Suppliers Successfully Hike Wafer Contract Prices, Triggering Short-Term Surge in Spot Market
September 1, 2023 | TrendForceEstimated reading time: 2 minutes
Recently, the spot market for NAND Flash chips has seen a rise in active price inquiries for certain products, a movement driven by successful increases in wafer contract prices. TrendForce reports this uptick primarily stems from negotiations in late August between NAND Flash suppliers and key Chinese module makers. These discussions led to a new wafer contract that successfully boosted the price of 512 Gb wafers by approximately 10%.
Other suppliers have also raised prices for their comparable products, signaling a shift in supplier sentiment: they are now less inclined to finalize deals at lower prices. This change has contributed to a short-term surge in the wafer spot market. Nevertheless, whether this surge in procurement is supported by actual end-user demand remains uncertain, as these orders have arisen in reaction to adjustments in supply-side pricing.
Suppliers remain firm on pricing and seek to accelerate bottoming out through production cuts
Beginning in 4Q22, Kioxia and Micron took the lead in production cuts, followed by Samsung in the 2Q23. Therefore, the effects of these cuts will not be fully realized until 2H23. TrendForce reports that Samsung initially reduced its production by 25%, and this figure is expected to increase to 35% by 4Q23. This indicates persistent oversupply pressures in the market. Without proactive interventions from suppliers, achieving a bottoming-out and rebound in NAND Flash-related product prices will be challenging, even if demand modestly recovers in 2H23. Consequently, major NAND Flash suppliers are currently controlling supply by actively reducing production, in a bid to halt further price erosion and prevent prices from hitting new lows.
In light of the recent uptick in NAND Flash wafer prices, module makers such as Kingston and Phison are experiencing increased cost pressures. As a response, there has been a growing trend among these companies to announce their intentions to raise the prices of end products, particularly in the SSD segment. Recently, these suppliers have reverted to official pricing for transactions, ceasing to allow customers to negotiate for lower prices.
TrendForce believes that, as suppliers continue to hold the upper hand in determining the prices for wafers and related NAND Flash products, short-term market price fluctuations are to be expected. Korean suppliers are likely to further cut NAND Flash production in the fourth quarter with the aim of stabilizing prices. However, when contrasted with actual end-user demand, buyers remain cautious—even pessimistic regarding future demand prospects. Consequently, even if purchasing costs are increased, this is unlikely to stimulate a surge in order volume. As such, the sustainability of the current uptrend in wafer spot market prices is still worth observing.
Suggested Items
Omdia: OLED Monitor Display shipments to surge by 123% YoY as Top Brands Embrace its Technology in 2024
05/09/2024 | PRNewswireOLED monitor display shipments significantly increased in 2023, following an upsurge of 415% year-over-year (YoY), according to Omdia's Monitor Display & OEM Market Tracker. This trend is set to continue with Omdia forecasting a 123% YoY increase in 2024, reaching 1.84 million units, driven by industry leaders Samsung Display and LG Display.
IDTechEx Report: Illuminating the Future of Lidar in Automotive
05/09/2024 | PRNewswireIn the rapidly evolving landscape of Advanced Driver-Assistance Systems (ADAS) and autonomous driving, sensor technologies have emerged as a pivotal force driving innovations in the automotive industry.
Sondrel Awarded New Video Processor ASIC Design and Supply Contract
05/09/2024 | SondrelSondrel, a leading provider of ultra-complex custom chips for leading global technology brands, is pleased to announce that it has won a major ASIC design and supply contract for a next generation, video processing chip.
IDC Forecasts Slower Growth for Global Telecommunications Services Market: Could AI Help Telcos to Maintain Healthy Margins?
05/08/2024 | IDCWorldwide spending on Telecom Services and Pay TV Services reached $1,509 billion in 2023, an increase of 2.1% over 2022, according to the International Data Corporation (IDC) Worldwide Semiannual Telecom Services Tracker.
Simbe Partners with Plexus to Scale Manufacturing and Meet Global Retail Demand
05/08/2024 | Globe NewswireSimbe, the leading provider of Store Intelligence™ solutions that increase retailer performance through unprecedented visibility and insights, today announced a partnership with Plexus Corp. to bring its best-in-class retail robotics-as-a-service to market quickly and at global scale.