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The latest analysis on the NAND Flash market by DRAMeXchange, a division of TrendForce, forecasts that the ASP of NAND Flash will drop by around 10% QoQ respectively in 3Q18 and 4Q18. Although 3Q18 heralds the traditional peak season for the sales of consumer electronics, the growth of the end market demand has been weaker than anticipated. At the same time, the supply of 3D-NAND Flash continues to expand.
DRAMeXchange points out that the main reason behind the falling prices is oversupply at various levels. First, the annual shipments for smartphones this year are expected to be just on par with last year's. The replacement demand for smartphones has been sluggish due to the lack of differentiation among products in terms of hardware specifications. Second, notebook shipments were very strong in 1H18, so the seasonal shipment growth for notebooks in 2H18 will be lackluster compared with the growth in the year's first half as the base period. Third, the competition is very intense in the server SSD market. Although demand for server systems is growing steadily, there is an oversupply of server SSDs because too many suppliers are engaging in this profitable segment. Finally, NAND Flash suppliers have raised their output forecasts as they have expanded their production capacity and improved the yield rates of their 64/72-layer 3D-NAND production. Given the above factors that have led to a persistent oversupply, contract prices of various NAND Flash products will remain weak through 2H18.
Growth in bit demand for eMMC/UFS and SSD is expected as the price drop can raise memory density in end products
The effects of the price decline are not all negative because lower NAND Flash prices can actually encourage device makers to raise the density (storage) specifications of their products. For instance, smartphone makers have expanded the storage of their flagship devices to 256/512GB. This in turn has led to the upgrade for models within the mid to high-range segment, from 32/64GB to 64/128GB. The increase in the NAND Flash density of smartphones will contribute significantly to the total NAND Flash bit consumption, which is estimated to grow by at least 40% YoY for 2018.
The drop in SSD prices is also going to push the SSD adoption rate in the notebook market to exceed 50% for the first time before the end of 2018. Furthermore, the NAND Flash density of mainstream client-grade SSDs for PC-OEMs will increase to 256GB by the end of 2018. Looking ahead, the mainstream density specification of client-grade SSDs could advance to 512GB over the next two to three years. Likewise, NAND Flash and SSD suppliers are actively developing higher-density storage solutions for the server markets. The density growth of server SSDs is projected to become larger in 2019 with the market entry of the QLC 3D-NAND architecture.
NAND Flash prices to keep falling in 1H19 as oversupply worsens
Since the market outlook for the 2H18 has become more certain, DRAMeXchange now anticipates continuing price decline during the traditional slow season of 1H19. Because of the seasonal headwinds, shipment forecasts for smartphones, notebooks and tablets are fairly conservative for the first half of next year. On the supply side, Toshiba's newly constructed Fab 6 in the Japanese city of Yokkaichi is scheduled to enter operation in 2019. Meanwhile, most suppliers are working to make the transition from the 64/72-layer architecture to the 96-layer. This ongoing technology migration is expected to increase the overall output and keep the market in oversupply.
View at TechPowerUp Main Site
DRAMeXchange points out that the main reason behind the falling prices is oversupply at various levels. First, the annual shipments for smartphones this year are expected to be just on par with last year's. The replacement demand for smartphones has been sluggish due to the lack of differentiation among products in terms of hardware specifications. Second, notebook shipments were very strong in 1H18, so the seasonal shipment growth for notebooks in 2H18 will be lackluster compared with the growth in the year's first half as the base period. Third, the competition is very intense in the server SSD market. Although demand for server systems is growing steadily, there is an oversupply of server SSDs because too many suppliers are engaging in this profitable segment. Finally, NAND Flash suppliers have raised their output forecasts as they have expanded their production capacity and improved the yield rates of their 64/72-layer 3D-NAND production. Given the above factors that have led to a persistent oversupply, contract prices of various NAND Flash products will remain weak through 2H18.
Growth in bit demand for eMMC/UFS and SSD is expected as the price drop can raise memory density in end products
The effects of the price decline are not all negative because lower NAND Flash prices can actually encourage device makers to raise the density (storage) specifications of their products. For instance, smartphone makers have expanded the storage of their flagship devices to 256/512GB. This in turn has led to the upgrade for models within the mid to high-range segment, from 32/64GB to 64/128GB. The increase in the NAND Flash density of smartphones will contribute significantly to the total NAND Flash bit consumption, which is estimated to grow by at least 40% YoY for 2018.
The drop in SSD prices is also going to push the SSD adoption rate in the notebook market to exceed 50% for the first time before the end of 2018. Furthermore, the NAND Flash density of mainstream client-grade SSDs for PC-OEMs will increase to 256GB by the end of 2018. Looking ahead, the mainstream density specification of client-grade SSDs could advance to 512GB over the next two to three years. Likewise, NAND Flash and SSD suppliers are actively developing higher-density storage solutions for the server markets. The density growth of server SSDs is projected to become larger in 2019 with the market entry of the QLC 3D-NAND architecture.
NAND Flash prices to keep falling in 1H19 as oversupply worsens
Since the market outlook for the 2H18 has become more certain, DRAMeXchange now anticipates continuing price decline during the traditional slow season of 1H19. Because of the seasonal headwinds, shipment forecasts for smartphones, notebooks and tablets are fairly conservative for the first half of next year. On the supply side, Toshiba's newly constructed Fab 6 in the Japanese city of Yokkaichi is scheduled to enter operation in 2019. Meanwhile, most suppliers are working to make the transition from the 64/72-layer architecture to the 96-layer. This ongoing technology migration is expected to increase the overall output and keep the market in oversupply.
View at TechPowerUp Main Site
