1Q13 NAND Supply Tightness Good for Suppliers – Trendfocus

The supply and demand dynamics for NAND is moving into a state that is favorable to the NAND suppliers, and prices for 64Gb NAND in the spot market have increased 31% since January. This is an uncommon occurrence against normal seasonality, as prices typically decline after the Asian Lunar New Year.

                          NAND Spot Pricing

 
Trendfocus, Inc. foresees that the supply of NAND will continue to be constrained through CQ2’13, and perhaps through the rest of the year. Supply has been tight since Toshiba reduced its output by 30% in CQ3’12 and so far, the company has been unclear about restarting its idle capacity. We do expect Toshiba is facing growing pressure from customers and may well refill the capacity in 2H 2013 (assuming demand continues to grow).  

In addition, process node migrations are slowing down for many NAND suppliers and no additional fab capacity will be added in 2013, which will keep output tight. CAPEX spending from NAND suppliers will be less than or similar to that of 2012, further reducing the possibility of any major capacity additions this year. One supplier is struggling with its migration to the 20nm process node and, due to this, has cut its supply of 20nm NAND to its clients.
 
On the demand side of the equation, Apple continues to consume approximately 25% of all NAND bits shipped, and the company appears to be gearing up for new product launches in CQ3. For its MacBook line of notebook PCs, it appears that Apple will implement an SSD sporting a PCIe interface, shifting away from the SATA interface.

Samsung will also consume additional NAND to support its Galaxy 4 smartphone launch – the Korean electronics giant will also likely launch new tablets powered by Google Android and Microsoft Windows 8 starting from CQ2.
 
TLC NAND-based client SSDs are starting to gain traction with some major the PC OEMs and may become a competitive force against MLC SSDs in mobile PCs sooner than expected.

How Samsung passes on cost savings to customers remains to be seen.

In a market with constrained supply, Trendfocus will continue to monitor the market demand in order to track clear directions in NAND $/GB that will influence the capacities and attach rates of solid state storage solutions throughout 2013.