. TrendForce believes in the short term, the NAND flash market and price will be impacted by the following factors:

1.    Manufacturers’ quarter-end and mid-year effects deepen concerns of price decline:
The European debt crisis and Greek’s political and financial issues continue to impact the global economy, while the rise of cloud storage services is weakening the UFD and memory card markets. Additionally, there have not been large shipments of system products, since buyers are conservative towards inventory stocking for the peak season due to the price decline. New products will be unveiled at Computex Taipei in early June, but TrendForce expects that in the short term, buyers will not be aggressive in purchasing new products for 2H12. Furthermore, NAND flash suppliers will likely adopt aggressive price strategies to stimulate purchasing, but as demand will not see a significant increase in the near future, it is unlikely buyers will take the bait.

2.    Impacted by the delayed release of new processors and device models, peak demand for system products will not be seen until 3Q. Although many new smartphone, tablet PC, and ultrabook models were scheduled to hit the market in 2Q, the majority of new product releases are for May or June. Thus, large shipments will not take place until mid-3Q, providing little benefit to the NAND flash market in 2Q. Additionally, the delayed release of the new PC processor Ivy Bridge will push PC shipment growth back as well, to after 3Q. Older ultrabook models still sport a relatively high price tag that has weakened consumer acceptance for the new products, but new ultrabooks arriving in May and June will be loaded with the new processor, which should help increase shipment growth after mid-3Q, in time with back-to-school demand. In summary, various system products will begin to benefit the NAND flash market in 3Q, which will help internal NAND flash storage such as eMMC and SSD see demand growth as well.

Therefore, affected by external macroeconomic factors and industry changes, TrendForce believes the NAND flash contract price trend will continue to show a slight decline in the short term, but the market will see gradual demand recovery beginning in 3Q.