[Crisis in K-Semiconductors] NAND Prices Plummet in Q3... Decline Accelerates

[Asia Economy Reporter Park Sun-mi] The semiconductor market in the second half of this year is expected to worsen more than previously anticipated. Following the memory semiconductor DRAM, which will determine the direction of the Korean economy, the price decline of NAND flash is also forecasted to steepen. Along with fears of an economic recession, the sharp drop in global IT device demand due to inflation and reduced consumption is strengthening the outlook that the semiconductor industry's performance, a pillar of Korean exports, will be bleak in the second half of the year.

On the 20th, Taiwanese market research firm TrendForce revised its NAND price forecast for the third quarter of this year downward from a 3-8% decline to an 8-13% decline. By product category, prices for embedded multimedia cards (eMMC) and universal flash storage (UFS) are expected to fall 8-13% compared to the previous quarter, while enterprise and consumer storage SSDs are projected to drop 5-10% and 8-13%, respectively. The price of 3D NAND wafers is anticipated to decline by as much as 15-20%. This price forecast represents roughly double the decline compared to the figures announced a month ago.

The prolonged weak demand for IT devices requiring memory storage, combined with NAND flash production and process advancements, has significantly intensified the oversupply situation in the market. Although the second half is typically a peak season for IT devices with concentrated new product launches, worsening economic conditions have led to demand falling short of expectations, and customers are burdened with clearing rapidly increased inventories, resulting in a decrease in memory semiconductor orders.

TrendForce previously assessed in its DRAM price forecast that the lower bound of the average price decline for DRAM used in PCs, mobiles, servers, and all other applications in the third quarter could fall to 10% or more. This is a more pessimistic revision from the initial expected price drop of 3-8%.

Immediately, memory semiconductor companies such as Samsung Electronics and SK Hynix face increased risks of performance slowdown and inventory growth due to falling DRAM and NAND prices in the second half. A semiconductor industry official stated, "To respond to the market, there are movements to reduce the proportion of products with relatively large price declines and to reorganize portfolios focusing on high value-added, advanced products that have a stronger price decline defense effect."