DRAMeXchange expects limited NAND Flash price fluctuatation due to rush order effect

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2009-03-10 18:27

Taiwan--(뉴스와이어)--Due to rush orders from downstream clients, NAND Flash average contract price of 1H March, 2009 showed stability or slight rise. Currently, the rush orders are mainly from the restocking demand in the China domestic market, especially for white-box or copycat (or so-called mountain-bandit in China) cell phone applications, says DRAMeXchange.

In addition, the quarter-end effect in March will also lower downstream clients' inventory level and suppress further purchasing demand. Downstream clients may also request upstream NAND Flash suppliers to further reflect the premium of the selling price due to the cost saved from new process technology migration. Under both positive and negative factors in March, the NAND Flash contract price is likely to remain relatively stable in the short term, according to DRAMeXchange's analyses.

With the recent memory card and UFD rush orders and the upstream vendors regulating their output according to the market demand, DRAMeXchange believes that the NAND Flash price is going to fluctuate in a limited range. Now the upstream vendors prefer the price to remain close to the production cost, and the downstream vendors mostly hope the contract price can be adjusted gradually in order to avoid the profit loss due to the rapid price adjustments. Also, with the rebounding of the NAND Flash price, the pace of high density memory card and UFD replacing lower ones will slow down and the time schedule of SSD's taking off will be delayed.

The current NAND Flash price rally started from the end of last year stemmed from the NAND Flash vendors decision to halt their 8 inch production and lower their 12 inch utilization rate. Amid the continuing supply decrease, the major NAND Flash chip 16 Gb MLC average contract price rose by 91% in the past three months.

The current price rally eased the upstream vendors operating losses and provided sufficient fund for the fabs to continue manufacturing. The downstream memory card and UFD vendors also indirectly benefited from the current price uptrend. After gradually clearing the inventory of NAND Flash chips and memory cards purchased with lower cost previously, the vendors’ revenue of the past two months increased remarkably.

Although the mainstream chip price went up over 90 percent, most upstream and downstream NAND Flash vendors remain conservative toward the future price trend of 2009. The current visibility of NAND Flash in retail channels is only one to two weeks, excluding the non-periodic OEM rush orders from the China market. The remaining global demand comes from regular channel inventory replenishment. The inventory of most channels now maintains at three to four weeks level.

Breaking down the market demand by regions, DRAMeXchinage states that the U.S. market is the slowest, followed by European market. Although the Asian market demand is also decreasing, it still performs comparatively better and the China market is the best performer. This is because the China market benefits from its local white box and minor-brand mobile phones, as shipments are relatively less influenced by the global financial crisis.

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