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TrendForce Maintains 4Q17 NAND Flash Market Outlook After Toshiba’s Capacity Rumors

Published: Oct 17,2017

Despite lower-than-expected output caused by certain problems in production lines, Toshiba will be able to deliver its NAND Flash shipments as per the dates and volumes in its fourth-quarter contracts, says DRAMeXchange, a division of TrendForce. After confirming with sources, DRAMeXchange refutes a report alleging that Toshiba’s monthly NAND Flash capacity has been reduced by nearly 100,000 wafers and some of its production lines have been suspended.

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Alan Chen, senior research manager at DRAMeXchange, stated that Toshiba’s production trouble will not have a major effect on the overall NAND Flash supply and demand in the fourth quarter of 2017 and in the first quarter of 2018. As for the NAND Flash spot market, there is no module supplier suspending quotes or shipments after knowing this information. This incident is expected to be resolved immediately with Toshiba quickly ramping up production to lower or fully compensate for the wafer deficit.

Chen noted that DRAMeXchange’s market outlook for this fourth quarter remains unchanged. The supply gap in this period will be smaller than in the third quarter. This also signals that the supply will eventually meet up to the demand, thus achieving market balance.

“Several factors are at work to make this happen,” said Chen. “First, non-Samsung suppliers are gradually moving their 3D-NAND processes into the volume production stage. Furthermore, the release of iPhone X encountered unexpected delays. A part of Apple’s demand for iPhone storage components therefore has also been deferred to the first quarter of 2018. On the whole, the NAND Flash demand in the fourth quarter of this year will be lower than initially anticipated.”

Even with the slight decline in Toshiba’s output, overall supply on the market will still expand conspicuously in the fourth quarter from the third quarter of 2017. Furthermore, NAND Flash demand in the channel market has remained sluggish unless NAND Flash suppliers lower their prices and ensure that the supply is more stable.

In the first quarter of 2018, the NAND Flash demand may be sustained by the strong sales of the latest iPhone devices. However, the markets for other end products will be affected by the seasonal headwinds. From the supply side, the overall production capacity of 3D-NAND products will keep expanding as suppliers improve the yields of their respective processes. Thus, supply will likely catch up to demand during the first half of 2018 and may even exceed it slightly. Only the return of busy season in the second half of 2018 will again put strain on the supply.

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