1Q20 NAND Flash Price Is Projected to Continue Rising

The contract price of client SSD has fallen for seven consecutive quarters until 2Q19 from peak price, to barely above the price of HDD.

As a result of this price decrease, the share of SSD, along with their capacity, used in notebook computers has risen since 2Q19. On the supply side, the June 15 power outage at the Yokkaichi fab jointly operated by Kioxia and WDC forced the two companies to reduce their NAND production, in turn halting the price drop of eMMC/UFS and SSD products in 3Q19. On the other hand, there was a sharp uptick in the wafer market leading to a 20% increase in 3Q19 wafer prices. As well, the contract prices of eMMC/UFS and SSD made a strong recovery in 4Q19.

From the perspective of client-side demand, despite increased contract prices in 4Q19 and the subsequent weakening of bit demand for client SSD, data center clients are actively preparing for new projects in 2020. This has the effect of increasing the momentum for enterprise stock-up demand, which resulted in a supply shortage for enterprise SSD in 4Q19. The contract price of enterprise SSD is thus expected to hold up. Aside from data center clients’ galvanizing of restocking demand, the restocking demand from the mobile devices sector began surging since 4Q19 because of Apple’s new iPhones, to be released in 1H20. The overall demand for NAND Flash in 1Q20 is projected to be strong despite seasonal headwinds.