To mitigate potential risks in logistics, NAND Flash buyers are now more willing to accept a tighter decline in contract prices in order to get their products sooner. However, since the Xi’an lockdown has not materially affected local factory manufacturing operations, price developments for NAND Flash contracts going forward are likely to remain relatively unaffected by the lockdown.
In addition, TrendForce finds that the daily number of new COVID-19 cases in Xi’an recently suffered a noticeable decline, and the local government also announced that the emergency level has been lowered. Thus, the local production facilities of Samsung and Micron are returning to normal in terms of manpower and operational capacity. Samsung’s local production base manufactures NAND Flash products, while Micron’s local production base is responsible for testing and packaging DRAM chips as well as assembling DRAM modules. The impacts of the lockdown primarily relate to delays in delivering memory products to customers. On the other hand, the event did not cause any tangible loss in memory production.
The lockdown in Xi’an has not caused a noticeable increase in NAND Flash spot prices, as most spot buyers already have a high level of inventory
As for spot NAND Flash pricing, vendors temporarily halted the quote offer immediately after the event due to fallout concerns. As a result, the general decline in NAND Flash spot prices has more or less come to a halt. However, there have been no accompanying signs of spot buyers rushing to buy more product, and overall trading volume remains quite low. TrendForce’s latest spot market survey reveals that buyers still have plenty of stock on hand and are in no rush to secure NAND Flash products at the prices currently on offer.
1Q22 SSD and UFS Customer Price Drops Expected to Reduce
As for the contract prices of major NAND Flash products, their overall decline was smaller than expected. For example, despite weaker demand for Chromebooks, laptop production as a whole has improved as component shortfalls gradually close, while demand for commercial laptops is also giving some upward momentum for overall laptop shipment. As a result, the QoQ drop in laptop shipments for 1Q22 was lower compared to previous first quarters. Additionally, lower than expected shipment of Intel’s latest Alder Lake processors, which support PCIe 4.0 interface, has led some PC OEMs to increase orders of PCIe 3.0 SSDs to meet their shipment targets. of PC for the 1T22. However, SSD vendors have already started to gradually shift their hardware readiness to PCIe 4.0 SSD, creating a gap between PCIe 3.0 SSD supply and demand. Additionally, the Xi’an lockdown has caused customer SSD buyers to scramble to lock in their required delivery volumes. Taken together, these factors mitigated the decline in client SSD prices for 1Q22 from previous 5-10% QoQ to 3-8% QoQ.
When it comes to smartphones, not only has demand remained relatively sluggish, but smartphone brands also hold a relatively high level of eMMC/UFS inventory, which means these brands aren’t particularly willing to negotiate prices for high volumes of mobile NAND Flash storage at the moment. On the other hand, thanks to the increase in orders from PC OEMs since November 2021, the inventory levels of NAND Flash vendors have fallen somewhat. Consequently, the decline in mobile NAND Flash storage quotes in turn narrowed slightly. Contract prices for UFS products are now expected to decline 5-10% QoQ in 1Q22 instead of 8-13% QoQ as previously forecast. Finally, contract prices for SSD servers and NAND Flash wafers are expected to decline 3-8% QoQ and 10-15% QoQ, respectively, in 1Q22, in line with previous expectations.
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