NAND Flash Memory Prices Currently on a Downwards Trend
NAND prices on the contractual market have been easing up already during the first quarters of 2018.
The main reasons for this is the current combination of the annual/cyclical off-season together with a lower market demand. Mostly driven by the smartphone market as main contributor to demand during peak season of 4Q 2017, the traditional off-season has had a significant effect and impacted wholesale prices during the first quarter of 2018.
Because of this, many manufacturers have not been focusing too much on expanding production capacities.
Instead, upstream suppliers and NAND manufacturers have been working on increasing memory content per box and in the hope that the current downward price trend stagnates before they again boost capacities.
NAND Flash Prices Expected to Further Decline During 3Q/4Q 2018
Both contractual NAND flash prices as well as spot-market wholesale prices are excepted to further decline during the remaining 2 quarters of 2018.
However, this general price decline tendency might very well get buffered out a little by the traditional increase in demand from Apple:
Apple usually places large contractual orders with the main NAND flash manufacturers during summer or early spring to prepare for their new upcoming models, usually launched during 4Q.
The big question here remains how well the new Apple models will sell - and also how these new products will be priced.
Because of the low market demand DRAMeXchange expects NAND flash memory growth to be weak also during 3Q/4Q 2018 and prices to keep on declining until early 2019.
Upstream NAND flash suppliers may further put pressure on their sales price to encourage more demand, and this has the potential to affect NAND flash spotmarket prices even more, leading to further price decreases.
According to DRAMeXchange's analysts, NAND suppliers could start to add new capacities or transfer some of the current capacity to a more effective 96-layer production, which would further boost the bit output growth. In case the market demand then fails to offset the new capacity supply this might lead to an even more significant drop in prices during 4Q 2018.
U.S - China Trade Tensions Could Disrupt NAND Flash Supply Chain
The current U.S. - China trade tensions brings an element of uncertainty to the global chip markets.
Because growing trade frictions between the U.S and China have the potential to severely affect the global NAND flash memory supply chain, this might cause significant impacts also on global prices.
Mainly impacting NAND producers that have business on the China mainland such as e.g Micron.
It remains uncertain how tariffs on both side would effect the - rather complex - global chip supply chain.
However, and in case main chip manufactures such as the above mentioned Micron or Intel experience issues with their supply chains, it it very likely to result in price increases for NAND and DRAM.
Growing tensions would also affect South Korean chipmakers, mainly Samsung Electronics and SK Hynix:
These two major players sell NAND flash memory chips to China for assembly of products that are then exported to the United States. Global supply chains are highly complex and interwoven, and significant impact on various parts of the industry would likely be the result if tensions increase.
As the likelihood of a full scale trade war between the U.S and China is currently growing every day, it remains to see how this would impact the NAND flash wholesale markets.
Major trade tensions would likely offset the ongoing downward price trends and could lead to supply shortages as the supply chains are restructuring.