According to Taiwan’s DIGITIMES report, the tech industry’s traditional terminal stockpiling season’s conclusion signals a slowdown in the surge of spot prices for storage as November unfolds. However, this doesn’t imply an easing situation for upstream NAND manufacturers. Let’s delve into the intricacies of this market flux and its far-reaching impact.
The market dynamics, as per the report, have been intriguing. Upstream NAND manufacturers persist in reducing capacity release during the fourth quarter. Consequently, storage module factories strive for sizable orders at reduced prices, yet face hurdles in fulfilling their requirements adequately.
1
Spot Prices in November and the Impact on Storage Factories
The short-term inventory backlog within the channel market contrasts with the NAND Flash Wafer’s consistent rise rather than a dip. Specifically, the mainstream 512Gb spot price has soared by around 20% within a month, stabilizing at $2.6. This ascent inexorably inches closer to the breakeven point for original manufacturers, outlining a robust market trajectory.
2
Trends in DRAM Contract Prices
Echoing the rising trajectory in the spot market, the fourth quarter has witnessed an uptick in DRAM contract prices. With mobile storage reaping benefits from year-end inventory replenishment by smartphone brands, the contract price swells by about 15-20% this quarter. The proliferation of DDR5, triggered by PC and server platform updates, drives double-digit price hikes, overshadowing earlier projections for DDR4 and DDR3.
3
Channel Market Dynamics and Price Fluctuations
Contrary to the steady price hikes in spot rates during the third quarter, downstream channels and storage module factories completed shipments in October. This concluded the year-end peak season, leading to a noticeable deceleration in spot price increases throughout November. This shift denotes a temporary pause in the anticipation of rising storage prices, curtailing the short-term demand for inventory replenishment.
4
Challenges in DRAM Chip Products and Wafer Prices
Despite substantial increments in high-capacity DRAM chip product prices, the market witnesses varying trends. The average increase hovers around 3.25% for DDR4 16Gb in recent months, while DDR4 8Gb observes marginal escalations. Second-hand DDR4 chips circulating in the market contribute to sustained high overall DDR4 inventory, impeding substantial price hikes. Conversely, DDR3 faces declining prices due to ongoing inventory adjustments.
5
Projections and Production Dynamics
NAND Wafer prices persist in the realm of reduced supply from upstream manufacturers. Notably, storage module companies reveal a delaying tactic by original factories toward fourth-quarter Flash supply. Despite attempts to finalize substantial chip orders in September, the original factories’ reluctance to release goods, both in quantity and price, has led to unsatisfactory outcomes.
6
Future Estimates and Industry Projections
The market’s current state indicates a unique dichotomy – an active upstream and a passive downstream in the Flash spot market. This intricate situation triggers comprehensive price upsurges across all Flash Wafer products. Despite a recent climb in 512Gb TLC price from $1.4 to $2.6-2.7 by November-end, achieving the breakeven point for original manufacturers seems challenging in the short term.
7
Conclusion
The tech industry’s storage sector, marked by fluctuating spot prices and contrasting demand dynamics, faces intricate challenges and intriguing trends. While short-term projections hint at stabilization, the long-term trajectory remains contingent upon the balance between supply, demand, and production strategies adopted by manufacturers.
