In recent weeks, the spot market for NAND Flash chips has witnessed a notable increase in price inquiries, driven by successful negotiations between suppliers and Chinese module makers.
The surge follows a rise in wafer contract prices, particularly for 512 Gb wafers, which saw a substantial 10 percent boost. This upward trend, however, is raising questions about the sustainability of the surge, as it appears to be driven more by supply-side adjustments than genuine end-user demand.
Reports from TrendForce indicate that discussions between NAND Flash suppliers and key Chinese module makers in late August resulted in a revised wafer contract, leading to the significant price hike. This move has not been isolated, as other suppliers also raised prices for similar products, indicating a notable shift in supplier sentiment. Suppliers are now showing reluctance to finalize deals at previously lower prices, contributing to the current short-term surge in the wafer spot market.
Despite these changes, uncertainties loom regarding the actual support of end-user demand for the increased prices. It appears that the surge is largely a reaction to shifts in supply-side pricing rather than a clear indicator of heightened demand. This market situation is leading to a cautious stance among buyers, with apprehensions about the longevity of the uptrend.
One strategy that suppliers are employing to address oversupply pressures is reducing production. Leading suppliers such as Kioxia, Micron, and Samsung have implemented production cuts, aiming to control supply and prevent further price erosion. Samsung’s production cuts, for instance, are projected to increase from 25 percent to 35 percent by the end of the year. While this strategy may stabilize prices, achieving a complete rebound in NAND Flash-related product prices remains a challenge, particularly if demand only moderately recovers.
As NAND Flash wafer prices rise, module makers such as Kingston and Phison are grappling with increased cost pressures. In response, there’s a growing trend among these companies to announce price hikes for end products, especially in the SSD segment. Many suppliers are refraining from price negotiations with customers and instead adhering to official pricing.
TrendForce predicts that the short-term price fluctuations in the wafer spot market are likely to persist, as suppliers continue to exert control over pricing. Korean suppliers are expected to further reduce NAND Flash production in the coming months to stabilize prices. However, despite purchasing cost increases, cautious and pessimistic attitudes among buyers about future demand prospects could limit the surge in order volume.
In conclusion, while the NAND Flash chip market has experienced a recent price surge driven by supply-side adjustments, concerns about genuine end-user demand and the sustainability of the uptrend persist. The delicate balance between supply control and actual market demand will be crucial in determining the trajectory of the market in the upcoming months.
