Due to a shortage of NAND flash memory chips, prices of SSD and eMMC devices are set to rise over 10% sequentially in the first quarter of 2017, according to DRAMeXchange.

The NAND flash shortage has been severe in the fourth quarter of 2016, as a result of strong shipments for smartphones, stable growth in SSD demand and the increase in the average NAND flash density in eMMC and eMCP devices, DRAMeXchange indicated.

Prices of NAND flash chips and wafers sold in the channel markets have reached their highest levels for 2016 in the fourth quarter, DRAMeXchange said. In the contract market, prices of eMMC and UFS devices have risen 9-13% in the fourth quarter, while prices of enterprise- and client-grade SSDs have gone up 5-10% compared to the prior quarter, DRAMeXchange noted.

"From the supply side, the industry-wide transition to 3D-NAND is now moving at full speed," said Sean Yang, research director of DRAMeXchange. "However, most suppliers with the exception of Samsung have not improve their yield rates for the technology as quickly as they would like. While 3D-NAND flash supply remains tight, the transition to the new architecture has resulted in a sharp production decrease and supply shortage for 2D-NAND (planar NAND) memory."

"The majority of flash components including eMMC, eMCP and UFS is still based on the 2D-NAND architecture," Yang continued. "At the same time, Chinese smartphone brands such as Huawei, Oppo and Vivo have placed large volumes of additional orders for high-capacity eMMCs and eMCPs because they are encouraged by the strong shipments of their devices."

DRAMeXchange identified demand from China-based smartphone vendors as the main factor causing the supply of 2D NAND flash chips fall short of demand. Robust demand from China-based smartphone vendors has also led to rising prices of NAND flash chips and wafers sold in the channel markets. "As memory suppliers have shifted more of their available capacity to meet the demand from smartphone brands, they have also scaled back shipments to memory module makers," Yang said.

The already tight supply of 2D NAND chips has become more severe due to the increase in memory content per box for mobile NAND products and growing demand for SSDs, DRAMeXchange indicated. "OEMs can expect supply shortage to continue into the first quarter of 2017. By that time, NAND flash prices may climb to new peaks," Yang noted.

DRAMeXchange forecast that contract prices of enterprise- and client-grade SSDs will rise over 10% in the first quarter of 2017, while prices of eMMC and UFS devices will register even larger increases.

By: DocMemory
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