USA: According to DRAMeXchange, a research division of TrendForce, 2HApr. inventory replenishment for China’s Labor Day holiday was not as expected. Furthermore, aside from restocking for certain new tablet PC and smartphone models hitting the market in 2Q12, most system product and memory card application markets remain sluggish, affected by the 1H slow season.
Moreover, NAND Flash price has fallen dramatically since the beginning of the year, which has already impacted NAND Flash suppliers’ profit margins. Thus, since the beginning of April buyers and vendors have taken opposing stances on price negotiations - some firms have still not reached a consensus on contract price for some chips by the end of April. Therefore, the average mainstream NAND Flash contract price decreased about 2-9 percent in 2HApr roughly.Source: DRAMeXchange, Taiwan.
TrendForce provides the following analysis of supply and demand factors affecting the NAND Flash market:
1. Looking at demand, based on the release schedule of new processors, operating systems, and low-cost 20nm-class-process SSD products, many manufacturers are not likely to significantly increase shipments of new ultrabook, smartphone, and tablet PC models until 4Q12. Therefore, restocking of related NAND Flash application products will not increase markedly until mid-3Q12.
2. As for supply, due to market demand that has been weaker than expected in 1H12 and the potential effect of delayed release of some system products in 2H12, many NAND Flash suppliers have indicated they plan to carefully manage 2012 capital expenditures and bit growth, as well as temporarily suspend or slow wafer expansion plans or reallocate a portion of product lines to non-memory IC products.
Additionally, some NAND Flash suppliers will gradually decrease the sales portion of memory cards and UFDs in channel market, which have relatively lower demand, favoring instead embedded applications such as eMMC, mSATA and SSD – this will increase the sales portion of system product application revenue, reducing the impact of price decline on profitability.
Hopefully, excess inventory from 1H12 will be digested before the peak sales season in 4Q12 and the market oversupply situation will improve.
In summary, although the 2Q12 NAND Flash market remains in a state of oversupply, as NAND Flash suppliers’ profits were impacted by 1Q12 price decline, and new 20nm-class-process products’ yield rate, performance, and reliability all require some time to improve, makers will be less willing to adopt aggressive price-cut policy in 2Q12.
Therefore, NAND Flash contract price will continue to show a slight downtrend in the 2Q12 slow season, but price is expected to stabilize in early 3Q12 due to recovery of inventory restocking demand caused by some system product clients’ new model releases.Source: DRAMeXchange, Taiwan.