| From: Sam | 10/3/2022 11:08:13 AM | | | | | | Supplier Pricing Clash Crashes Prices to Reduce Inventory, NAND Flash Pricing Forecast to Drop by 15~20% in 4Q22, Says TrendForce
Published Sep.26 2022,14:50 PM (GMT+8)
According to TrendForce research, NAND Flash is currently oversupplied. Buyers started focusing on destocking and greatly reducing purchases in 2H22 while sellers began offering rock-bottom prices to shore up purchase orders, causing wafer pricing to drop by 30-35% in 3Q22. All types of NAND Flash end products remain weak and factory inventory increased rapidly, resulting in a 15-20% decline in NAND Flash pricing in 4Q22. Most manufacturers’ NAND Flash product sales will also officially cross over into loss territory before the end of this year, which means that certain suppliers under pressure from operating at a loss will likely reduce production as a way to reduce losses.
In terms of client SSDs, since purchasing demand in 2H22 is far less than that in 1H22, PC brands currently feel pessimistic regarding demand next year and reducing inventory is a top priority, causing suppliers to increase client SSD price flexibility to surge shipments. PCIe 4.0 SSD shipments continued to rise this year and more suppliers launched 176-layer products to increase the penetration rate of this interface. In particular, 512GB quickly became the focus of supply. Coupled with a large supply of QLC SSDs, the supply side generally latched onto the 512GB capacity for fixed-volume or two quarter consolidated price negotiation strategies, intensifying price competition at this capacity. The decline in PC client SSD pricing is estimated to broaden to 15~20% in 4Q22.
In terms of Enterprise SSDs, purchase volume has also declined due to the expectation that server shipments will fall in 4Q22. However, though demand for consumer products has dropped significantly, manufacturers are eager to expand sales of enterprise SSDs. Notably, U.S. manufacturers began providing 176-layer products to clinch market share and Solidigm released a SK hynix 128-layer enterprise SSD for customer verification. At the same time, Kioxia is eagerly partnering with North American cloud service providers for PCIe 4.0 SSD. Price competition among suppliers is bound to intensify as more products enter the market. Thus, the price of enterprise SSD is forecast to drop by 15-20% in 4Q22.
In terms of eMMC, sluggish demand for chromebooks and TVs is cultivating a negative attitude among buyers towards eMMC stocking. As for demand visibility of networking products, visibility is optimistically expected to extend to the end of the year but, considering sluggish overall demand, only limited support for eMMC demand can be provided by networking products alone. With weak demand for consumer products and sustained growth in supply and output, inventory pressure forced manufacturers to offer low prices in 3Q22 for fixed-volume sales in 2H22 to stimulate buyers' willingness to buy. However, buyers’ order requirements generally trend towards small quantities across several batches. This will lead to a decline of eMMC pricing until the end of the year and eMMC prices are estimated to fall by approximately 13-18% in 4Q22.
In terms of UFS, the main application of UFS which is the smartphone market remains weak and traditional peak season sales has fallen short of past performance. Brands retain high inventory levels in both whole devices and components and their willingness to buy UFS has decreased. Therefore, manufacturers began looking for fixed-volume shipments starting in 3Q22, aggressively attracting transactions with branded companies though low prices and reaching supply agreements with certain Chinese brands in succession. However, since the market is generally pessimistic regarding demand next year, the status of manufacturer transactions has been poor and inventory pressure has not eased significantly. Therefore, manufacturers will continue to intensify price incentives to stimulate stocking momentum. UFS pricing in 4Q22 is estimated to drop by approximately 13~18%, with further slips a possibility.
In terms of NAND Flash wafers, even though some module makers have experienced slight pressure relief after several quarters of inventory adjustment, the overall market situation is still pessimistic, so attitudes towards stocking is extremely passive. Demand for products such as SSDs, memory cards, and drives at the retail end is stagnant as consumer products continue its slump and fail to become a force supporting wafer pricing. The supply side continues to increase wafer supply and a slowdown in the pace of process migration to higher layers has not been realized. Since a downward trend in pricing is inevitable, manufacturers are forced to accelerate process migration to optimize cost structure. In addition, manufacturers have been slashing prices since 3Q22, resulting in wafer contract pricing quickly approaching factories’ cash cost. TrendForce observes, against the framework of a perfectly competitive market for NAND Flash, suppliers intend to accelerate wafer price drops, and NAND Flash wafer pricing in 4Q22 is estimated to fall 20-25% QoQ.
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| To: Johnny Canuck who wrote (89072) | 10/3/2022 11:14:34 AM | | From: Sam | | | | The latest from DRAMeXchange--
Supply-side Inventory Proves Difficult to Dump as Demand Weakens Rapidly, Memory Manufacturers Initiate Rare Production Reduction, Says TrendForce
Published Oct.03 2022,16:27 PM (GMT+8)
According to a TrendForce investigations, memory pricing began to decline from 4Q21 due to weakening demand for certain consumer electronics. Coupled with the impact of rising inflation, the Russian-Ukrainian war, and pandemic policies, demand in peak season was weak, resulting in inventory pressure that has extended from the buyer side to manufacturers. In response to the aforementioned situation, Micron announced last week that it would cut production of DRAM and NAND Flash, becoming the first major memory manufacturer to officially reduce its capacity utilization plan. In terms of NAND Flash, the market situation is more severe than that of DRAM. As the average contract price of mainstream capacity wafers has fallen to their cash cost and is approaching the periphery of selling at a loss for various manufacturers, Kioxia also announced that it will reduce NAND Flash capacity utilization by 30% from October on the heels of Micron’s announcement.
In terms of DRAM, current contract pricing remains higher than the total production cost of various mainstream suppliers. Therefore, compared with NAND Flash, it remains to be seen whether there will be a significant reduction in production. In addition to mentioning the slight reduction in capacity utilization in this sector currently, Micron mainly emphasized its sharp downward revision of capital expenditures in 2023 and that the annual growth of DRAM production bits next year will only be around 5%. TrendForce believes, according to Micron, to actualize such conservative bit growth means that there is still room for a significant downward revision in capacity utilization and the extent to which Micron's subsequent production reductions are implemented remains to be seen.
In terms of NAND Flash, Micron originally planned to gradually increase its proportion of 232-layer products from 4Q22. However, with the implementation of the company’s decision to reduce production, Micron's mainstream processes are estimated to remain dominated by 176-layer products in 2023, while wafer starts in legacy processes will also fall. Kioxia and WDC originally planned to migrate to 162-layer products starting in 4Q22 but WDC slowed CapEx in 2023. When funding is hard to come by and demand visibility poor, the proportion of 162-layer products will fall greatly and the company’s original plan to replace mainstream 112-layer products in 2023 will not be achieved.
More manufactures limiting bit output cannot be ruled out as only large-scale production reduction can reverse supply/demand imbalance in 2023
After analyzing 2023 supply and demand in the memory market, due to a conservative demand outlook, DRAM and NAND Flash look to be greatly oversupplied in each quarter and inventory pressure will continue to accelerate in 1H23. In the DRAM sector, after Micron led the way to announce a DRAM production reduction plan that will fall far below historical levels of supply-side bit growth, the 2023 DRAM Sufficiency Ratio will contract from the 11.6% previously forecast by TrendForce to less than 10%, helping to alleviate rapidly deteriorating inventory pressure. However, more suppliers must be relied on to join in the actual reduction of DRAM production in the future in order to reverse the supply and demand imbalance next year.
It is imperative to reduce bit supply in the NAND Flash field due to the large number of competitors and the fact that manufacturers have yet to encroach on the physical limits of manufacturing. Considering that supply-side bit growth from Micron and Kioxia has been downgraded, the 2023 NAND Flash Sufficiency Ratio will drop significantly from the original estimate of 10.1% to 5.6%. Under the expectation that more NAND Flash suppliers will join the ranks reducing production due to loss considerations, inventory pressure is expected to ease in the 2Q23, while price declines are expected to diminish in 2H23. |
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| To: Sam who wrote (89079) | 10/3/2022 12:54:28 PM | | From: Sun Tzu | | | | (1) RRP is a reflection of pros, not retail.
(2) At 4% and the market falling, this is not so much fear as putting money to work
(3) Over the weekend I updated that post to "BTFD died last week" <g>
Still not enough fear, but without BTFD, we should get there in October. |
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| To: Sun Tzu who wrote (89083) | 10/3/2022 3:21:00 PM | | From: Sam | | | | | I think heavy institutional selling should abate here since so many of them are on a September year. There will still be some selling but more buying this month, then a little more selling in November depending on what happens in the election and how those are assessed. And of course there are so many geopolitical wild cards that could affect the economies around the world. If Xi lifts his zero COVID policies, it would make a big difference in both the markets and the economies around the world. Or if Pukin gives up in Ukraine (not that I give that a large probability)... that too would make a big difference. |
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| To: Sam who wrote (89084) | 10/3/2022 4:08:13 PM | | From: Sun Tzu | | | | You are a fund manager. You can make 4% to wait for the market to bottom, or you can try to catch falling knives. Which will you choose?
As for Xi and China - they have already started helping their housing market, which is why copper jumped so much today. But ultimately they need to get their economy back on track and that doesn't seem very likely.
The market is highly oversold and some bounces are in the cards. But the official earning estimates are too high. And everyone knows that. So what you want to watch is what will happen after the pre-announcements. Is there more selling to be done, or will they behave like MU.
In fact, MU may be a good indicator. |
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