“The anticipated inventory-stocking demand did not materialize ahead of events such as the start of the school year in Europe and the U.S. in September and China’s National Day on October 1,” said Sean Yang, assistant vice president of DRAMeXchange.

Due to the weaker-than-expected overall demand, NAND Flash suppliers have become more aggressive in cutting prices. Consequently, the average contract price for mainstream NAND Flash chips in the second half of August was 6~7% lower than that in the first half of the month, showing the largest decline in the last three months.

On the supply side, the percentage of total product shipments from 15nm and 16nm processes continues to grow, and the pace of 3D-NAND Flash development is accelerating as well. Based on these factors, the next year’s annual supply bit growth for NAND Flash is forecast to surge to 47%. DRAMeXchange also anticipates further price declines as the market will be in oversupply up to the first quarter of 2016.

Yang added that 15nm and 16nm processes have started to mass produce eMMC, eMCP and SSD products since the start of this second quarter, and these products have become mainstream at the current stage. Samsung’s 3D-NAND Flash has a cost/performance advantage that allows Samsung to capture a large number of orders from suppliers of Client-SSDs for PC-OEMs. Competing NAND Flash suppliers therefore have had to slash their prices and speed up the development of their 3D-NAND Flash products, which will be ready for sampling between this fourth quarter and the middle of the first quarter of 2016 at the earliest.

With the output portion of 15nm and 16nm processes climbing at the same rapid pace, DRAMeXchange projects that the share of 10nm-level processing in the total output will reach 80% this fourth quarter. The percentage of 3D-NAND Flash in the total output will also exceed 10% for the first time in the same forecast period. By making good progress with their technology migrations in the period of economic downturn, NAND Flash suppliers on the whole have optimized their cost structures, with the estimated average supply bit growths for this third and fourth quarters respectively at 15% and 14%.

In the end market, Apple is still seeing healthy demand for its iPhone 6S and 6S Plus while other smartphone and tablet vendors are relatively more conservative in their device shipment projections. Notebook sales did not pick up with the arrival of Windows 10, and the expected sales momentum was further dampened when Intel delayed deliveries of its new processor platform for this year. Demands have fallen for all kinds of NAND Flash products (eMMC, eMCP and Client-SSD) as a result, adding to the downward price pressure in the market for the next half of 2015.