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Tight supply ups NAND flash contract price

Posted: 05 Oct 2012 ?? ?Print Version ?Bookmark and Share

Keywords:NAND flash contract price? smartphone? tablet?

According to DRAMeXchange, a research arm of TrendForce, as a result of manufacturers' tightening supply strategies and the 4Q12 restocking demand for smartphones and tablets, 2HSep mainstream NAND flash contract prices climbed by nearly 7.5-11 per cent. The 32Gb and 64Gb MLC exhibited larger price increases, while the price uptrend for TLC are of a relatively smaller proportion, noted the market research firm.

In the short term, it is anticipated that the NAND flash market situation may continue to remain stable, with the price uptrend likely to also persist.

NAND flash supply perspective
Since Toshiba announced to implement a 30 per cent production cut at the end of July, NAND flash manufacturers have begun to display a more cautious attitude towards production control in 4Q12. With huge price drops impacting NAND flash products during 2Q12, many businesses vendors have experienced negative revenue growth, which gradually made the protection of profits a major priority amongst manufacturers. With the memory card and UFD markets yet to show any obvious improvements since early this year, major NAND flash suppliers have not only increased the proportion of system products, but have also taken the initiative to stabilise prices through the implementation of supply tightening strategies aimed at channel customers. Micron's 4Q12 financial report, which covers the period from June to August, shows that its NAND flash profit growth has reverted from negative to positive, an indication that the supply control strategies are working. Following the impacts and trends from the current economy, it is predicted the capacity expansion plans from manufacturers may either be delayed until next year, or may be decided upon if the demand situation has changed for the better. As such, the attitudes towards the 4Q12 production situation are more conservative than initially expected. TrendForce said NAND flash manufacturers are highly likely to continue with the supply tightening strategies during 4Q12.

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Figure 1: 32Gb MLC NAND Flash Contract Price
source: DRAMeXchange, Oct., 2012.

NAND flash demand perspective
The memory card and UFD markets have been sluggish in 3Q, with no clear signs of back-to-school demand nor restocking demand related to China's national holiday. For Q4, it is predicted that even with Thanksgiving and Christmas shipments, the European and U.S. market's 4Q shipment growth will only be slightly greater than that during 3Q12. The situation and performance of system product OEM clients, on the other hand, appear to be relatively stable. Although major OEM clients remain conservative towards 4Q12 system product demand due to the effects of the overall economy, the steady restocking demand from competitive smartphone brands like Apple and Samsung, along with their requirement for high-standard NAND flash with greater density, are expected to help the NAND flash market maintain its stability.

On the whole, TrendForce remains cautious about the 4Q12 demand prospects for major system products, memory cards and UFDs. As NAND flash manufacturers continue to tighten their NAND flash resources, the mainstream NAND flash contract prices, which had been stable during July and August, have shown partial upward trends starting September. TrendForce added that the partially stable and rising trends will likely continue and extend into October.

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Figure 2: 64Gb MLC NAND Flash Contract Price
Source: Oct., 2012.

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