NAND Prices to Decline in Second Half... "Impact of Russia-Ukraine War and China's Blockade"

[Asia Economy Reporter Park Sun-mi] Due to the impact of the Russia-Ukraine war and lockdowns in major Chinese cities, demand for electronic products has slowed, causing fluctuations in the prices of NAND flash memory, a strong suit of Korean semiconductor companies. While NAND flash prices were expected to rise by 5-10% in the second quarter, forecasts now suggest that the price increase will plateau in the third quarter.

On the 12th, Taiwanese market research firm TrendForce analyzed that NAND flash wafer prices, which are highly sensitive to market demand and supply, began to decline starting this month. Since March, the effects of the Russia-Ukraine war and lockdowns in major Chinese cities have also impacted consumer sentiment, leading to a slowdown in demand for electronic products containing semiconductors. At the current pace, TrendForce predicts that NAND flash wafer prices could drop by 5-10% in the third quarter.

As wafer prices fall, the upward trend in NAND flash prices is expected to stall. With NAND flash also facing an oversupply situation in the second half of the year, TrendForce assessed that price increases could slow from 5-10% in the second quarter to 0-5% in the third quarter. They also left open the possibility of price declines across various NAND products. Initially, it was expected that NAND flash supply shortages in the second and third quarters would sustain price increases, but the situation is now completely changing.

From the demand perspective, all conditions?including the Russia-Ukraine war, lockdowns in major Chinese cities, and soaring inflation?are shaping a weaker demand for consumer electronic products such as laptops, smartphones, and TVs.

Nevertheless, NAND flash manufacturers are maintaining their existing production volumes. Samsung Electronics experienced disruptions in NAND flash production when Xi'an, China, was locked down at the end of last year, but it is currently maintaining its plans to expand production. Moreover, production at the P2L fab in Samsung’s Pyeongtaek plant, which manufactures NAND flash, is continuing to increase. China’s largest memory semiconductor company, YMTC, also plans to expand wafer input for NAND flash in the second half of the year, indicating that NAND flash production capacity will further increase.

Kim Un-ho, an analyst at IBK Investment & Securities, explained, "As demand slows in the home appliance and PC markets, the semiconductor shortage has already eased, and the mobile market’s final demand is also slowing due to the Chinese lockdowns. As NAND flash market demand weakens, price increases have started to slow, and concerns about demand in the second half of the year are rising."

This content was produced with the assistance of AI translation services.