Weak demand for consumer electronics is forcing suppliers to cut NAND prices in exchange for sales, according to market research firm TrendForce. The price of NAND Flash plates is expected to start falling in May and the supply of NAND Flash will gradually outpace demand in 2H22. The drop in the price of NAND Flash plates in 3Q22 can reach 5 ~ 10%.
The Kioxia pollution incident in February was expected to tighten the NAND market in 2Q22 and 3Q22. However, due to rising inflation and the war between Russia and Ukraine, market demand for consumer products during the traditional peak season of the second half of the year is conservative and prices of customer SSDs, eMMCs and UFS in 3Q22 will be fixed compared to 2Q22.
With regard to corporate SSDs, as the demand for data centers remains strong, there is still no significant adjustment in demand. However, as the overall NAND Flash market gradually shifts to oversupply, prices will only increase slightly by approximately 0 ~ 5% in 3Q22.
NAND Flash may encounter oversupply in 2H22
The war between Russia and Ukraine, rising inflation and the Chinese pandemic are dampening demand for consumer electronics, TrendForce reports. Demand for the Chromebook declined rapidly in early 2022 as exogenous demand from the pandemic disappeared.
Demand for commercial laptops benefits from returning to the office, which happens in many countries, while the opposite is true for consumer laptops. Therefore, the overall demand for laptops in 2022 will be lower than the demand in 2021. For smartphones, the production volume of Chinese brands has been suppressed due to the blockade of China due to its zero Covid policy.
In terms of supply, Samsung is focusing on significant future growth in the enterprise SSD sector and continues to maintain its original capacity expansion plan, especially after its NAND production line was derailed due to the blockade in Xi’an late last year. To stabilize the plant’s future operations, the capacity of the P2L plant in South Korea continues to increase.
Yangtze Memory Technologies (YMTC) will also expand its plan to introduce plates in 2H22. As 128 L production has reached the company’s target and it has successfully broken into the 1H22 level 1 smartphone supply chain, YMTC will also accelerate production at its second plant in Wuhan.
As the overall weakness in demand will persist in 2022 and some manufacturers will support a model of expanding production, the NAND Flash market will face oversupply in 2H22.