Chinese manufacturers are already stocking up memory chips with its price increasing
According to CNBC, Mark Newman, an analyst at Sanford c. Bernstein, thinks the trade conflict between Japan and South Korea has an opportunity to bring prices of memory chip such as NAND Flash back up, which have been low for nearly a year.
South Korean tech companies like Samsung are bound to find substitute material in response to Japan’s export control on three key semiconductor materials. If Japan does remove South Korea from the white list, the situation will become more serious.
Mark Newman thought that it would take Samsung more than two or three months to find substitute material meeting quality requirements, which led to a reduction in Samsung’s inventory of memory chips and production will slip for weeks. If that happens, it could have a positive impact on the price of storage. Storage prices are now starting to rebound, Newman noted. He added that Samsung now has enough inventory to avoid an immediate crisis.
If Japan removes South Korea from the list, South Korean companies will need to apply for permission to buy materials from Japanese companies. As permit application takes time, the manufacture and export of South Korean electronics components will slow down.
Chen Libai, president of A-DATA Technology, pointed out that the current problems in the memory market will be further complicated by the possibility that Japan will kick South Korea off export white list on August 2th, as the trade war between Japan and South Korea intensifies. Many Chinese manufacturers indeed come to Taiwan to purchase goods in order to avoid the relevant impact, he added. That makes the memory price rebound really so that the overall second half of the operation has a strong rebound opportunity.
In fact, Mr. Chen pointed out that recent memory conditions have been severely affecting the market since the blackout at Toshiba in the middle of June, because three of Toshiba's five factories have not resumed normal production. After that, the trade conflict between Japan and South Korea occurred. Japan restricted the export of high-tech raw materials to South Korea, which affected the supply of NAND Flash and DRAM. In addition, the current inventory has been gradually reduced under the condition that manufacturers cut production further, so the fact that memory prices have rebounded can be confirmed.
Chen Libai highlighted that the NAND Flash and DRAM memory prices hit bottom at the end of June and the cumulative increase of that has been about 20% since July. Driven by various factors in the future, it is expected that memory prices will rebound from a small rebound to a medium-term rebound pattern. Overall, spot prices for DRAM and NAND Flash have already hit a low in June, and contract prices will also hit a low in July.
Mr. Chen also said that in the face of the upcoming memory rebound market, Chinese manufacturers did come to Taiwan to “grab” the goods including from system factories to module factories a few days ago, in order to reduce the future risk of trade war in Japan and South Korea. Therefore, A-DATA Technology has also prepared inventory and production capacity to meet market demand.