NAND Flash prices, which have faced challenges due to softening demand, are poised to stabilize and potentially witness a mild surge in the fourth quarter of 2023, according to insights from TrendForce, a leading market research firm.
Samsung, one of the major NAND Flash suppliers, has made a significant move to address the market conditions by implementing a substantial 50 percent production cut starting from September. This reduction in production is primarily focused on processes under 128 layers. This strategic step by Samsung is expected to influence other suppliers to follow suit and increase their production cutbacks in the fourth quarter, with the primary goal of accelerating inventory reduction.
TrendForce’s research indicates that as a result of these production adjustments, Q4 NAND Flash average prices are projected to remain steady or experience a mild increase, estimated to fall within the range of 0 to 5 percent.
NAND Flash prices are predicted to exhibit a more positive trajectory compared to DRAM, aligning with TrendForce’s earlier forecasts for the year. With NAND Flash vendors facing mounting losses and sales prices approaching production costs, suppliers are opting to intensify production cuts to help stabilize and potentially raise prices.
In August, NAND Flash wafer contract prices began to show signs of recovery, and with the implementation of expanded production curtailments, there is optimism regarding the resurgence of customer stockpiling, further amplifying price dynamics in September.
However, for this positive price trend to extend into 2024, continuous production cutbacks and a robust rebound in enterprise SSD (Solid-State Drive) purchase orders are considered pivotal factors.
Notably, suppliers could find a silver lining in the scenario as the anticipated deficit in NAND Flash is expected to shrink, with module makers benefiting from this development. While NAND Flash has demonstrated greater pricing flexibility compared to DRAM, the year 2023 has not witnessed significant demand upticks. The influence of AI servers, particularly displacing general-purpose servers, has contributed to a relatively subdued NAND Flash market this year. This trend has been marked by a decline in Q3 average prices and suppliers grappling with widening deficits.
TrendForce emphasizes that stringent production control, exemplified by Samsung’s aggressive production cuts, is likely to set off a ripple effect that may lead to a price increase for their primary products. This ripple effect is anticipated to boost the overall bit shipment volume of NAND Flash in Q4, gradually narrowing the deficit gap for suppliers. Concurrently, this shift is expected to improve the profit outlook for module makers operating in the NAND Flash market.
The NAND Flash market’s path to recovery and stability hinges on ongoing production adjustments and a resurgence in customer demand, particularly in the enterprise SSD segment. TrendForce will continue to monitor these developments as the year progresses.
