Demand surge lifts NAND flash contract price

According to the latest data from DRAMeXchange, a research arm of TrendForce, OEM orders this year from smartphone, tablet and ultrabook clients will be concentrated by September to early November as replenishment preparation begins. Due to this, many NAND flash vendors will prioritise and allocate capacity towards system products, the demand for which is comparatively higher.

Additionally, as inventory restocking demand from several downstream clients rebounded prior to the commencement of China's recent national holiday, 1HOct MLC NAND flash contract prices continued to increase by nearly 3-17 per cent. The contract prices for the other chips, on the other hand, showed a flat, stable trend for the most part, indicated the market research firm.

According to TrendForce, the main reason for the recent surge of NAND flash contract prices is that OEM clients are preparing to restock inventory from September to October as a response to new product releases. With this and the after effects of Toshiba's production cuts taken into account, the contract prices increases serve as a fitting pricing strategy for the seasonality. Given that businesses within the industry remain cautious towards the year-end holiday sales figures, suppliers are hoping that the price uptrend will continue and extend into November. Buyers, however, perceive October as the peak replenishment period, and believe that the October aftermarket prices will gradually decline.

As the OEM peak restocking phase passes during early November, manufacturers will likely begin to face account-related pressures.

TrendForce predicts that after mid-November, NAND flash contract prices will gradually go on a downtrend. Subsequent price trends will depend on the sales performance during the Christmas season, and the extent of replenishment demand prior to the upcoming Chinese New Year holiday.