NAND Flash Contract Price Drops Slightly in First Half of April, says TrendForce

The willingness to purchase NAND Flash components was relatively low in first half of April due to the module clients’ conservative attitude towards China’s May 1st Holiday sales performances and sufficient inventory levels, according to DRAMeXchange, a research division of TrendForce. As NAND Flash manufacturers are currently feeling less pressured to digest their inventory compared to the previous quarter, many are seeing less need to give in to clients’ pricing demands. NAND Flash contract prices in first half of April, as such, fell only 0-1% compared to the second half of March.

Looking at 3Q14, DRAMeXchange's Assistant Vice President, Sean Yang, believes that the NAND Flash market’s supply and demand will eventually reach a healthy, balanced state, and projects that NAND Flash contract prices will stabilize in 2H’14 under the momentum brought about by new mobile devices. In the future, Yang expects the steady NAND Flash prices to help improve the products profit prospects as well as creating market stability.

The NAND Flash manufacturers, as of this moment, have no intention of boosting sales performances through aggressive price reduction strategies. This is partly attributable to the oversupply situation in the market, which caused Q1's average NAND Flash contract price to drop 16-18% QoQ, and tightened profit margins resulting in suppliers’ refrain of lowering costs to stimulate sales. Only Micron and SK Hynix continued expanding NAND Flash output in 1H’14; Micron’s Singapore plant continued its transition from DRAM to NAND Flash, for example, whereas SK Hynix is restoring NAND Flash capacity in the aftermath of last year’s fire accident. Neither Samsung nor Toshiba have made efforts to expand NAND Flash production in 1H14; most of their recently raised output, instead, came from the migration towards the 1ynm processes. The 2Q14 and 3Q14 industry bit growth, therefore, are likely to only be around 9-10%. 

The changes in market demand this year can be said to have played a largely critical role in affecting the NAND Flash market. The relatively weak market performance of the entire NAND Flash industry, for instance, resulted from the lower than expected mobile device shipments in 2Q14. According to Yang, the smartphone and tablet shipment momentum for global companies (including Apple and Samsung) and Chinese brands do not officially peak until 3Q14. For the system NAND Flash products such as EMMC and eMCP, the replenishment demand is set to emerge at some point during June. While the PC market is currently still weak compared to the mobile device market, in 3Q14 notebook shipments are forecast to rise by an estimated 9-10% following the release of Intel's new platform in 2Q14. This will in turn benefit the sales of memory products such as SSDs. For 3Q13, TrendForce predicts that demand bit growth will rise by approximately 16% compared to 2Q14. A potential supply-demand balance in the NAND Flash market could be reached as the growing demands eases the industry's oversupply situation.