According to TrendForce’s research, the quarterly decline in NAND Flash prices will converge to 10-15% in the first quarter of 2023 as most suppliers have started to reduce production, and price cutting competition will also be controlled after the original manufacturers start to reduce production. Among them, NAND Flash Wafer is close to cash cost, so the decline will be the first product to be controlled; Enterprise SSD, as an important market for original manufacturers, to consume inventory and with larger profit margin, is the product with the deepest decline. Overall, NAND Flash has experienced a sharp price drop in the second half of 2022, prompting suppliers to actively reduce production, and with higher price elasticity compared to DRAM, TrendForce expects the NAND Flash price down cycle to end earlier than DRAM.
As for Client SSDs, the demand for notebooks is still weak in 2023 and notebook brands are conservative in stocking, coupled with the fact that the growth of Client SSD demand in 2023 continues to slow and the benefits of production reduction have not yet fermented, the oversupply situation still continues. The price of 512GB capacity has fallen, and as more suppliers launch high level QLC products, 512GB prices are likely to continue to fall. However, TrendForce has observed that the strategy of some of the production reduction suppliers to hold prices has worked, and the price drop of Client SSDs in Q1 was controlled and converged to 10~15%.
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In terms of Enterprise SSDs, the weak server shipments from the fourth quarter of 2022 have not yet improved, which in turn has affected the downward revision of Enterprise SSD orders. In addition, suppliers have extended Enterprise SSD price declines in the fourth quarter of last year in order to slow inventory build-up and increase stocking levels for North American customers, but this move has weakened Enterprise SSD stocking demand in the first quarter of 2023. However, this move has weakened demand for Enterprise SSD stocking in the first quarter of 2023. Since the average unit price of Enterprise SSD is still better than other consumer products, original manufacturers still want to actively expand Enterprise SSD shipments to support profitability, leading suppliers to adopt a bidding strategy, making Enterprise SSD the product with the deepest drop of 13-18% in Q1.
As for eMMC, the demand for Chromebooks, TVs and Netcom products is not strong enough to support eMMC prices effectively. At present, the original eMMC inventory level is still high, and the original manufacturers will still actively promote their products as long as their profit margins allow, while some module manufacturers continue to compete fiercely in the Chinese market with low-cost wafer products, which also puts pressure on the original manufacturers. However, as low-capacity eMMCs have fallen to the cost range, the price decline will be limited, and the decline will be concentrated on high-capacity eMMCs above 64GB, with an estimated price drop of 10-15% in Q1.
UFS demand for smartphones remains sluggish, with most major smartphone OEMs indicating that procurement volumes will likely remain flat compared to 2022, and the outlook for UFS demand remains negative for the year. Due to the increasing capacity of single-unit smartphones, NAND Flash products are consuming more bits, so OEMs still choose to actively promote their products, while Chinese customers hope to drive the upgrade of single-unit capacity through price incentives. At present, the number of smartphones with 256GB capacity is increasing, but it is mostly concentrated in flagship and high-end models, and it will take until the second half of 2023 for the introduction of new products to become more significant. In the first half of the year, UFS is still in an oversupply situation, and it is estimated that the price of UFS will drop by 10-15% in the first quarter.
As for NAND Flash wafers, module manufacturers are currently lacking in pulling momentum, and demand for retail SSDs and flash cards is weak. However, as the prices of mainstream capacity wafer products have fallen to the cash cost range of various suppliers, they are even sold out in some bulk purchase transactions. Under the situation that the overall supply has started to be restrained, the original manufacturers are not willing to sustain losses, and TrendForce estimates that the contract price of NAND Flash Wafer will be the smallest product to fall in the first quarter, about 3~8%.
