Flash memory prices fall, NAND flash memory will enter the adjustment period
A few days ago, Nikkei News reported that due to Apple's production adjustments for the iPhone X and a slowdown in smartphone sales from Chinese manufacturers, some memory prices have dropped. Specifically, NAND flash memory is now entering an adjustment phase. This shift comes after a period of sustained growth in demand for memory-centric semiconductors, which had kept market conditions strong.
The semiconductor industry has been closely monitoring whether the market is transitioning into a more balanced or adjusting phase. Recently, spot prices for NAND flash memory used in smartphones have declined by approximately 10% compared to three months ago. This marks a significant change from the continuous price increases seen since the second half of 2016.
According to Luan Heng, a columnist at SeekingAlpha, data from Korea Investment & Securities indicates that average selling prices (ASPs) for NAND and DRAM are expected to decline between 2016 and 2018. Recent quarters have shown a downward trend in ASPs for Samsung Electronics and SK Hynix, two major players in the memory market.
Nikkei also noted that since 2016, when iPhones began featuring flash memory capable of storing dozens of high-definition movies, global smartphone storage capacities have increased significantly. Additionally, growing demand from IT companies to store personal information in data centers has further fueled the expansion of the flash memory market.
However, Apple’s iPhone X saw a 50% drop in output from January to March. Analyst Sean Yang from CINNO Research pointed out that Apple is the largest consumer of these chips, accounting for about 1.6% of global demand in 2017—roughly 160 million gigabytes. Reduced production of the iPhone X means fewer consumers of memory chips, which could slow the growth of NAND, DRAM, and their average selling prices.
Meanwhile, fast-growing Chinese smartphone brands like OPPO and Vivo are also facing challenges. IDC data shows that global smartphone sales fell by 0.1% year-on-year in 2017. These shifts in the smartphone market have directly impacted the supply and demand dynamics of flash memory.
Samsung initially planned to build a new NAND flash memory production line in Pyeongtaek, South Korea. However, with the recent price decline, it has shifted focus to building a DRAM production line instead. JP Morgan estimates that Samsung’s investment in flash memory will decrease by 30% in 2018 compared to the previous year.
DRAMexchange forecasts that DRAM supply will grow by 22.5% in 2018, up from 19.5% in 2017. However, DRAM revenue is expected to rise by only 30%, far below the 76% growth recorded in 2017.
The development of memory manufacturing in mainland China is also influencing the global supply and demand for NAND and DRAM. Several Chinese semiconductor factories are expected to begin operations as early as 2019. For example, Jinhua IC in Fujian is accelerating its project timeline, with major factory construction expected to be completed by October this year. In Wuhan, Yangtze River Storage Technologies is investing $2.4 billion to build three large-scale 3D NAND flash memory plants. The first plant is set to start production in 2018 with a monthly capacity of around 300,000 wafers. Meanwhile, a company in Hefei has also purchased a batch of DRAM production equipment.
Robert Castellano believes that the decline in memory prices, along with Samsung’s reduced NAND flash memory expansion and the completion of Chinese manufacturers’ memory plants, signals the end of the so-called “super cycle†for memory chips.
Sensanjishi, an executive at JP Morgan Securities, cited by Nikkei, stated that NAND flash memory is entering an adjustment period. Moriyama added that with increasing yields from various manufacturers, the supply of NAND flash memory will rise, easing the supply shortage compared to 2017.
DIGITIMES noted that while the semiconductor industry still expects continued growth in global storage demand, the NAND memory market is currently undergoing short-term adjustments. It is expected to rebound in the medium to long term. However, given the volatile nature of the market, and with new product yields and declining sentiment, the outlook for 2018 remains uncertain.
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