1H'May NAND flash contract prices drop due to seasonality

TAIWAN: According to DRAMeXchange, a research division of TrendForce, 1H'May NAND Flash contract prices are gradually declining due to the persistent effects of the off-peak season.

Memory cards and UFDs are continuing to be affected by the seasonal slowness typical of the second quarter, as can be seen in the two products' noticeably weak sales performances during the first half of May.

Seeing as how China's May holiday period had failed to generate much buyer momentum, and taking into account the conservative market atmosphere resulting from the early channel inventory replenishments efforts and weak sales, numerous NAND Flash customers have opted to wait until 2H'May before actively engaging in contract price negotiations. The customers are apparently hoping that by that period, cheaper as well as more ideal NAND Flash prices could be obtained.

In order to protect their own margins and to gain acceptance of the buyers, NAND Flash suppliers are continuing to offer prices at levels that are either equivalent to or slightly higher than the previous amounts.
Given the lingering effects of the off-peak quarter and the NAND Flash customers' anticipation of lower prices during the quarter-end period, however, hardly any agreements could be reached in 1H'May. This not only resulted in sluggish market transactions, but also led to a slight dip in NAND Flash prices.

Looking at the demand side and the future state of the market, the system OEM clients' next pull-in momentum probably won't happen until at least 1H'June. As demand for memory card and UFD products are not expected to pick up before the third quarter, 2Q13 NAND Flash demand is likely to continue its decline until the first half of June.

On the supply side, NAND Flash sellers are expected to give into lower prices due to the quarter-end effects and the continuous supply growth resulting from the 20nm process migrations. As NAND Flash supplies continue to grow amid weakening demand, chances are good that prices will remain on a slight downtrend following the first half of May.