We’re just past the Flash Memory Summit, where my colleague Joe Unsworth got to quiz a load of companies about how the market is developing. NAND Flash has had a bad time of it lately, with prices well below what’s sustainable, but a recovery is on the way in the last quarter of 2019 and throughout 2020.
There’s already been signs of rising prices, but those will become more widespread towards the end of the year, with 2020 to have price declines of only 5% (a good thing when we expect cost reduction to be around 20%). The NAND industry has suffered, with unsustainable pricing that demands a correction to support capacity investments. Joe reckons that the NAND industry must see its margin structure increase at least 10%, to be above 30%, if it’s going to become a healthy business.
The Toshiba/WDC power outage has had an impact on the supply environment and this has acted as a catalyst for higher prices in some markets. Overall, there is still some nagging inventory in some suppliers but that will normalize in the next three months. The Japan/Korea export control issue appears to be resolved but that was a modest factor in NAND Flash. Already announced capacity cut-backs will also limit supply bit growth in 2020 to below 40%.
Clearly price declines are now driving higher capacity across products, aided by lower DRAM prices freeing up the memory budget. Talking to buyers at the ‘Summit it becomes clear that unit demand has been better than expected in PC OEM and aftermarket SSDs. Hyperscale demand has seen signs of recovery followed by smartphones and SSDs used in Storage arrays. Some customers in down-grade markets have already seen modest price increases and some incremental demand for 4Q19 are being met with higher prices already.
New technologies discussed at the ‘Summit were NVMe and its ecosystem, QLC technology and Emerging Memory. There has been a flood of controller announcements from established players, and several new companies, aimed at enabling QLC, NVMe and Computational storage. Emerging Memory was topical as well, but without a presence from Intel and Micron the excitement around 3D XPoint was subdued.
Last month Joe updated his forecast note on NAND Flash Supply and Demand, which provides a whole lot more detail.
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