The contract prices of NAND Flash products have been decreasing for two consecutive quarters in 1H18 due to the traditional off-season and capacity expansion of 64/72-layer 3D NAND Flash. During this period, suppliers provided competitive prices for high-density products to boost the memory content per box, aiming to further improve the demand in peak season. Meanwhile, suppliers have postponed further plans of capacity expansion, hoping to moderate the price decline.

On the demand front, growth momentum for 2H18 NAND Flash market is expected to be weak although Q3 is the traditional peak season, with demand from smartphones, notebooks and tablets growing by 0-1%, 0-1%, and 9-10% QoQ respectively. Suppliers may further lower the quotes to boost the demand, which will result in steeper-than-expected price decline.

Going forward to the fourth quarter, suppliers may not release much new capacity, but the yield rate of 64/72-layer products is expected to grow mature, exceeding 80%. Moreover, suppliers may also add new capacity or transfer some of the current capacity to 96-layer production, which would further boost the bit output growth.

In terms of the demand, the momentum remains weak due to slow growth of notebook market, lack of specification upgrade in the smartphone market, and less replacement demand. The demand growth fails to offset the new supply, probably leading to the steeper drop in prices in Q4 compared with Q3. However, the market situation will depend on the sales of new iPhones, which may moderate the price decline.

A 6.1-magnitude earthquake hit Osaka on June 18, 2018. Yokkaichi, where Toshiba’s NAND Flash fab locates, also had 4-magnitude tremor. DRAMeXchange learns that Toshiba underwent an inspection immediately after the earthquake, and finished checking the wafers on June 19. Only limited number of wafers were influenced and can be fabricated normally after rework, bringing almost no influence to the market. The fab has returned to full operation soon after that.