Effects of Japan-South Korea Trade War: Phison Expects NAND Flash Prices to Increase Another 30%
Recently, the red-hot NAND Flash market has led to a rise in NAND Flash prices, and the trade war between Japan and South Korea boosted the prices even more. Khein-Seng Pua, CEO of Phison Electronics Corporation, a manufacturer of controllers for NAND flash memory chips, remarked that the spot prices of NAND Flash have risen by more than 10% since July and they are rationally expected to increase by 20% to 30% in the near future; moreover, if panic buying occurs in the market, the prices may even rise by up to 50%.
NAND flash prices have been rebounding from their earlier low level and inflating excessively lately. Pua said that the upsurge in NAND flash prices has been brewing for one to two months. Previously, they witnessed a decline mainly due to the pressure brought on by the highly excess inventory of products in the market. But owing to the traditional demand of products in the third quarter as well as the effects of the reduction in output in the first quarter, the upward trend of prices simmered and became increasingly noticeable in the second and third quarters. Given the events such as Toshiba’s power outage at its memory foundry and Japan-South Korea trade tensions, the prospects of NAND Flash market condition in the third quarter do not look bad, Pua believed. However, he also mentioned that the present lack of stock resulted simply from the sudden changes in demand: Earlier the downstream companies kept their inventory low because of the downward trend of NAND Flash prices, but now since the good market news came out, companies have been considering stockpiling more products.
In July, the prices quoted by NAND Flash upstream factories rose by around 10%, and they might probably continue rising in the future, for the factories are expected to boost the prices that are given to the end-customers in accordance to the market condition.
Toshiba is a big shareholder in Phison as well as an important source of supply for Phison’s upstream fabs. However, it is said that Phison purchased a lot of goods in the second quarter from suppliers including Micron, Intel, and SK Hynix. At present, Phison already tops a NAND Flash memory chips inventory of NTD 10 billion. The orders placed in late June at current prices will still be delivered in July and August. During the rise in prices in NAND Flash market, Phison’s low-price inventory is expected to create a boon to its sales and profits.
Meanwhile, as for the latest news that Phison will stop quoting price for downstream companies, Pua noted that stopping supplying goods would be a wallop to the company’s customers, so the company would continue to supply goods to its high-quality customers, only the prices would increase. Despite the recent tight supply in the market, Phison has a sufficient stock of goods. “We has a low-price inventory, and we are able to support the good customers,” said Pua.
On July 12, Phison’s share prices experienced a decline after a continuous increase, falling NTD 7.5 per share, with its closing price being NTD 327.5. However, the investment trusts had bought it six times. ADATA, another manufacturer of flash memory products, has just experienced an increase of NTD 1.1 per share, its closing price being NTD 52.7. The dealers had bought it three times.