In April, under the unified command of the General Administration of Customs, the first round of anti-smuggling operations targeting the construction of free trade pilot zones concluded, implicating several domestic storage manufacturers and having a far-reaching impact on the entire industry.
The operation focused on illegal activities such as issuing fraudulent VAT invoices, obtaining subsidies fraudulently, claiming export tax rebates, and money laundering. It aimed to combat smuggling by exploiting the convenience policies of free trade pilot zones and special customs supervision areas. The operation’s slogan was “National Gate Sword 2024.”
01
Storage Supply Chain Investigation
The storage product supply chain is lengthy, with many products passing through customs zones. Several supply chain and logistics companies were implicated in this operation. After investigation, numerous manufacturers were involved, including some well-known brands in the industry.
Sources revealed that a major storage factory in Shenzhen was also implicated, affecting some listed companies and revealing tax issues. If the investigation continues, more manufacturers may be dragged in, with differences primarily in the magnitude of tax involvement.
FlashTech News learned that some manufacturers have been difficult to contact recently, with even office staff temporarily on leave.
Given the potential massive impact, some manufacturers may be at risk, especially those with more independent supply chains.
02
DRAM Products May Be Hit
According to industry insiders, since DRAM products require raw materials to be imported through customs, the operation will likely prolong the delivery cycle and complicate supply chain processes.
Moreover, this will increase production costs. Currently, storage factories have adjusted their taxes to standard levels, with a 13% VAT.
Overall, the chances of securing cheap products in the market will decrease. Manufacturers will need to seek new sources of storage products and supplier systems as alternatives.
For the storage industry, future production and operations will become more standardized. Market speculation and malicious competition will diminish, price fluctuations will gradually return to normal, and costs will stabilize, promoting the industry’s order.
03
Nand Storage Manufacturers Gritting Their Teeth
Over the past six months, storage manufacturers have consistently raised prices across various products. Both NAND Flash and DRAM have seen significant increases, benefiting the industry in the fourth quarter of 2023.
Moving into 2024, primary manufacturers continue to raise prices aggressively.
However, demand in the spot market remains weak. The bleak market prospects and rising costs are creating significant pressure on downstream manufacturers and module makers.
With the worsening disparity between finished products and raw materials, production costs continue to rise while spot product prices drop.
Combined with persistently low demand and stagnant sales, manufacturers holding out must face a harsh reality in the spot market.
This customs operation will further accelerate the rapid differentiation of the entire industry. The storage supply chain will undergo a significant shakeout, and every segment will face severe challenges. Some manufacturers will face increased survival pressure, and the storage industry is expected to develop new business models to adapt to changing times and market dynamics.
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