TAIPEI – Global shortages of NAND flash have intensified in the fourth quarter, according to DRAMeXchange. Factors contributing to the shortage include strong smartphone shipments, growing SSD demand, and the increase in the average memory density of eMMCs and eMCPs.
Prices of NAND flash products are currently their highest for the year, as the market anticipates the undersupply situation to persist well into the first quarter of 2017. Between this year’s fourth quarter and next year’s first quarter, contract prices of enterprise and client SSDs are expected to rise more than 10%, while mobile products such as eMMC and UFS will register even larger contract price increases, says the firm.
Prices of NAND flash chips and wafers sold in the channel markets have increased in the fourth quarter. In the contract markets, eMMC and UFS have seen sequential price increases of approximately 9 to 13%, while prices for enterprise and client-grade SSDs have also advanced about 5 to 10% sequentially.
“From the supply side, the industry-wide transition to 3D-NAND is now moving at full speed,” said Sean Yang, research director of DRAMeXchange. “However, most suppliers, with the exception of Samsung, have not improved their yield rates for the technology as quickly as they would like. While 3D-NAND flash supply remains tight, the transition to the new architecture has resulted in a sharp production decrease and supply shortage for 2D-NAND (planar NAND) memory.”
Yang noted the majority of flash components, including eMMC, eMCP and UFS, are still based on the 2D-NAND architecture. At the same time, Chinese smartphone brands such as Huawei, OPPO and Vivo have placed large volumes of additional orders for high-capacity eMMCs and eMCPs because they are encouraged by the strong shipments of their devices.
“Demand from Chinese smartphone brands is the main contributing factor to the current shortage of 2D-NAND flash and has also indirectly caused the price hikes for wafers and chips in the channel markets,” said Yang. “As memory suppliers have shifted more of their available capacity to meet the demand from smartphone brands, they have also scaled back shipments to memory module makers.”
The undersupply of 2D-NAND flash is further compounded by the increase in memory content per box for mobile NAND products and the growing demand for SSDs. “OEMs can expect supply shortage to continue into the first quarter of 2017. By that time, NAND flash prices may climb to new peaks,” said Yang.
The aggregate price increase in the NAND flash market since the second quarter is enormous, says the firm. Consequently, the demand growth for NAND-based products in the channel markets has diminished slightly, as branded vendors and retailers raised their prices. At the same time, unit production costs are becoming more difficult to assess for PC-OEMs and smartphone makers, as prices of mobile and PC storage components have kept rising. On the whole, branded device manufacturers are preparing for continuing price increases in the NAND flash market in the first quarter of 2017. Shipments and the increase in memory content for smartphones, along with progress in 3D-NAND manufacturing, will determine the general price trend.