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DRAMeXchange, a division of TrendForce, reports that following the Toshiba outage in mid-June, the Japanese government announced that it will be controlling South Korea-bound exports of three key materials used in the manufacturing of semiconductors, smartphones and panels, causing module manufacturers in the memory industry downstream to give higher quotes. However, since DRAM and NAND Flash inventories remain high, and that this is not a complete barring of materials but a prolonging of procedures, the possibility of a short-term, structural reversal of supply and demand is low.
Source: DRAMeXchange, TrendForce
The Japan-South Korea trade tensions raised news about a reversal in memory prices within the industry. Given that the inventories of module manufacturers downstream are generally lower -- since DRAM prices have already been sliding fast for three consecutive quarters -- some module manufacturers are raising their quotes or announcing halts to production, considering the material restrictions to signal a rebound. However, said TrendForce, spot markets currently make up just less than 10 percent of the entire DRAM market; the supply-demand trend in the mid- and long-term remains dependent on contract markets, which make up over 90 percent.
Looking at demand -- whether PCs and smartphones at the retail end or the implementation of enterprise servers and datacenters -- TrendForce reports overall end demand still seems to be rather weak. Yet looking back at supply, the firm sees DRAM suppliers generally sitting at over three months' worth of inventories, leading to a continual sliding of contract prices for PC, server and mobile DRAMs at the beginning of 3Q with no signs of reversal yet. TrendForce said the possibility of a structural reversal of supply and demand in the DRAM market remains slim.
The NAND flash market, on the other hand, is affected by Japan's increasingly stringent controls on materials exports and the Toshiba outage. Since wafer quotes are already a bit low, July is forecast to see rising quotes. But because suppliers generally have two to three months' worth of inventories in their possession, most module manufacturers won't be raising prices immediately.
Whether transaction prices will rise in the future still depends on the market and inventories on the supply side. As for quotes by OEMs for various SSD and eMMC/UFS products, although some suppliers have temporarily ceased shipments, TrendForce, judging from supply and demand and taking the inventories of OEMs into consideration, thinks that prices will come under downward pressure in the long term despite the short-term increase in NAND flash prices.
