Anticipated Surge: Q2 NAND Flash Contract Prices to Soar, Enterprise SSDs to Lead

The NAND Flash market is expected to experience a significant increase in contract prices in Q2, with enterprise SSDs seeing the highest rise, while eMMC and UFS markets also show growth, driven by demand from Chinese smartphone brands and cloud service providers.

The NAND Flash market is projected to experience a notable increase in contract prices in Q2, indicating a strong demand for the product.
The demand for eMMC and UFS products is expected to increase, driven by the demand from Chinese smartphone brands and the robust demand from India and Southeast Asia.
The enterprise SSD market is expected to see the highest increase in contract prices, indicating a strong demand from cloud service providers and potential growth in the second half of the year.

According to TrendForce, the NAND Flash market is set to experience a notable increase in contract prices in Q2 of this year. The projected rise is expected to be between 13-18%, with enterprise SSDs anticipated to see the highest increase. Despite Kioxia and WDC ramping up their production capacity utilization rates since Q1, other suppliers have taken a more conservative approach to their production strategies. The dip in Q2 NAND Flash purchasing compared to Q1 does not dampen the overall market momentum, which is influenced by decreasing supplier inventories and production cuts.

The demand for eMMC is primarily driven by Chinese smartphone brands, leading to a significant surge in shipments from Chinese module makers as some suppliers have reduced their supply. Buyers are increasingly turning to solutions from module makers to meet their production needs, which is driving the technological advancement of Chinese module factories and their collaboration with top-tier clients. This trend is expected to drive the adoption of eMMC products among smartphone customers, resulting in a projected 10-15% increase in eMMC contract prices in Q2 due to the sharp rebound in NAND Flash wafer prices.

The UFS market is experiencing robust demand from India and Southeast Asia, driven by significant smartphone sales. Chinese smartphone brands are increasing their orders in Q2 to ensure sufficient inventory levels, further boosting demand. Suppliers aiming to reach their break-even targets quickly are likely to push UFS contract prices up by 10-15% in Q2.

Enterprise SSDs are benefiting from rising demand from cloud service providers (CSPs) in North America and China, with purchasing volumes expected to grow quarter-over-quarter in the first half of the year. However, due to low order fill rates for large-capacity SSDs, suppliers continue to influence price trends, potentially forcing buyers to accept higher prices. As some buyers try to increase their inventory levels before the peak season in the second half of 2024, enterprise SSD contract prices are forecasted to surge by 20-25% in Q2, marking the highest increase among all product lines.

On the other hand, client SSDs are experiencing a more cautious buying strategy due to the off-season in-end sales, leading some PC original equipment manufacturers (OEMs) to cut their orders for Q2. The rapid price rebound is expected to hinder order growth in the second half of the year, with Q2 contract price increases for PC client SSDs projected to be lower than those for enterprise SSDs, at approximately 10-15%.

The demand for NAND Flash wafers has seen a decline in post-Lunar New Year sales as downstream customers show no need for stockpiling. However, the price increase has resulted in suppliers failing to meet orders from Chinese smartphone brands, leading to a shift towards module makers. Consequently, Chinese module makers continue to maintain high inventory levels to expand their collaboration with smartphone brands. With manufacturers eager to reach profit targets quickly, NAND Flash wafer contract prices are continuing to rise. Nevertheless, the increase is expected to be more moderate than in Q1, estimated at 5-10% due to subdued demand in the retail market.

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Technology Explained

NAND: NAND technology is a type of non-volatile memory that is used in many computer applications. It is a type of flash memory that is used to store data in a non-volatile manner, meaning that the data is not lost when the power is turned off. NAND technology is used in many computer applications, such as solid-state drives, USB flash drives, digital cameras, and memory cards. It is also used in many embedded systems, such as cell phones, tablets, and other consumer electronics. NAND technology is a reliable and cost-effective way to store data, making it a popular choice for many computer applications.

SSD: A Solid State Drive (SSD) is a modern data storage device that employs flash memory technology to store data electronically. Unlike traditional hard disk drives (HDDs), SSDs have no moving parts, resulting in significantly faster read and write speeds. This leads to quicker boot times, faster application loading, and smoother overall system performance. SSDs are known for their durability, shock resistance, and energy efficiency, making them ideal for laptops, ultrabooks, and other portable devices. They come in various form factors, including 2.5-inch, M.2, and PCIe cards, and are favored for their reliability, quiet operation, and reduced heat generation