With no consensus being reached between chip suppliers and buyers, NAND flash contract prices have not been settled since June. The price tracker expects data to be available for publishing in mid-July.
NAND flash contract prices fell 15-20% in May, industry sources said. Prices should have been more stable in June, but certain end products have been undergoing inventory adjustments, the sources indicated.
Downstream device manufacturers and distributors moved to pile up their chip inventories after the Japan disaster raised concerns about the supply of upstream parts and materials such as silicon wafers. But these inventories have yet to be digested due to a particularly slow second quarter, discouraging downstream players from purchasing more chips, the sources pointed out.
The overstocking of NAND flash memory is also in part due to companies' over-optimistic tablet sales forecasts, the sources added.
With clients reluctant to re-stock, NAND chip producers are unable to bargain for higher contract prices and therefore, negotiations on contract pricing cannot move forward, according to the sources.
On the supply side, the sources observed that major NAND flash producers will start mass producing chips using their 20nm-class process technologies in the third quarter of 2011. Meanwhile, some of them are scheduled to run their new 12-inch fabs in the third quarter, which will scale up their total output significantly.
The sources projected the NAND flash memory glut will persist through the third quarter of 2011. Seasonal demand and pricing trends will need to be re-assessed later in August, the sources noted.