Weakened demand for consumer electronics is prompting suppliers to cut NAND prices in exchange for sales, according to market research firm TrendForce. The price of NAND Flash wafers is expected to begin falling in May and the supply of NAND Flash will gradually overtake demand in 2H22. The price decline of NAND Flash wafers in 3Q22 may reach 5~10%.
February’s contamination incident at Kioxia 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 in the traditional peak season of the second half of the year is trending conservative and the prices of client SSD, eMMC, and UFS in 3Q22 will be flat compared to 2Q22.
In terms of enterprise SSDs, as demand for data centers remains strong, no significant correction in demand has yet been observed. However, as the overall NAND Flash market gradually moves into oversupply, prices will only grow slightly by approximately 0~5% in 3Q22.
NAND Flash may face oversupply in 2H22
The war between Russia and Ukraine, rising inflation, and the pandemic in China are softening demand for consumer electronics, TrendForce reports. Demand for Chromebooks dwindled rapidly at the beginning of 2022 as exogenous demand from the pandemic disappeared.
Demand for commercial notebooks is benefiting from a return to the office occurring in many countries, while the opposite is true for consumer notebooks. Therefore, overall demand for notebooks in 2022 will be lower compared with demand in 2021. In terms of smart phones, the production volume of Chinese brands has been suppressed due to China’s lockdowns stemming from its Zero-Covid policy.
In terms of supply, Samsung is focusing on substantial 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 Xi’an lockdown at the end of last year. In order to stabilize future plant operations, the capacity of its P2L fab in South Korea continues to increase.
Yangtze Memory Technologies (YMTC) will also expand its wafer input plan in 2H22. Since the 128L yield rate has reached the company’s goal and it had successfully broken into the tier 1 smartphone supply chain in 1H22, YMTC will also accelerate production at its second factory in Wuhan.
As overall weakness in demand will linger in 2022 and certain manufacturers will maintain a pattern of expanding production, the NAND Flash market will face oversupply in 2H22.