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Samsung Electronics to Raise NAND Flash Memory Price
Growing Demand Reduces Inventory
Samsung Electronics to Raise NAND Flash Memory Price
  • By Kim Eun-jin
  • July 11, 2019, 09:00
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Samsung Electronics is planning to raise its NAND flash memory price by 10 percent.

Samsung Electronics is planning to raise its NAND flash memory price by 10 percent amid growing concerns about a disruption in production due to the Japanese government’s semiconductor material export restrictions. Other companies such as Micron Technology are likely to follow suit.

Recently, Samsung Electronics’ supply and demand conditions improved to some extent after Toshiba’s power outage accident. In addition, the NAND flash memory inventory has decreased to a four-week amount, about half of the DRAM inventory, and NAND flash memory demands are rising these days after a significant drop in price.

The price of the item is not dropping at this moment. The contract price applied to inter-company transactions stopped falling in seven months in June this year, when the unit price of 128 Gb MLC was US$3.93. In addition, the spot price recently showed a slight increase.

Samsung Electronics’ move has to do with the price drop that continued until recently. The June price, US$3.93, is the lowest since September 2016, when the price was US$3.75. For reference, the unit price was as high as US$5.5 one year ago. Last month, the contract price showed little change whereas the DRAM contract price fell 11.73 percent.

In the meantime, Toshiba, the second-largest player in the industry, is reducing its production by more than 20 percent in the wake of the accident. Not only Toshiba but also Western Digital produces NAND flash memories at Toshiba’s manufacturing facilities. The accident has had a meaningful impact on the inventory of Samsung Electronics and SK Hynix in that Toshiba’s and Western Digital’s market shares were as high as 19.3 percent and 15.3 percent in 2018, respectively.

What matters is whether smartphone manufacturers and server companies will continue to increase their demands after the planned price increase. Industry insiders point out that the global semiconductor industry is unlikely to recover until the first half of next year, which means the current upward price movement is unlikely to continue. Rather, the planned price increase reflects the desperateness of NAND flash memory manufacturers, which are in the red except Samsung Electronics.