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NAND Flash contract price falls to 3-5% in 2HJun.

Posted: 04 Jul 2012 ?? ?Print Version ?Bookmark and Share

Keywords:NAND Flash? USB 3.0? ultrabook? European crisis?

In a recent research conducted by TrendForce's DRAMeXchange, average mainstream NAND Flash contract price fell 3-5% in second half of June due to the quarter-end effect and inventory strategies. Although some NAND Flash vendors adopted aggressive price strategies to attract buyers, other manufacturers were more conservative, placing greater priority on profits.

With the European crisis continuing to affect NAND flash markets in the second half of 2012, buyers have been more conservative in terms of inventory build-up. In addition to low economic visibility and weaker than expected NAND Flash demand, TrendForce anticipates the NAND Flash market will be affected by the more supply and demand factors.

One such factor is NAND Flash Supply in 2Q, with June seeing the lowest NAND Flash price decline. The significant price decline and weaker than expected yield rate for 20nm-class processes have placed great pressure on profits of NAND Flash manufacturers. The universal flash drive and memory card markets have been especially challenging for NAND Flash vendors. Adding to suppliers' difficulties, system product shipments did not meet expectation in the first half of 2012. As a result, some NAND Flash vendors have adjusted yearly bit output growth downward for 2012.

Another factor is NAND Flash Demand. As universal flash drive demand has been weak since 1Q this year, aggressive strategies geared toward stimulating demand did not produce significant results. The rise of cloud storage services has also weakened consumer demand for flash drives. Another key factor affecting the flash drive market is USB 3.0's penetration producing no significant increases. Delayed smartphone, tablet PC, and ultrabook shipments in the first half of the year also contributed to the current state of the NAND Flash market.

With the peak sales season in the second half of 2012 just around the corner, the majority of

new smartphone, tablet PC, and ultrabook models will enter mass production in 3Q, and buyers' stocking of the new products may stimulate NAND Flash demand. On the supply side, NAND Flash manufacturers' conservative outlook on bit output should help stabilize the industry in the short term. The NAND Flash market looks to fare better in July than it did in 2Q, with a relatively stable price trend.

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