Memory chip market may be showing signs of bottoming out as China’s YMTC leads Samsung, Micron in raising prices

The memory chip market may have started to bottom out after more than a year of price declines brought about by a supply glut, as Yangtze Memory Technologies Corp (YMTC), China’s top chip maker, is reportedly increasing prices.

YMTC, which accounts for about 5 per cent of the global NAND memory chip market, recently informed its customers that it will increase pricing for its 3D NAND flash memory by up to 5 per cent, the Taiwan Economic Times reported on Thursday, citing unidentified sources.

YMTC did not respond to a request for comment.

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Other major memory chip makers such as Samsung Electronics, SK Hynix and Micron Technology are expected to follow suit and raise NAND prices by a similar range, according to Taiwanese IT media DigiTimes.

Micron, the biggest US memory chip maker – and currently under a Chinese cybersecurity review – told distributors this month that it will not accept inquiries for DRAM and NAND flash products below current market prices, the report said.

“These moves indicate that these companies believe the market has reached its bottom and that the imbalance of supply and demand is gradually easing,” said Wang Lifu, an analyst at research group ICwise.

“Since last year, several manufacturers have shut down their factories for a few days each month to control the supply, but they might not adopt the production reduction strategy after May,” Wang said. “However, whether the price of NAND will remain at its lowest level for [longer] or rebound quickly in the future is uncertain.”

NAND flash is a type of non-volatile storage technology that retains data even without power, making it ideal for electronics products such as smartphones, tablets, laptop computers and solid-state drives.

YMTC’s 64-layer 3D NAND flash memory chips on a 300mm silicon wafer. Photo: Handout alt=YMTC’s 64-layer 3D NAND flash memory chips on a 300mm silicon wafer. Photo: Handout>

YMTC’s price increase comes ahead of market anticipation about a rebound in the sector, which is expected to gradually stabilise in the second half of this year.

The move is also seen by industry insiders as a positive step towards reversing the downward pricing trend that has been fuelled by global economic headwinds, declining market demand, and excess inventories.

Since the second quarter of last year, global NAND prices have fallen by up to 25 per cent as supply chains scrambled to clear inventories, according to research company TrendForce.

In a March report, TrendForce said prices fell by 10 to 15 per cent in the first quarter of this year due to oversupply as demand for products such as servers, smartphones, and laptops was weak, adding that prices “will have an opportunity to rebound in the fourth quarter if demand remains stable”.

K. S. Pua, chief executive of Phison Electronics, a Taiwanese NAND flash supplier, said further price cuts were “not viable” and some suppliers may face bankruptcy if the market did not recover, according to DigiTimes.

Analysts predict that leading flash memory makers including Kioxia, Micron, Samsung, SK Hynix, and Western Digital have suffered combined losses of more than US$10 billion after they had to cut prices.

Cheng Weihua, YMTC’s chief operating officer, told a forum in late March that supply and demand in the global NAND flash market “will reach a balance in the second half of the year”, primarily on the back of orders from makers of smartphones, servers and personal computers.

Of the most popular solid state drives (SSDs) offered on Chinese e-commerce platform, Samsung 1-TB SSDs are going for 559 yuan (US$79.50), while some smaller brands are offering 2-TB SSDs for less than 500 yuan.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP’s Facebook and Twitter pages. Copyright © 2023 South China Morning Post Publishers Ltd. All rights reserved.

Copyright (c) 2023. South China Morning Post Publishers Ltd. All rights reserved.

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