Supply Chain More Optimistic About Q2 Component Demand
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Industry reports indicate that Toshiba recently suspended production for its NAND flash. DRAMeXchange, a division of TrendForce, confirms that Toshiba has had lower than expected output for its NAND flash production related to issues with equipment operation but it will not impact the company's fourth-quarter contract shipments.
DRAMeXchange also does not expect the production issues to have a major effect on the overall NAND flash supply and demand in the fourth quarter of 2017 and in the first quarter of 2018.
Toshiba told EPSNews: “Beginning in September of 2017, viruses were detected in some locations within the Toshiba Group of companies. We cannot share details or comment on the specific locations that were affected, but can confirm that the virus did not spread outside of the Toshiba Group network. Currently, normal operations have been restored at all affected locations.”
The Toshiba Group consists of several companies including Toshiba Memory and Toshiba Electronic Devices & Storage.
“Even with the slight decline in Toshiba’s output, overall supply in the market will still expand in the fourth quarter from the third quarter of 2017,” said Alan Chen, senior research manager at DRAMeXchange, in a statement. “Furthermore, NAND Flash demand in the channel market has remained sluggish unless NAND Flash suppliers lower their prices and ensure that the supply is more stable.”
“As for the NAND Flash spot market, there is no module supplier suspending quotes or shipments after knowing this information,” continued Chen. “This incident is expected to be resolved immediately with Toshiba quickly ramping up production to lower or fully compensate for the wafer deficit.”
DRAMeXchange maintains NAND flash supply will match demand and achieve market balance in 2018. Chen expects supply will catch up with demand in the first half of 2018 and possibly exceed it before a strain on supply returns in the second half.
“Several factors are at work to make this happen,” Chen said. “First, non-Samsung suppliers are gradually moving their 3D-NAND processes into the volume production stage. Furthermore, the release of iPhone X encountered unexpected delays. A part of Apple’s demand for iPhone storage components therefore has also been deferred to the first quarter of 2018. On the whole, the NAND Flash demand in the fourth quarter of this year will be lower than initially anticipated.”
Strong sales for the latest iPhone devices will sustain NAND flash demand although other end markets will be “affected by seasonal headwinds” in the first quarter of 2018, said Chen.
He also noted that production capacity of 3D NAND products will continue to expand as suppliers improve their yields.
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