Good news is still the headline in the NAND market. According to a report from DRAMeXchange’s research group, TrendForce, NAND contract prices have climbed 2-4% due to replenishment demand from OEM customers. The NAND market experienced slow movement in May due in part to high inventory levels and weaker than expected performance in the channel market.
This increased demand has forced NAND manufacturers and vendors to designate stock to OEM customers, forcing channel customers into a tight market. This situation will escalate quickly because channel members are concerned about their inventory levels moving into 2H13. NAND-based products are expected to become even more popular, and those companies in the channel are working quickly to fulfill their inventory requirements.
Solid state drives, or SSDs, are still slowly increasing in demand as we saw in May. However, there is still plenty of supply out in the market left over from disappointing SSD sales in 4Q12. Earlier this year, when SSD demand was very low, NAND pricing declined as a result. We have seen major price fluctuations in the last 12 months, but it appears that the price drops will be slower than we expect. The gap between supply and demand is closing due to reduced production by manufacturers in an overdue market consolidation. Manufacturers are continually looking to shrink their dies for more output and lower prices, but that plan may be pushed to the back burner for the meantime. However, the performance of the 1x wafers seems to be lacking and causing difficulty in manufacturing. Approximately 70% of NAND output this year is forecasted to be 20-nm-class. This helps maintain a high level of reliability in production as well as supporting the eMMC SSD market.
All in all, things are looking pretty good if you are in the NAND game. The market has remained fairly flat and manufacturers are satisfying most of the demand for their chips. Of course, this time last year was the beginning of a wild ride that not many were prepared for.