2018 going the opposite way of 2017 with regards to NAND flash
SAN FRANCISCO — After a banner year in 2017, the NAND flash market continues to cool significantly in 2018. Analysts say that the shortages of NAND parts that persisted throughout last year have given way to oversupply, resulting in significant price erosion.
According to TrendForce, a research firm that tracks memory chip pricing, the average selling price of NAND flash is expected to decline by 10 percent in the third quarter and another 10 percent in the fourth quarter. Noting that the third quarter typically heralds the peak season for consumer electronics sales, the firm says that demand has been weaker than expected. Meanwhile, the supply of 3D NAND flash continues to expand as suppliers improve yield rates and expand capacity.
Prices are also expected to continue declining in the first half of next year, which is traditional the slower time of year for electronics sales. Shipment forecasts for smartphones, notebooks and tablets are fairly conservative for the first half of 2019, according to TrendForce.
TrendForce blames oversupply at various levels for the persistent price declines. Smartphone shipments are not expected to grow meaningfully if at all this year, according to to the firm, and notebook shipments are expected to be relatively flat in the second half of the year after a strong first half. Competition also continues to be fierce in the server SSD market, which is flooded with product despite strong demand, according to TrendForce.
IC Insights — another market research firm — warned last month that NAND flash suppliers are overspending on capacity expansion, contributing to falling prices. While most of the five major NAND suppliers have said they believe that NAND bit volume demand growth will average about 40% per year over the next few years, the industry exceeded the amount of capital spending need to a support a 40% increase by 27% last year and is forecast to exceed the amount needed by another 41% this year.
“IC Insights believes that the risk for significantly overshooting 3D NAND flash market demand is very high and growing,” the firm said in a report.
TrendForce noted that Toshiba’s new Fab 6 in the Yokkaichi, Japan, is scheduled to begin production next year. Most suppliers are working to make the transition from the 64/72-layer architecture to the 96-layer, which is expected to increase the overall output and keep the market in oversupply, according to TrendForce.
— Dylan McGrath is the editor-in-chief of EE Times.
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