TrendForce: Effects from SK Hynix's Wuxi Plant Fire Accident Causes 2H'Sep NAND Flash Contract Prices to Grow

According to DRAMeXchange, a research division of TrendForce, the 2H'Sep NAND Flash contract prices grew by 3-6% (compared to 2H’August) due to the expectations of a lowered NAND Flash supply following the Wuxi plant’s fire accident.

Looking at the demand side, even though the sales of memory cards and UFDs have improved, their overall market performances are still below previous standards and market expectations. The system OEM clients are remaining conservative towards future sales despite introducing new products intended for the peak quarter. This attitude has led to a noticeable decline in their overall inventory replenishment momentum.

Looking over to the supply side, given that the fire accident at SK Hynix’s Wuxi plant impacted its DRAM product line, the market is currently still expecting the company to compensate for lost production by allocating portions of its NAND Flash capacity to DRAM. Numerous NAND Flash manufacturers have responded to such developments by opting to raise their price. The 2H'Sep contract price increases, all in all, can be said to have been caused by the market’s expectations of the lowered NAND Flash supplies in the near future.

Looking at the market, even though the overall sales performances are not showing any signs of improving, the Q4 oversupply situation can still be expected to ease given the restricted NAND Flash supplies resulting from SK Hynix’s fire accident. With the Wuxi plant’s full recovery period still being uncertain, and with SK Hynix’s NAND Flash re-allocation plans unspecified, TrendForce predict the NAND Flash contract prices will continue to increase in the coming one to two months.