TrendForce: 1H’Jan NAND Flash Contract Prices Fall as Suppliers Face Pressure to Digest Capacity

The NAND Flash contract prices have dropped by approximately 3%-5% in 1H’Jan compared to 2H’December, according to DRAMeXchange, a research division of TrendForce. Looking at the demand side, with the estimated 1Q14 shipments of OEM devices such as Smartphones, Tablets, and Notebooks expected to fall by 15-20% QoQ, more and more NAND Flash manufacturers are beginning to increase their shipments to the module clients. While this has caused the pricing downtrend to persist, the extent of the price drops have shown signs of easing due to the conservative attitude displayed towards Chinese New Year and the module manufacturer’s general reservations about re-stocking their inventory.

The sales of products such as memory cards, UFDs, eMMC, and SSDs are all expected to weaken in the short term as the typical effects of the off-peak quarter emerges. Despite the efforts of suppliers to regulate their new wafer production levels, increases in the NAND Flash industry’s quarterly supplies will be inevitable following the continuous advancements towards 1Xnm technology. In the event that the manufacturers’ main product sales do not show any notable improvements and that the market supplies continue to accumulate, the pressures faced by NAND Flash sellers to digest their capacity will become a lot more intense. TrendForce believes that the NAND Flash industry will experience an oversupply in 1Q14, and estimates the gap between the market’s demand and supply to be approximately 4-5%. The NAND Flash contract price drop is likely to become a lot more noticeable following Chinese New Year.