From the second half of 2018, the market of memory began to decline. By 2019, this trend still remains which leads to too much inventory and the slumping market price of NAND Flash. However, owing to the shutdown of Toshiba memory factory and the impact of trade conflict between Japan and Korea, the price of NAND Flash starts to bounce in recent. What influence it will bring to the market? Does it mean the halt of decline or just a flash in the pan? The reporter from Huaqiang Electronics has visited some representative NAND Flash manufacturers to know what measures they will take to respond to market turmoil. According to some report, the price of consumer NAND Flash has declined by 65 percent in 2018. Until June this year, aggregate price index of consumer NAND Flash in 2019 has fell by 30 percent. It is hard to predict the memory market itself, especially in the state of cyclical decline in the industry. It is normal for the market to cut prices, which also leads to a reduction in profits and even losses. According to the relevant data, the sales volume of NAND Flash in the first quarter of 2019 has reached ＄10.75 billion, decline by 23 percent.
So the reporters have interviewed the general manager of Silicon Motion WallaceC. Kou. He said that several factors have contributed to the fall in NAND flash prices over the past year. First of all, the 64 layers 3D NAND flash technology of each of them is going to be mature and the yield is adjusted to an excellent state. And, each of them tries to put as much capacity as possible on the 64 layer 3D NAND flash, so the supply side bit grew a lot. Secondly, the scale of smart phone market tends to be saturated. The growth of smart phone over the past few years has already slowed down. Owing to the mature technology, the cycle of changing a new phone is longer than before. Although the storage capacity of phone still increases, the overall growth rate is still not keeping up with the increase in NAND bit growth. Thirdly, the demand for the data center is not as anticipated. Data center has gradually substituted more SSD for HDD, which is an important market application for NAND. The replacement rate is related to the price of NAND. When the price of SSD is higher than HDD, the replacement speed will accelerate. But, owing to the slump of global market, the demands for enterprise-class SSD of data center has lowered, which leads to the oversupply of NAND.
Pan Jiancheng, the chairman of the board of Phison Electronics, considers that NAND market has been in the supply and demand imbalance for long time. The prices are lower than the cost prices. The major suppliers are unwilling to see market disorder again. Phison Electronics has already increased inventory in March. And, Phison Electronics has already found that Toshiba and other major chip manufacturers began to reduce production, which is followed by Micron, WeiTeng and other manufacturers. Pan Jiancheng also says that the reason why the price of NAND Flash lowered before is attributed to the pressure of high inventory on the market. But, there is products demand in the third quarter and the effects of reduced production in the first quarter which is intensified in the second and third quarter. Therefore, the market of NAND Flash is not bad in the third quarter.
Facing the high inventory on the market, Wallace C.Kou considers that there is still a lot of NAND inventory. For one hand, NAND manufacturers need to control the capacity. For other hand, it is important to find the way to cut inventory. Unlike other types of memory such as SRAM and DRAM, NAND must be equipped with controller before it can be used as a product. If these NAND have not equipped with controller, the oversupply will be more intensified, which is not a good thing for the whole NAND industry. As the leading manufacturer of flash memory master control, SMI provide the whole solutions including IC and FW. “At this time, we will keep closely relation with NAND factories to ensure that we can stably match with NAND from different factories whether SSD, eMMC/UFS memory of smart phone or the master chip between flash memory card and USB drives. And, our partner manufacturers can cut their inventory as soon as possible. At the same time, we can improve our products and face the industrial challenge together.” he said.
We can see that there are several reasons why the price of NAND Flash continues to decline. Among them, the factors of the lower NAND price include demand market saturation, global market slowdown and high inventory levels. Especially, the inventory of enterprises has become the key factors affecting the NAND market price. But, manufacturers have already realized the problem and made active adjustment to the capacity of NAND. In the absence of significant good news on the demand side, there is supply shortage of NAND, of which the degree depends on the timing and extent of the compromise between South Korea and Japan.