NANDFlash product prices may fall by 15-20% in the fourth quarter

According to a study by TrendForce, a market research organization, NAND Flash is currently in oversupply. Starting in the second half of the year, buyers have focused on eliminating inventory and significantly reducing procurement. Sellers have issued broken prices to consolidate orders, resulting in a 30-35% decline in the price of wafers in the third quarter. However, various types of NAND Flash terminal products are still weak, resulting in a rapid increase in factory inventory, leading to a 15-20% decline in the price of NAND Flash in the fourth quarter.

The majority of original manufacturers' NAND Flash product sales will also officially enter a loss by the end of this year, which means that some suppliers are under pressure from operating at a loss, and it is a possible response to reducing production to reduce losses.

-Client SSD

Due to the fact that the purchasing demand in the second half of 2022 is far less than that in the first half of 2022, and that PC brands are currently not optimistic about demand next year, reducing inventory is a top priority, which will enable suppliers to increase the price elasticity of client SSDs in order to sprint for shipments.

This year, the shipment of PCIe 4.0 SSDs continues to climb, and more suppliers have launched 176 layers of products to increase the penetration rate of this interface. Especially, 512GB has long become the focus of supply. In addition to the large supply volume of QLC SSDs, the supply side generally locks on 512GB capacity and adopts a strategy of bundling or merging and negotiating prices for two consecutive quarters, exacerbating the price competition for this capacity. It is estimated that the price of PC client SSDs will expand to 15-20% in the fourth quarter.

-Enterprise SSD

In anticipation of a decline in server shipments in the fourth quarter, the purchase volume has also declined. However, at a time when the demand for consumer products has significantly decreased, the original factory is eager to expand the sales of enterprise SSDs. In particular, American manufacturers have begun to provide 176-layer products to grab the market, while Solidigm has also launched SK hynix 128-layer enterprise SSDs for customer verification. Meanwhile, Kioxia is actively cooperating with cloud service providers in North America for PCIe 4.0 SSDs, The price competition among various suppliers is bound to intensify as more products come into the market, so it is predicted that the price of enterprise SSD will decline by 15-20% in the fourth quarter.

-eMMC

The sluggish demand for chrome books and televisions has caused buyers to have a negative attitude towards eMMC stocking; As for the demand visibility of Netcom products, it is expected to continue until the end of the year. However, considering the overall weak demand, Netcom products are still strong and have limited support for eMMC demand.

In the face of weak demand for consumer products and sustained growth in supply and output, inventory pressure forced the original factory to issue a low price for bundled sales in the second half of the year in the third quarter to stimulate buyers' purchasing willingness. However, buyers generally rely on small quantities and multiple batches of purchases for order demand, which will lead to a decline in eMMC prices that will continue until the end of the year. It is estimated that eMMC prices will decline by about 13-18% in the fourth quarter.

-UFS

The market situation of smartphones, the main application of UFS, continues to be weak, and the sales performance in traditional peak seasons is not as good as before. Brand factories are still in high inventory of complete machines or components, and their willingness to purchase UFS has also decreased.

Therefore, from the third quarter, the original factory began to seek to bundle shipments, actively attracting brand deals with low prices, and gradually reached supply agreements with some Chinese brand customers. As of now, the original factory's attitude is that customers can negotiate in advance to pull goods based on next year's demand. However, due to the market's generally not optimistic about next year's demand, the original factory's transaction situation is poor, and the inventory pressure has not significantly improved. Therefore, the original factory will continue to increase the price decline to stimulate the momentum of pulling goods, It is estimated that the price of UFS will decline by about 13-18% in the fourth quarter, and may expand further.

-NAND Flash wafer

Even though some module factories have experienced some slight relief from inventory adjustments over the past few quarters, the overall market situation is still not optimistic, so the attitude towards stocking is extremely passive.

The demand for products such as SSDs, flash cards, and USB flash drives at the retail end continues to weaken as consumer products continue to weaken, unable to become a force for price support for wafers. However, the supply side continues to expand wafer supply, and the pace of process transfer to higher layers has not slowed. Due to the inevitable downward price trend, there is pressure on the original factory to accelerate the process transfer to optimize the cost structure.

In addition, since the third quarter, the original factories have started to cut prices to compete, resulting in the rapid approach of the wafer contract price to the cash cost of each factory. According to institutional observations, under the framework of a fully competitive market, NAND Flash suppliers intend to accelerate the price decline of wafers, and it is estimated that the price decline of NAND Flash wafers in the fourth quarter will be a quarterly decrease of 20-25%.