Date: 08/10/2012

7.5%-11% rise in 2H Sept mainstream NAND Flash contract prices: TrendForce

According to DRAMeXchange, a research division of TrendForce, under the impact of manufacturers' tightening supply strategies and the 4Q12 restocking demand for smartphones and tablet PCs, 2HSep. mainstream NAND Flash contract prices have risen by approximately 7.5%-11%. Viewed in terms of the initial prices for each individual months following 3Q12, the 32Gb and 64Gb MLC revealed larger price increases, whereas the price uptrend for TLC are of a relatively smaller proportion. In the short term, it is likely that the NAND Flash market situation may continue to remain steady, with the price uptrend expected to also continue. Analyzing from the supply and demand perspective, the present NAND Flash market is estimated to be impacted by the following factors:

1. NAND Flash Supply perspective:
Since Toshiba announced to implement a 30% production cut at the end of July, NAND Flash manufacturers have begun to display a more cautious attitude towards production control in 4Q12. With huge price falls impacting NAND Flash products during 2Q12, many businesses vendors have experienced negative revenue growth, which slowly made the protection of profits a major priority amongst manufacturers. With the memory card and UFD markets yet to show any clear improvements since early this year, major NAND Flash suppliers have not only increased the proportion of system products, but have also taken the plan to stabilize prices through the implementation of supply tightening strategies meant at channel customers. Micron's 4Q12 Financial Report, which covers the period from June to August, shows that its NAND Flash profit growth has reverted from negative to positive, an indication that the supply control strategies are working. Following the impacts and trends from the current economy, it is expected the capacity expansion plans from manufacturers may either be delayed until next year, or may be decided upon if the demand situation has changed for the better. As such, the attitudes towards the 4Q12 production situation are more conservative than initially expected. TrendForce thinks NAND Flash manufacturers are highly possible to continue with the supply tightening strategies during 4Q12.

2. NAND Flash Demand perspective:
The memory card and UFD markets have been sluggish in 3Q, with no clear signs of back-to-school demand nor restocking demand related to China's national holiday. For the fourth quarter, it is expected that even with Thanksgiving and Christmas shipments, the European and US market's 4Q shipment growth will only be slightly greater than that during 3Q12. The situation and performance of system product OEM clients, on the other hand, appear to be relatively firm. Although major OEM clients remain conventional towards 4Q12 system product demand due to the effects of the overall economy, the stable restocking demand from competitive smartphone brands like Apple and Samsung, along with their requirement for high-standard NAND Flash with greater density, are anticipated to help the NAND Flash market maintain its stability.

On the whole, TrendForce remains cautious about the 4Q12 demand prospects for major system products, memory cards, and UFDs. As NAND Flash manufacturers continue to tighten their NAND Flash resources, the mainstream NAND Flash contract prices, which had been stable during July and August, have shown partial upward trends starting September. TrendForce expects the partially stable and increasing trends to likely continue and extend into October.

Source: TrendForce
Author: Srinivasa Reddy N