TrendForce: 2H’July Mainstream NAND Flash Contract Price Slides 6-9%, 2H13 Demand Prospects Viewed with Caution

According to DRAMeXchange, a research division of TrendForce, due to the cautious attitude displayed towards the prospects of 2H13 demand, the 2H’July mainstream NAND Flash contract prices have slid by approximately 6-9%, which puts an end to the contract price uptrend from the end of May. The July contract price downtrend is currently believed to be attributable to the weaker than expected demand in the NAND Flash market.

Following the tightening of the memory component supplies in 1H13, various manufacturers have placed repeated orders in order to prepare for the second half of the year, which was initially viewed with optimism. The market status in the third quarter, however, turned out to be more sluggish than expected, and this in turn prompted smartphone, tablet, and notebook vendors to make downward revisions to their shipments. The NAND Flash manufacturers, as a direct result of these developments, have begun to face increased pressures related to purchase orders and inventory level adjustments. Even if the new mobile products released in 3Q13 manages to generate pull-in momentum and improve Q3 NAND Flash demand, the NAND Flash maker’s overall performances are still likely to fall short of expectations. As the situation with the fourth quarter sales and 2H13 regional market performances are still in doubt, TrendForce believes that the system OEM demand prospects should be viewed cautiously.

In the memory card and UFD market, the module manufacturers have only limited resources due to the NAND Flash vendors’ supply tightening strategies. These module makers were generally willing to accept any high prices set in 1H13 in order to avoid running into a potential shortage. However, not only did the Q2 UFD market shipments turn out to be weaker than expected, demand in Q3 are also sluggish due to the uncertainties surrounding the economy. This has lessened the desire for module manufacturers to make any further purchase orders and, in turn, weakened the NAND Flash pricing momentum considerably. With the increased economic uncertainties and tightened demand, TrendForce believes that the NAND Flash contract prices will continue to drop throughout August.