Slow season effect continues, 2HMar. NAND flash contract price declines slightly

TAIWAN: According to DRAMeXchange, a research division of TrendForce, affected by the slow sales season, retail channel UFD and memory card demand remains weak, and OEMs’ new product models will not hit the market until 2Q12 at the earliest. As a result, downstream NAND Flash clients continue to adopt conservative inventory policies to reduce risk.

Previously, when buying momentum was weak, vendors adopted more aggressive price strategies in hopes of stimulating demand. However, currently promotional sales are having limited effect, and if price continues to fall vendors will see profit erosion. Therefore, some vendors are unwilling to lower price any further.
The above factors have resulted in a slight decline for 2HMar. NAND Flash contract price. TrendForce indicates, although the NAND Flash industry has seen weak demand in 1H12, demand is expected to warm up in 2H12 due to three industry highlights – ultrabooks, smartphones and tablet PCs, and USB 3.0.

SSD demand stimulation from ultrabooks
Ultrabook models loaded with the new Ivy Bridge platform will hit the market in 2H12. The new products are expected to significantly increase NAND Flash consumption regardless of whether they are equipped with a small amount of SSD mixed with HDD or a pure SSD solution.

Arrival of new smartphone and tablet PC models
New smartphone and tablet PC models from various manufacturers are scheduled to hit the market in 2H12, just in time to make the most of the traditional strong sales season. Together, smartphones and tablet PCs may consume over 50 percent of NAND Flash capacity; combined with the peak season effect, stimulation from the new products will significantly benefit demand momentum.

USB 3.0 flash drive market takes off
New PC models loaded with Ivy Bridge will enter mass production in 2H12, which will benefit the USB 3.0 market. Consumer recognition of USB 3.0 products is expected to increase considerably, which will indicate gradual market maturity.

Furthermore, USB 3.0 retail price should decrease significantly, as NAND Flash controller IC vendors introduce related controller chip products and flash drive makers migrate to 2ynm-class process technology.