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TrendForce: 1H'August NAND Flash Contract Price Continues to Slide due to Tepid Demand and Quarter-End Effect

19 August 2013 Semiconductors

According to DRAMeXchange, a research division of TrendForce, 1H'August NAND Flash contract prices have dropped by approximately 6-8% due to tepid market demand and the quarter end-effects experienced by the US manufacturers. The system clients have recently become more conservative towards the prospects of new product sales, and as a result, are feeling less inclined to replenish their SSD and eMMC inventories. The atmosphere on the channel side, where UFD and Memory card sales are still relatively sluggish, is also similarly restrained: With the NAND Flash price decline not showing any clear signs of stopping, and with inventories piling up to higher levels, there is now less of an incentive on the module manufacturers' part to make any further purchases. It is worth mentioning that in response to the quarter-end effect and the upcoming year-end accounting procedures, the US-based NAND Flash makers have begun to turn to a more aggressive pricing strategy in order to stimulate demand. This has had the effect of increasing the pressure on other manufacturers to make further reductions on their prices. The weak market demand and the impact of the aforementioned quarter-end effect, all in all, can be said to have played a highly crucial role in lowering the contract prices for NAND Flash components. 

In regards to the future state of the market, even though new smartphone and tablet releases are expected to bolster Q3 NAND Flash demand, with the global economic situation still being uncertain, the outlook for 2H13—which is traditionally known to be a peak sales period— remains conservative. This is among the reasons why an increasing number of manufacturers are making downward revisions to their annual shipment targets. Taking the aforementioned developments into account, TrendForce believes there is a chance for a slight oversupply situation in Q3. The odds of NAND Flash contract prices declining during September, as such, are relatively high.

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