DRAMeXchange , a division of TrendForce , points out that 1Q19 contract prices across all NAND Flash product categories were impacted by a weak server demand, an extended smartphone replacement cycle, less-than-expected sales for Apple's new phones and other end demand disappointments. Combined with the quarter fall, this quarter presents a drop of 20%, the most dramatic drop since NAND Flash supply surpassed demand back in early 2018.
DRAMeXchange analyst Ben Yeh points out that, after going through the demand slump of the first season, smartphones, laptops, servers and other main products in demand will all see improvements in the second season looking forward. On the other hand, NAND Flash suppliers scramble to suppress capital expenditure and reduce the production ratio of new production processes, even directly reducing production itself. Although it won' t cause an immediate reversal of the oversupply situation, it will have a positive effect on the market environment. In summary, 2Q contract prices for eMMC/UFS, SSD, wafers and other products will still continue to slide, but to a lesser extent compared to 1Q, landing between 10~15%.
Concerning channel markets in 2Q, 256Gb TLC wafers have fallen a long way since November 2017, coming to a large price drop exceeding 70% with price-per-GB plunging below 0.08 USD, the largest drop among all product categories. As prices gradually near the budget line with nowhere else to go, compounded with the increase in supplier yield rates and reduction of lower grade parts, end products such as memory cards and USBs may experience an upward adjustment or two in prices. Therefore, through stimulation by the upward price adjustments, module suppliers will increase in re-stocking momentum, while the slide in contract prices will gradually lessen in severity. Contract prices are predicted to exhibit diminishing drops in 2Q.
Ben Yeh points out that apart from channel markets, suppliers will also turn to high capacity UFS and SSD products, hoping not only to stimulate demand but also compete for market shares by lowering prices; mobile device suppliers including Western Digital and Samsung will be offering high capacity UFS 3.0 products to attract customers, hoping to stimulate demand in 2H this year through performance increases and attractive prices. Suppliers will also be completing uMCP product lines, pushing mid- and high-end devices toward 256GB, as well as gradually pushing 32GB devices toward 64GB.
For Client SSDs, suppliers will be increasing the falling pressure of 512GB/1TB product prices to stimulate content-per-box growth. This, along with the gradually increasing proportion of good value PCIe SSDs (Gen 3.0×2) in product shipments, will drive a larger drop in ASP, accelerating the rate at which SSDs are introduced into laptops. As for enterprise SSDs, demand for server/data centers is the only major demand on the rise in 2019. With a higher gross profit than other products, enterprise SSDs have become the holy grail companies vie for. Suppliers have all set their sights on PCIe products, which have plenty of room for growth and even more opportunities for competition. Contract prices shall continue to fall in the aftermath.