NAND Flash Memory Price Trends, Outlook & Forecast for 2015
Analysts and main players both on the contractual market as well as on the wholesale spot-markets for NAND flash memory chips have seen some serious price variations while experiencing a certain level of constant price volatility in the market during the past years.
Because of this, and before we summon up some of the most important events that have had an impact on the volatile NAND flash wholesale spot-market during the recent years, we'll just want to make sure to get everyone on the same page regarding some technical cornerstones that are relevant to also better understand some of the recent improvements in process technology and wafer production.
As you well know, NAND flash memory is a type of non-volatile storage that does not require power to store data. It is also typically much faster compared to mechanical hard drives, but because of all its advantages and especially because of the more complex manufacturing processes required also a little more cost intensive than common HDD's.
NAND flash memory is commonly found in a wide range of devices such as tablets, smartphones, custom USB drives, memory cards and SSD solid state drives.
NAND flash memory has a finite number of write cycles and functionality degrades gradually with time, but these issues can also be handled more elegantly with the help of suitable software and on most modern operating systems.
Because of this, NAND flash memory has rapidly become one of the major components of computer hardware industry in the past 3-4 years mainly because of the introduction and popularity of Solid State Drives. SSDs are more than 7 times faster compared to mechanical hard drives but cost a ca. 3 times as much.
The common goal of the NAND flash industry and memory manufacturers is to bring the prices down and constantly improve their price-to-performance ratio. SSDs currently use both SLC, MLC and TLC versions of NAND flash memory, and currently NAND flash is mainly produced by manufacturers such as Samsung, Toshiba, Hynix as well as Micron and Intel who also produce NAND flash memory solutions and modules.
Currently, NAND flash memory chips are supplied by manufacturers in mainly eight different sizes from 1GB SLC to MLC chips from 16GB to 256GB MLC NAND flash memory.
Back in the early days there was a time when most solid state drives utilized 16 GB MLC NAND flash memory modules because the maximum total capacity at the time was 128 GB. But now, with improved process technology and also 3D NAND technology SSDs up to 1 TB so modules of up to 256 GB have been designed as especially Samsung also seeks to dominate the upcoming 3D NAND market and is currently expanding within this area. The analysts over at Credit Suisse the following to say regarding Samsung and their unique and early positioning on the 3D NAND flash:
"Samsung is implementing an aggressive greenfield 3D NAND strategy. Although some of the existing 2D NAND equipment and facilities can be converted into 3D NAND production, it has decided to build brand new fabs. Competitors are expected to convert existing planar NAND facilities, given limited capital resources and uncertainty on customer demand. To a certain extent, Samsung can create its own demand through its own branded devices as well as having the first-mover advantage in qualifying its products with customers."
However, the introduction of 3D NAND manufacturing does not mean that production costs can be reduced, at least not during the initial stage of adaptation because one of the main issues with manufacturing 3D NAND chips is that they are built significantly more complex than 2D chips.
"While the previous generation of flash memory took only three or four deposition layers to build, 3D NAND takes between 120 and 144, according to a study by market research company Stifel."
When they were introduced, SSDs had a price-to-performance ratio of more than $1 and companies wanted to bring the number down to as close to hard drives as possible. In the future SSDs will replace hard drives but in order for that to happen, prices need to come down significantly.
So let's look back and at the main events that have shaped wholesale price trends for NAND flash memory during the past years.
NAND Flash Wholesale Price Trends. The Early Start of 2010.
There has been a steady decline in the prices of NAND Flash modules since 2010. Upon launch, the contractual wholesale price for a standard 16 GB MLC was $3.30 per module. Since it was something new at the time and was being used in different components the price was still high. Secondly, the production of the NAND Flash memory modules was low because of the low demand by consumers.
A sudden increase in demand in 2010 saw a big increase in the price of the modules. The prices rose to as high as $4.62 per module. The 16 GB module is the most popular because it is used in smartphones, netbooks, Chromebooks, SSDs and so on. Most of the smartphones come with 16 GB as standard storage thus 16 GB MLC is the most demanded chip.
Since the market was developing for NAND flash memory, the prices were fluctuating a lot during the year. Prices kept on rising and declining each month without any indication of settling.
Factories ramped up their production capacities significantly in order to cater to the demand.
By the end of the year 2010, 16 GB MLC NAND Flash price rose to $5.40 per module.
NAND flash 2011-2012. Steady years ahead and upwards.
In 2011, the things started to settle down and we saw a steady decline in the prices of NAND flash memory. The year started off with $5.40 per 16 GB MLC module and ended off with a low price of $2.65. This indicated that the industry has settled and now both the demand and supply are constant. There have been a few innovations along the way as well. The die size of the NAND flash memory and fabrication process reduced significantly.
NAND flash memory chips starts off with 50-60 nm fabrication process and along the way the process started to shrink bringing better performance overall. Heat dissipation became better and performance increased as well. The prices also declined so 2011 was a good year for the growth of NAND flash industry.
The same situation followed in 2012 with a few hiccups along the way. In 2012, the prices dropped at $1.65 during mid-year but started to rise again by the end of it.
Manufacturers also introduced 64 GB modules during this year which might have affected the prices. 64 GB modules were getting popular because SSDs were the most demanded product in the computer industry and smartphones were introduced with 64 GB storage. Companies were spending a lot of money on research and development of SSD controllers and increasing their capacity. 64 GB modules saw the companies aim for higher capacity such as 512 GB drives in the market.
NAND memory growth. All time high of 2013.
The prices kept increasing in 2013 as NAND Flash memory saw the all-time high growth rate. The industry was valued at $30 billion at the time. There were four major players in the market, Samsung, Toshiba, Hynix and Micron. In 2013, prices varied between $1.75-3.50. The variation was huge and it was due to several reasons. The year started off with a steady price of $1.80 but started to rise during mid-year.
The prices rose all the way up to $2.96 in July 2013. The good indication was that the price is now steady and there are no major price hikes during the year.
Then tragedy struck, a fire at Hynix factory put a major hold on the production of MLC NAND Flash. As a result, the prices rose all the way up to $3.50 in September 2013. The demand was still high and the production was low so the prices continued to be above the $3 mark till the end of the year.
In 2014, NAND Flash price trends saw a steady decline which was good news for the consumer. The smartphone market was booming and the demand of NAND flash kept on increasing. The year started off at $3 but continued to decline to $2.40 in July 2014. By the end of the year, NAND flash wholesale prices had dropped all the way to $2.20.
Currently, the market for NAND flash memory has been further stabilized and the 16 GB MLC module will continue to prove at a relatively stable level.
Also, several companies have introduced 128 GB versions of smartphones and manufacturers are now producing up to 256 GB MLC modules to cater to the needs of the consumer markets.
However and as Samsung is rumored to supply Apple with 64GB NAND flash memory chips for the to meet market demands for the iPhone 6S and 6S Plus on a contractual basis and probably starting from this summer, reduced supply both to and from downstream vendors and manufacturers can be expected also during 3Q/4Q of 2015 which can be seen as a “same procedure as every year” for buyers and traders of NAND flash memory chips on the spot-markets.
As Sean Yang, assistant vice president of DRAMeXchange, a leading tracker of DRAM and NAND memory markets, recently pointed out:
"Supply of NAND flash will exceed demand throughout the first half of the year. The situation will get better for manufacturers of memory chips in the second half, when Apple introduces its next-generation smartphones and tablets."
For the downstream spot-market for wholesale of NAND flash memory chips in Hong Kong we assume business as usual, and stable prices with a slight rise towards fourth quarter as vendors and manufacturers start to flush their stocks for the upcoming end of year sales.
Wholesale buyers of custom USB flash drives will still benefit from low prices up until beginning of 3Q when increased demand from the markets will lead to a more balanced supply situations for manufacturers.
Please do feel free to contact our sales team for more information on NAND flash wholesale!