Taipei, January 15, 2009 -- NAND Flash contract price of 2H January, 2009, rebounded constantly, reflecting the fermentation effect of earlier upstream suppliers' reduction. Most suppliers also released 2H January contract price in order to response to the restocking demand before Lunar Chinese New Year. Though the demand for low-density products has shrunken, the average contract price of 4Gb MLC and 8Gb MLC products rose between 23 to 27%. The rise of price in 2H January reflected earlier upstream suppliers' reduction announcement that 20% QoQ of 200mm wafer production in 4Q08 & 1Q09 would be gradually phased out. The reduction mainly focused on 8-inch fab output, therefore, price of 4Gb and 8Gb MLC products rose with a large scale.
In addition, most downstream makers lowered their inventory to ordinary level in January. Starting from mid-January, they have started to fill their inventory back. Toshiba/SanDisk group earlier announcement on the reduction of 30% MoM 300mm production in January also helped to push the average contract price of MLC products from 5 to 16% along with market expected atmosphere. Most contract prices of SLC products whose demand has decreased also slightly rose.
Starting from 4Q08, most NAND Flash suppliers have either announced reduction or annual maintenance, and this is expected to decrease 10% QoQ wafer output in 1Q09. Reduction effect has encouraged NAND Flash market to rebound in 2H December, 2008. In 1Q09, both demand and supply for NAND Flash would decline, and the market is still under oversupply low season. The price has stopped declining and rebouned recently because of multiple effect from production reduction, healthier inventory level and restocking demand before Lunar Chinese New Year. In the short-term, the price would show stabilization. Currently the market expectation for 1Q09 slow season demand remains conservative. NAND Flash price stability after January, due to a glut concern, would depend on the recovery of market demand.