NAND flash prices 1Q 2008

As you can see from the graph, the spot-market purchase price for NAND flash here in Hong Kong has been steady, the price gaps between the various flash memory capacities have stabilized mostly and prices for most capacities are even on a soft trend downwards. One exception still is the 256MB capacity which, due to the IC solution often associated with this size, is priced higher than it proportionally should and is often subject to price variations, depending on the various supply chains and the warehouse stocks of suppliers. These low USB flash prices have even managed to live through Chinese New Year without any notifiable major changes. Now that was the good news...

Beneath the surface, the local suppliers and USB flash drive manufacturers, especially in Guangdong Province and in the Pearl River Delta are facing growing pressure from the general inflation in China. In the last few months, thousands of smaller factories from different industries have closed down, hitting the shoe industry hardest where losses are huge and most factories are see themselves forced to close down.

Many more are expected to follow throughout the year, hitting especially the labor intense industries that used to benefit from the abundant availability of cheap labor. Migrant workers pull back from the expensive coastal areas, where inflation hits in harder on the food and basic necessities. In the big cities living is too expensive and the traditional dream of buying property to found a family cannot be achieved. Facing the prospects of staying in an expensive place away from home or returning to a known surrounding, where family ties and connections still mean a lot, and where even a smaller wage might provide more than in the big metropolis, many now choose to the latter and return to their home towns and villages.

Adding up to this, the snow storm and the damage done by the traffic chaos during the Spring Festival has worsened the situation and many workers have chosen to stay in their home towns and not to return to the factory in the first place.

Inflation causes raise of production costs

For high-tech industries and the suppliers of computer hardware and IT products of course the situation is much better then for the "low-tech" and labor intense branches, such as shoes or appliances, most who are either closing or moving their production further inland, to areas like Zhejiang and Hunan. But surely this trend of general inflation, together with added pressure from raising prices for imported raw-material, the weak USD and difficulties of retaining employees, is already starting to affect overall price levels, hitting hardest in on basic commodities and food.

The world is about to witness a general price increase for products manufactured in China.

Not only for our customized USB flash drives, but also for most other products. Chinese suppliers facing this new inflation and a weak dollar only have two options: either they raise their prices according to their increased production cost. Or they compromise on quality and try to save by reducing costs wherever possible. Of course the later is not a sustainable option, and in the last few years both customers, buyers and governments have continuously sharpened their quality standards and new rules and regulations for imports, such as the RoHS, continues to tighten quality control requirements. For the serious players in the industry new quality criteria can usually be met quite easily, while the smaller suppliers mostly find it more difficult to cope with new regulations and customer requirements.

MemoTrek looks back at many years of purchase experience in China, and our purchase office and its team in Shenzhen is based upon long-term relationships with all the main USB flash drive manufacturers and USB factories on the Mainland and in Guangdong Province. We constantly do what we can to offer to our customers the lowest prices for customized USB flash drives available on the market today, but there's no way we're going to compromise on quality.

Also you should be reminded that many under-priced USB flash drives of bad quality are circulating the market. Due to the current situation chances are big that some of the smaller suppliers choose to flood the market with their stocked up B-grades. You should be careful with products that are priced far under current market levels. All too often these flash drives contain old IC controllers, poor MLC solutions and even 2nd hand NAND flash or grade B chip-sets that have not passed the QC of the main manufacturers. Mostly these USB flash drives are being produced by small companies, sometimes even family back-yard operations. These product are not going to make you happy: problems and worries are pre-programmed to occur if you choose to target only the cheapest price with no regards to quality.

To avoid buying poorly manufactured products we urge you to buy only from serious companies who specialized in customized flash memory and promotional USB flash drives. Very often the price difference is not that big, and you save yourself a lot of troubles. We even recommend to make compromises on the capacity and buy a smaller sized flash drive from a quality supplier instead of a bigger capacity from a cheap and maybe not so reliable source. For any questions on what size offers the currently best price/capacity ratio and tips on what capacity size might suit your needs best please don't hesitate to contact our sales team.

To sum up our prognosis of the USB NAND flash price itself, we estimate that the current price might even hold on more or less stable until summer, with the 8GB slowly climbing down in position. Typically, by end of August, Apple's contractual demand starts to grow drastically due to season's sales and product launches. What might actually happen is that price levels for NAND flash stay relatively stable while service costs, assembly fees and general costs of production needed to achieve the same quality level go up. This will leave the smaller players on the market unable to compete and might lead to a re-shuffle of the production capacities and gainings of territory and market shares for those USB flash drive manufacturers and suppliers still left standing up.

Of course also the Olympics in China are coming up in August and it will be interesting to see how that will affect the industry.

Our dedication is our strength. We focus on only one thing: supplying satisfied corporate customers with wholesale and high-volume orders of quality customized USB flash drives. Located in the main hub and worldwide distribution center for USB flash drives we are the first to see changes in the markets and realize new moods in the supply chain. And we share our experience with our customers.

Don't hesitate to contact us if you would like to know more or if have any questions regarding our products or services.

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