Friday, February 11th 2022
NAND Flash Pricing Set to Spike 5-10% in Q2 Due to Material Contamination at WDC and Kioxia, Says TrendForce
WDC recently stated that certain materials were contaminated in late January at NAND Flash production lines in Yokkaichi and Kitakami, Japan which are joint ventures with Kioxia, according to TrendForce's investigations. Before this incident, TrendForce had forecast that the NAND Flash market will see a slight oversupply the entire year and average price from Q1 to Q2 will face downward pressure. However, the impact of WDC's material contamination issue is significant and Samsung's experience during the previous lockdown of Xi'an due to the pandemic has also retarded the magnitude of the NAND Flash price slump. Therefore, the Q1 price drop will diminish to 5~10%. In addition, according to TrendForce, the combined WDC/Kioxia NAND Flash market share in the 3Q21 was as high as 32.5%. The consequences of this latest incident may push the price of NAND Flash in Q2 to spike 5~10%.
The contaminated products in this incident are concentrated in 3D NAND (BICS) with an initial estimate of 6.5exabytes (approximately 6,500M GB) affected. According to TrendForce, damaged bits account for 13% of the group's output in 1Q22 and approximately 3% of the total output for the year. The normal production schedule for the entire line has yet to be confirmed. It is worth noting that the damages announced by WDC likely do not account for total losses stemming for this event and the number of damaged Kioxia parts has not been aggregated, so the total number of affected bits may increase further.
Production primarily focused on Client SSD and eMMC, subsequent spot pricing may climb
Currently, WDC and Kioxia are focused on supplying PC client SSD and eMMC products. Since WDC is the number two and number one supplier in the client SSD and eMMC markets, respectively, subsequent supply will inevitably be hampered. Therefore, even if production demand for PC OEM is revised downward in Q2, client SSD prices may remain resistant to decline. In terms of enterprise SSD, Kioxia PCIe 4.0 has been verified by a number of customers and the company's market share in 2022 was originally forecast to increase. However, this incident will impact Kioxia's ability to ship product and further affect subsequent customer procurement. Therefore, in order for buyers to satisfy their own production requirements, a Q2 decline in enterprise SSD product pricing will be largely restrained.
In addition, as buyers and sellers in the spot market are still clarifying events and incident assessments, they mostly responded by suspending quotations, with no new quotations having been generated. However, TrendForce's assessment indicates that subsequent events will obviously stimulate spot price appreciation. Judging from contract pricing, any orders negotiated on a whole quarter basis should be unaffected in the near-term but there may be an immediate price increase in wafer quotations this February and March.
The contaminated products in this incident are concentrated in 3D NAND (BICS) with an initial estimate of 6.5exabytes (approximately 6,500M GB) affected. According to TrendForce, damaged bits account for 13% of the group's output in 1Q22 and approximately 3% of the total output for the year. The normal production schedule for the entire line has yet to be confirmed. It is worth noting that the damages announced by WDC likely do not account for total losses stemming for this event and the number of damaged Kioxia parts has not been aggregated, so the total number of affected bits may increase further.
Currently, WDC and Kioxia are focused on supplying PC client SSD and eMMC products. Since WDC is the number two and number one supplier in the client SSD and eMMC markets, respectively, subsequent supply will inevitably be hampered. Therefore, even if production demand for PC OEM is revised downward in Q2, client SSD prices may remain resistant to decline. In terms of enterprise SSD, Kioxia PCIe 4.0 has been verified by a number of customers and the company's market share in 2022 was originally forecast to increase. However, this incident will impact Kioxia's ability to ship product and further affect subsequent customer procurement. Therefore, in order for buyers to satisfy their own production requirements, a Q2 decline in enterprise SSD product pricing will be largely restrained.
In addition, as buyers and sellers in the spot market are still clarifying events and incident assessments, they mostly responded by suspending quotations, with no new quotations having been generated. However, TrendForce's assessment indicates that subsequent events will obviously stimulate spot price appreciation. Judging from contract pricing, any orders negotiated on a whole quarter basis should be unaffected in the near-term but there may be an immediate price increase in wafer quotations this February and March.
22 Comments on NAND Flash Pricing Set to Spike 5-10% in Q2 Due to Material Contamination at WDC and Kioxia, Says TrendForce
In other words, if you make SSDs and buy chips from say Kioxia, you're now paying 5-10% more than you did on your last order, if you don't have long term contracts in place.
It's unlikely to affect the actual SSD pricing as much, but we might see a small price increase.
It seems fairly stable to be honest, not big swings either which way, which is a good thing.
I can't vouch for the extent of the damage but no reason to suggest The Register's posting horse sh!t.
If the price of wheat flour goes up 5-10%, does the price of bread go up 5-10%?
That might not be bit oversimplified, but similar enough. I'd expect zero increase for now, maybe 2-3% down the road, but not 5-10% unless something else happens.
I'm not sure how inflation is related to this and not all of us live in the US.
One more thing, the prices increases are for spot prices, companies that use a lot of NAND flash have long term contracts in place.
classic
All we can do is either buy now or wait and see.It's an estimate by a "market intelligence" company. They've been wrong before.
Not blaming anything on inflation (in the US), I'm just saying prices (US) change more often than supply part prices, so went part prices are passed on to consumers, we wont notice the difference in the end.
en.wikipedia.org/wiki/DRAM_price_fixing
And the last one, I'm sure everyone remembers the last one.