NAND Flash Pricing Set to Spike 5-10% in Q2 Due to Material Contamination at WDC and Kioxia, Says TrendForce

[AleksandarK]

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.

View at TechPowerUp Main Site

 

[R0H1T]

And before some others blow their lid off with conspiracy theories no this was highly unlikely to be an inside job, the scale is just too great for that! WD & Kioxia will obviously lose money due to this & lots of it ~

Wells Fargo analyst Aaron Rakers pointed out that WD takes about 40 per cent of the JV's output and, by extension, Kioxia will also suffer a production capacity loss, meaning a potential reduction of production output of up to 16EB.

WD shipped around 24EB of NAND in 2021's fourth quarter, meaning it's potentially lost the equivalent of 27 per cent of that quarter's output. Clearly its NAND revenues in the current quarter will be reduced by this production loss and the same will be true for Kioxia.

Chemical contamination at Kioxia/WD 3D NAND fabs

Operations at Yokkaichi and Kitakami affected

www.theregister.com

 

[TheLostSwede]

So overall no real change then?

 

[Hyderz]

5-10% probably us prices, other countries with weaker currency compared to the us dollar will probably see a bigger price increase

 

[TheLostSwede]

5-10% probably us prices, other countries with weaker currency compared to the us dollar will probably see a bigger price increase

This is cost to the devices makers.
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.

 

[Hyderz]

This is cost to the devices makers.
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.

ah thank you for clarifying that for me

 

[Jack1n]

I keep seeing articles like this every couple of months and yet the prices on SSD's seem to only drop.

 

[TheLostSwede]

I keep seeing articles like this every couple of months and yet the prices on SSD's seem to only drop.

Most likely due to market competition. Samsung did put up their pricing for some products.
It seems fairly stable to be honest, not big swings either which way, which is a good thing.

 

[Tomorrow]

The contaminated products in this incident are concentrated in 3D NAND (BICS) with an initial estimate of 6.5exabytes (approximately 6,500M GB) affected.

Typo. Should be 6500 TB

 

[ExcuseMeWtf]

Factory fires, floods, material contamination... always gotta come up with sth to excuse raising those prices.

 

[Ravenmaster]

And before some others blow their lid off with conspiracy theories no this was highly unlikely to be an inside job, the scale is just too great for that! WD & Kioxia will obviously lose money due to this & lots of it ~

Chemical contamination at Kioxia/WD 3D NAND fabs

Operations at Yokkaichi and Kitakami affected

www.theregister.com

How easy would it be for them to fake a contamination story just so that they could make a 10-15% price hike? I mean, has any personnel that does not work for their company been in to investigate and confirm the legitimacy of the contamination?

 

[R0H1T]

They would have to file this in their earnings report, so unless you think the regulators are also complicit the "incident" should be fairly authentic!

I can't vouch for the extent of the damage but no reason to suggest The Register's posting horse sh!t.

 

[DeathtoGnomes]

It's unlikely to affect the actual SSD pricing as much, but we might see a small price increase.

I hope you're right here, but I have my doubt. History tells us that manutafturing increases, 5-10% here, equates to 15-20% passed on to customers, with US inflation at ridiculous levels, everyone should expect prices to increase despite what this news brings.

 

[TheLostSwede]

I hope you're right here, but I have my doubt. History tells us that manutafturing increases, 5-10% here, equates to 15-20% passed on to customers, with US inflation at ridiculous levels, everyone should expect prices to increase despite what this news brings.

I think you're missing the point here a little bit.
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.

 

[mechtech]

3% of total output but up to 10% price increase

classic

 

[DeathtoGnomes]

If the price of wheat flour goes up 5-10%, does the price of bread go up 5-10%?

yes I do. Supply increases are almost always passed onto the consumer. Companies that like to price gouge I expect 10-15% increase bread pricing.

I'm not sure how inflation is related to this and not all of us live in the US.

because right now prices here, on just about everything, is in a state of shit, so likely the inflation could be blamed for end product increases and a Nand price hike wouldnt be noticed.

One more thing, the prices increases are for spot prices, companies that use a lot of NAND flash have long term contracts in place.

I doubt they are long term enough. Less than 5 years maybe?

 

[TheLostSwede]

yes I do. Supply increases are almost always passed onto the consumer. Companies that like to price gouge I expect 10-15% increase bread pricing.


because right now prices here, on just about everything, is in a state of shit, so likely the inflation could be blamed for end product increases and a Nand price hike wouldnt be noticed.


I doubt they are long term enough. Less than 5 years maybe?

So are you going to blame the price increase in six or 12 months on this? Inflation is one of those things we all have to deal with and it's clearly not specific to this either, so using that as an excuse from your side when we don't even know what's going to happen is a bit lame.
All we can do is either buy now or wait and see.

3% of total output but up to 10% price increase

classic

It's an estimate by a "market intelligence" company. They've been wrong before.

 

[TheGuruStud]

US is exporting inflation. Overseas gonna get whacked, next. Already 15%, here. 10% would be expected to cover upcoming losses. Might as well blame it on this. Memory manuf always lie, anyway.

 

[TheLostSwede]

Memory manuf always lie, anyway.

Proof of this? Otherwise it's just an opinion.

 

[DeathtoGnomes]

So are you doing to blame the price increase in six or 12 months on this? Inflation is one of those things we all have to deal with and it's clearly not specific to this either, so using that as an excuse from your side when we don't even know what's going to happen is a bit lame.

3-6 months is my guess, sooner if inflation continues the way it is now.

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.

 

[Vayra86]

KIOXIA was celebrating 35 years of NAND this year, those guys really do know how to throw a party. Never mind the morning after

 

[mechtech]

Proof of this? Otherwise it's just an opinion.

I wouldn't say always, but it's been known to happen.

DRAM price fixing scandal - Wikipedia

en.wikipedia.org

And the last one, I'm sure everyone remembers the last one.

 

[TheLostSwede]

I wouldn't say always, but it's been known to happen.

DRAM price fixing scandal - Wikipedia

en.wikipedia.org

And the last one, I'm sure everyone remembers the last one.

But price fixing isn't the same as lying about an incident that's causing manufacturing defects, is it? That they do dodgy things when it comes to their sales is a different matter. A lot of companies does that.