Date: 20/08/2012

NAND flash price stable due to tight control of supply by Toshiba and Samsung

DRAMeXchange has reported 1HAugust 2012 NAND contract prices are continuing to stabilize, with average contract prices remaining either flat or showing small signs of increase.

DRAMeXchange comments and analysis for the stability includes:
1. As buyers and sellers remain divided over the future pricing trend, vendors of memory cards and universal flash drives (UFD) display a conservative attitude towards market prospects. This, as a result, is encouraging NAND Flash manufacturers to commence with their strategy of restraining supply.

2. With regard to NAND Flash pricing and market outlook, the supply side shows that major NAND Flash manufacturers like Samsung and Toshiba are continuing to impose tighter supply strategies towards memory card and UFD vendors. Looking at various NAND Flash vendors' 2Q12 financial reports, it is revealed that both the revenue and profit margin figures are tighter than those exhibited in the previous quarter. As such, NAND Flash vendors have adopted stricter price standards to prevent profits from slipping, whereas for the less profitable memory card and UFD markets, tighter production control is being imposed in order to amend the supply-demand imbalance.

3. From the buyer's perspective, given that memory card and UFD product performance has yet to peak in 3Q12, and taking into account the conservative outlook for 4Q12, stock levels have been regulated more cautiously, which in turn weakened the incentive to purchase further inventory. Trendforce believes that buyers and sellers will have split views on price movements, and are hence less likely to come to a consensus regarding price.

4. Apart from Toshiba, which recently undertook a 30% production cut, other manufacturers have yet to announce their production plans. However, as product shipments have fallen below expectations, the annual shipment growth rate has been adjusted downwards to 60-65%. This, in a sense, shows how NAND Flash vendors remain reserved about demand prospects for next year's peak season.

Toshiba release stated "Oversupply of NAND flash memory in the retail market, for application in USB memories and memory cards, has resulted in continual price declines since the beginning of this year. Toshiba has responded by adjusting shipments to the retail market since June and from today will reduce the operating rate at the plant in order to adjust output. This move will help to reduce inventory in the market and improve the overall balance between supply and demand."

Toshiba said it will implement a timely production adjustment to encourage early restoration of the balance in supply and demand and improve the overall market conditions ahead of the anticipated rise in demand.