NAND Flash Wholesale Prices & Spot-Market Situation 1Q/2Q 2011
After some tense months following shortly after Lunar New Year and when the Japan earthquake and its affects on the worldwide supply chains for wholesale electronics reached its peaks, prices have slowly re-balanced after the Korean suppliers Samsung and Hynix drove up production output in order to meet the increased demand created by the temporary production fall-outs of the Japanese NAND flash manufacturer such as Toshiba, and current low price levels make both a good investment opportunity while this at the same time encourages the new and improved sub-30nm and sub-20nm NAND technologies to move into position.
In the first few weeks after the horrible quake, upstream NAND traders and main wholesale players on the NAND flash spot-market reacted to the new uncertainty by a general raise in wholesale prices for all NAND flash capacities and in order to build up a buffer against the expected price fluctuations that where to follow.
At the time of the quake, the estimated inventory levels hold by most players was low even though some key-players had started to stock up on NAND memory after the Chinese Lunar New Year and had started to build minor inventories, and therefore the general prediction was that the production halts and power-cuts resulting from the earthquake would hit in and show major disruptions on the supply chain after an 2-3 months and when all upstream NAND vendors had fully flushed their inventories and left with no other option than re-stocking NAND flash inventories with memory from the spot-market.
These low-level inventories managed to generate enough room for other NAND manufactures, such as Intel/Micron as well as the Korean manufacturer Samsung and Hynix to level-up their production capacities and add NAND flash production lines in their main semiconductor plants as well as increasing their capital investment in new plants and sub-20nm technologies and in order to be better equipped to server a bigger market share.
Most NAND production plants and semiconductor manufacturers in Japan where not directly affected by the quake, and the Japanese semiconductor industry did a great job in getting their main supply chains back on tracks again very quickly after the quake, which again helped greatly in reducing overheads due to the disruptions and further managed to contain the NAND flash wholesale prices within a high but still reasonable level.
So after the first shock effects and some drastic price hikes throughout supply chains for many critical electronics components such as LCD screens, NAND flash memory, DRAM memory and other computer hardware, the market then slowly started to cool down as damages where contained and alternative supply chains where used to bridge and overcome temporary disruptions, and prices then started to revert to normal.
Supported by the usually weaker market demand during the summer months, the ramp-up of production capacities from the various NAND flash memory producers who are keeping a close eye on the growing market demand for NAND flash memory due to rapidly growing sales figures of smartphones and Tablet PCs and SSD drives for portable devices and notebooks, prices started to balance out and normalize during end of June.
NAND Flash Spot-Market Preparing for 20nm Technology
Currently we're further seeing a market consolidation, and especially the Korean NAND flash memory manufacturers lead by Samsung seem to have made use of these first few quarters to further fortify their market share on the NAND flash memory spot-market.
Samsung holds a firm grip on lower and mid-range flash memory capacities, meeting competition mainly from Intel/Micron who target the higher memory capacities and make for some serious competition.
As the summer season is already fading out, we now see wholesale traders and upstream NAND flash suppliers starting to re-stock their inventories and prepare for this years annual end-of-year sales.
With the iPhone 5 and the iPad 3 both expected to launch during 4Q this year, and presumably in September or October, market predictions for NAND flash memory promise growth and strong market demand especially for the contractual NAND flash market.
It will be interesting to see how the current legal patent issues between Apple and Samsung is going to affect Apple's purchase strategy, and if Apple might target to purchase more NAND flash memory from Hynix, Intel/Micron or Toshiba. Ultimately, Apple may also choose to invest in their own NAND flash memory production plants.
With the NAND demand forecast for the next few year and Apple's market share on smartphones and tablet PC's it would give Apple more leverage and a strategic advantage to be able to produce their own NAND flash memory and thus be less dependent on other manufacturers or even competitors such as Samsung.
However, acquiring and successfully employing semiconductor technology to produce the latest sub-30 or sub-20nm NAND flash wafers requires a significant level of CapEx spending and is a time consuming task to undertake.
Thinkable would be a spin-off where one of the main NAND flash producers form a dedicated Joint-Venture with Apple or a major acquisition where Apple secures technological know-how and NAND production plants.
NAND Flash Memory Prices & Spot-Market Outlook 4Q 2011
Now and as the last days of August are soon behind us, upstream suppliers and NAND flash memory traders are currently already starting to stock-up their inventories as prices have already started to go up slightly during this weeks price update on the NAND flash spot-market in Hong Kong, and as prices are expected to further rise during the next few months we predict supply shortages for mid/high capacities during the upcoming weeks and until the vendors get a better impression of how this year's seasonal sales is going to further develop and how the sales for end-user devices such as the upcoming iPhone5 and iPad3 as well as the various Android Tablet PC's will affect prices for NAND flash memory, LCD screens and other important electronics parts.
One further aspect to mention is the expected general price raise for wholesale electronics and BoM's for ODM productions, especially also when considering the drift of increasing prices for certain products that contain high-level of rare earth metals such as e.g HDD hard drives, SSD and most other wholesale electronic parts that contain semiconductors. Added to this, there's still a strong pressure on the Yuan currency, which currently trades at US$ 6.40 to the CNY among upstream vendors and main players in the supply chain, thus putting even more pressure on local Shenzhen manufacturers.
Because of this, we recommend to purchase your seasonal promotional gifts and branded merchandise such as your company's branded USB flash drives as early as possible and in order to retain a better price advantage.
As always, please feel free to contact our friendly sales team for more information!