The trend of falling flash prices is hard to change [electronics manufacturing expo News]

15 Jul 2019

Due to the high inventory, the price decline trend of NAND Flash products this year is difficult to reverse, but the decline may be reduced.

Recently, the NAND Flash (flash chip) market, where prices have "falling down", suddenly encountered industry changes.

In early July, the Ministry of Economy, Trade and Industry announced that Japan would restrict the electronics manufacturing expo export of three types of semiconductors and OLED materials to South Korea. Since July 4th, three materials including "fluoropolyimide", "photoresist" and "high-purity hydrogen fluoride" will be restricted to Korea.

Among them, photoresist is related to the manufacture of memory chips such as NAND Flash. Some mobile phone practitioners have told reporters that storage has exceeded the screen and CPU, and it has become the biggest cost of mobile electronics manufacturing expo phones. The cost of storing in mobile phones is 25%-35%, which shows its importance.

On the other hand, at the end of June, Toshiba’s NAND Flash factory suddenly shut down for 13 minutes and has not resumed normal operations. These factors have an impact on the electronics manufacturing expo capacity and price of the next NAND Flash, so there are rumors that the next NAND Flash will increase prices.

However, in the industry's view, although the decline may narrow, the trend of price decline is difficult to change. Chen Hao, research associate of TrendForce, told 21st Century Business Herald: "The NAND ASP is expected to fall 40% in 2019."

Two emergencies in the flash memory market

Specifically, on the one hand, Japan’s semiconductor control over exports to South Korea has become severe. Since the 4th of July, the MFN status of South Korea has been cancelled. For fluorinated electronics manufacturing expo polyimide, photoresist and hydrogen fluoride. The export restrictions on semiconductor materials will be changed from the original application for export exemption to case-by-case review, and the relevant review process will last up to 90 working days.

According to the Xinhua News Agency, the Japanese government rejected the South Korean negotiating proposal on July 9, reiterating that it does not intend to revoke the control of raw materials exported to the Korean electronics manufacturing expo semiconductor industry. Japanese Minister of Economy, Trade and Industry Shigeng Hiroyuki told reporters after the cabinet meeting on the 9th: "Restricting exports to South Korea" cannot be discussed. We do not intend to withdraw control measures."

The Korean semiconductor industry has been hit as trade frictions between Japan and South Korea have intensified. For Korean storage manufacturers, photoresist has the greatest impact.

It is understood that lithography is an important process in chip manufacturing, and photoresist is a key material for lithography. It is a sensitizer coated on a semiconductor substrate, which accounts for about 7% of the chip manufacturing cost. In the upstream field of photoresist, Japanese companies occupy a monopoly position.

In the NAND Flash market, the main players are Samsung, Toshiba, Western Digital, Micron, SK? Hynix, Intel, of which the Samsung camp and the Toshiba electronics manufacturing expo camp occupy half of the country. The Japanese supply will also affect the manufacturing of NAND Flash chips from Samsung and SK Hynix in South Korea, resulting in a reduction in production.

In response to this situation, the industry also reported that Hynix is ​​negotiating with Intel or acquiring Dalian plant and 3D NAND business to supplement production capacity. In addition, the Korea Ministry of Industry, Trade and Resources has proposed a “revitalization strategy” to strengthen the domestic supply chain. It is estimated that from 2021, it will invest 6 trillion won (about 5.1 billion U.S. dollars) in semiconductor materials, components and equipment.

On the other hand, Toshiba suffered a power outage in June, and five factories were not spared. It has not yet fully recovered, which has also affected the electronics manufacturing expo production capacity of NAND Flash. The injured factory area also includes a joint venture between Toshiba and Western Digital, and Western Digital said publicly that about 6 ExaByte (EB) capacity was affected.

Chen Wei told reporters: "The impact on Toshiba NAND Flash capacity is at least 30%, but it is expected to resume production in mid-July."

In addition to the above accidents, the revenue and capacity of another giant Micron is not ideal. Affected by the environmental background of oversupply and Sino-US trade friction, GM's revenue in the Q3 quarter of FY 2019 accounted for approximately 31% of total revenue, and revenue decreased by 18% quarter-on-quarter and 25% year-on-year. In order to further improve market supply and demand, Micron decided to increase the electronics manufacturing expo proportion of NAND Flash output reduction from 5% to 10%, and will also reduce capital expenditure in 2020.

So, in the face of this year's NAND Flash capacity reduction, will the product price rise in the third quarter?

The downtrend is difficult to reverse

Some people believe that these two events will have an impact on the price of NAND Flash, and even expect NANDFlash to increase prices by 10% to 15%.

However, Chen Hao told reporters: "The July channel Wafer (wafer) price offer is expected to rise at least 10%, but the electronics manufacturing expo transaction price may not rise so much, Jibang Consulting estimates that NAND ASP will fall 40% in 2019."

According to the evaluation of TrendForce Memory Storage Research (DRAMeXchange), the Toshiba incident will put Wafer's short-term quotation under price pressure. The price of 2D NAND Flash products may rise in the third quarter, and the decline of 3D NAND Flash may slightly converge. Among them, the impact of 2D NAND products is more obvious, because Toshiba's Yokkaichi factory area is still an important electronics manufacturing expo source of supply for the market and the inventory level of such products is low, so the third quarter is expected to have upward pressure.

However, mainstream products such as eMMC/UFS and SSD based on 3D NAND architecture, with high inventory support from both buyers and sellers, the third-quarter contract price will not fall, but the decline may be slightly reduced. In the Wafer (wafer) and channel retail markets, due to the market influence of Western Digital, and Micron also announced the expansion of production cuts, and this year the market has been close to the cost line pressure, TrendForce is expected to be Wafer The quotation brought short-term upward pressure, and the contract price is expected to remain flat or small in the fourth quarter.

On the other hand, China's domestic Yangtze River storage is also expanding production capacity. It is reported that Changjiang Storage is expected to produce 64-layer 3D NAND in Wuhan storage base by the end of 2019. Changjiang Storage is building a US$24 billion semiconductor factory in Wuhan. Although compared with international manufacturers, the 64-story 3D NAND stored in the Yangtze River is still lagging behind, and the electronics manufacturing expo production capacity is not large, but the gap is rapidly shrinking, which will also impact the price of the NAND Flash market.

In 2017, as the price of memory chips such as flash memory continued to rise, it once triggered a series of price increases including products such as mobile phones, solid-state hard drives, and memory sticks. Until 2018, the relationship between supply and demand changed, flash memory prices have been falling, and the decline continued in 2019.

A related report from the Korea Semiconductor Industry Association shows that in February 2019, the global electronics manufacturing expo market price of 8GB system memory DRAM (Dynamic Random Access Memory) was US$5.9, down 36.8% compared with the same period in 2017, and 128GB flash NAND Flash. The global market price is $5, down 25.2% from the same period last year.

Overall, due to high inventory, the price electronics manufacturing expo decline trend of NAND Flash products this year is difficult to reverse, but the decline may be reduced.

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