NAND Flash Product Prices Expected to Rise 5-10% in Q3 Due to Production Boost and Decreased Demand

In the ever-evolving world of technology, it’s important to keep an eye on the latest trends and developments. And according to TrendForce, a leading market research firm, there are some interesting insights to be gained from their recent report.

Let’s start with the enterprise sector. It seems that businesses are continuing to invest in server infrastructure, especially with the growing adoption of artificial intelligence (AI). This increased demand for enterprise solid-state drives (SSDs) has been driving up prices. However, the consumer electronics market has been a bit lackluster in comparison.

To make matters more interesting, NAND suppliers have been aggressively increasing their production in the second half of the year. This surge in supply is expected to push the NAND Flash sufficiency ratio up to 2.3% in the third quarter. As a result, the overall price hike for NAND Flash is projected to be a modest 5-10%.

Now, let’s dive deeper into the specifics. This year, NAND Flash prices experienced a strong rebound as manufacturers limited their production during the first half. This strategy helped them regain profitability. However, with production ramping up and retail demand remaining sluggish, wafer spot prices have taken a significant hit. In fact, some wafer prices are now over 20% below contract prices, raising doubts about the sustainability of future price hikes.

When it comes to client SSDs (solid-state drives), there are some interesting dynamics at play. Despite the traditional peak season for notebook sales approaching, customers are being conservative with their stocking behavior. The prices of PC end products have not fully absorbed the price hikes from last year, and procurement volumes have not shown significant growth in the second half.

On the supplier side, there has been an upgrade in PC client SSD processes to 2XX layers, resulting in increased production capacity. However, weak demand continues to suppress price increases. Additionally, there is a considerable price gap between QLC (quad-level cell) and TLC (triple-level cell) products, leading more PC buyers to opt for QLC solutions. This heightened price competition is expected to restrain the price increase for PC client SSDs in the third quarter to a range of 3-8%.

Shifting our focus to the enterprise front, the expansion of AI server deployments is driving significant investments in IT infrastructure. As a result, server original equipment manufacturer (OEM) orders have seen a sharp rise in the third quarter. However, orders from smartphones and notebooks have been more conservative. Despite this, the NAND Flash market is becoming more balanced.

When it comes to high-capacity QLC Enterprise SSDs, they are mainly supplied by two dominant module makers. Other players in the market are fiercely competing for enterprise SSD orders to optimize their capacity utilization in the latter half of the year. This competition is expected to lead to a substantial price increase for enterprise SSDs in the third quarter, ranging from 15-20%.

Moving on to eMMC (embedded multimedia card), the third quarter lacks significant demand drivers. Nevertheless, module makers are determined to push for higher prices. However, this determination is expected to result in minimal price increases, with contract prices remaining relatively flat.

Finally, in the UFS (universal flash storage) segment, there are ample inventory levels and slow depletion by smartphone original equipment manufacturers (OEMs). This, coupled with increased supply options from module makers, is creating more choices for buyers. However, module makers are aiming for significant price hikes in the third quarter, but resistance is expected due to ample buyer inventories and weak market demand. As a result, Q3 UFS contract prices are projected to rise by only 3-8%.

In conclusion, while the enterprise sector continues to invest in server infrastructure driven by AI adoption, the consumer electronics market is experiencing a lackluster performance. With NAND suppliers ramping up production and sluggish retail demand, the NAND Flash sufficiency ratio is expected to increase in the third quarter. This, in turn, will curb the overall price hike to a modest range. It will be interesting to see how these trends unfold and how they will impact the technology landscape moving forward.

Technology Explained

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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.

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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

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