NAND Prices Expected to Drop 5% in Q3 Due to Reduced Demand for Smartphones and PCs

[Asia Economy Reporter Park Sun-mi] Prices of NAND flash across all sectors except enterprise SSDs, a key component of data center servers, are expected to fall by about 5% in the third quarter. This indicates that semiconductor demand is wavering as consumption of consumer electronics such as smartphones, PCs, and home appliances slows down due to global inflation and economic uncertainty.

On the 22nd, market research firm TrendForce forecasted that an oversupply of NAND flash will occur in the third quarter of this year, causing average prices to drop by 0 to 5%. In particular, consumer SSDs are expected to see prices fall by 3 to 8% in the second quarter as PC and laptop demand slows and inventory surges, forcing a move to reduce stock for the time being. The price of consumer SSDs was initially expected to rise by 3 to 8% in the second quarter, but the situation has completely reversed in just three months.

Prices of embedded multimedia cards (eMMC) and universal flash storage (UFS) are also expected to decline by 3 to 8% in the third quarter, while 3D NAND wafers are anticipated to see a price drop of 5 to 10%. As a memory semiconductor powerhouse with a high global market share, South Korea is bound to be directly hit by the NAND price decline. In fact, NAND sales by Samsung and SK, which together hold over 50% of the global market share, amounted to $17.92 billion in the first quarter of this year, down 3% from the previous quarter. Especially, with the worsening slump in Chinese smartphone demand, SK Hynix, which focuses on mobile products, saw its shipments decline by more than 10% compared to the previous quarter, showing sluggish performance.

However, the fact that a solid demand base such as data center servers still exists in the memory market is expected to serve as a breakthrough for the Korean semiconductor industry. Enterprise SSD prices, which rose 5 to 10% in the second quarter, are expected to maintain previous levels despite the overall NAND price decline in the third quarter. TrendForce stated, "Global enterprise SSD purchasing power is expected to increase by about 10% in the third quarter," adding, "Although demand is growing, intense price competition among companies will keep prices at nearly the same level as in the second quarter."