Sellers Under Heavy Inventory Pressure, 3Q22 NAND Flash Wafer Contract Price Dip Expands to 30~35%, Says TrendForce
According to the latest TrendForce investigations, moving into the second half of 3Q22, the lack of a peak season has led to a delay in inventory destocking. Transactions in the NAND Flash market have been frosty. Buyers are watching passively and tend not to negotiate pricing. Pressure on factory inventory has reached a breaking point and manufacturers are bottoming out pricing in order to make a deal. This move will lead to a further decline in manufacturer pricing. TrendForce once again revises downward 3Q22 NAND Flash wafer contract prices and the decline of pricing is estimated to balloon to 30-35% from the original estimate of 15-20%.
In the past two years, the pandemic has promoted digital transformation and notebook computers and servers have stimulated rapid growth in NAND Flash consumption. In order to satisfy demand, manufacturers have been expanding aggressively, with their processes accelerating the output of 128-layer+ products. However, the 2H22 NAND Flash market situation has deteriorated sharply with the acute correction in purchase order demand for smartphones and laptops indicative of a market oversupply. Looking forward to 2023, the conservative attitudes of various consumer electronics brands may lead to difficulties in improving market conditions in the next year and stimulate suppliers to step up efforts to seize market share.
TrendForce indicates, due to sustained price precipitation in 2H22, if some manufacturers do not make production cuts, there is an increased possibility another wave of consolidation in the market may be triggered. In particular, the number of suppliers has not decreased and the price of NAND Flash will fluctuate greatly in the long term. At the same time, some manufacturers may find it difficult to keep up with the speed of technology migration as the transition to higher technology-level production will increase CapEx. Therefore, TrendForce believes that this wave of price collapse may be the beginning of market consolidation.
Looking forward to the price of NAND Flash wafers in 4Q22, as manufacturers have already implemented a strategy of maintaining market share at all costs, contract and spot market wafer pricing are facing collapse. Therefore, TrendForce believes that NAND Flash wafer pricing may drop by another 20% in 4Q22 and, since the industry tends to negotiate pricing in the fourth quarter and the subsequent first quarter, this decline is likely to continue to expand in the shadow of rising inventories and frosty demand.