Toshiba's recent move to scale down its output for NAND flash chips has pushed up contract prices for the memory recently, despite that demand remains sluggish, according to industry sources.

Toshiba's recent product cutback targets mainly production of TLC (triple-level cell) NAND chips used mainly for USB drives and memory cards, the sources revealed. The supply cut has led to a substantial rally in chip prices, discouraging downstream distributors from stockpiling inventory, the sources said.

Distributors originally planned to step up their purchases, but have now taken a wait-and-see attitude, the sources indicated.

Unlike fluctuating demand for TLC NAND chips, demand for MLC (multi-level cell) parts has been relatively stable, the sources noted. MLC chips are used in consumer technology products such as smartphones and tablet PCs, and demand coming from the sector is expected to boom between August and September when new devices are rolled out, the sources said.

On the other hand, market demand for SSDs appears to be on the rise, the sources pointed out. Previous falls in NAND flash prices already dragged down prices for SSDs significantly, which has brought a positive catalyst for the SSD market, the sources said. For instance, the retail price of a 128GB SATA3 SSD – now the mainstream specification – has come down to about NT$3,000 (US$100), the sources added.