Major suppliers of NAND flash memory have moved to cut back their production, allowing the chip prices to be kept steady recently, according to industry sources.. The price stability is expected to continue through September, but developments after September will really depend on end-market demand and overall economic conditions, the sources said.

While demand for USB flash drives and memory cards remains sluggish, major NAND flash producers reportedly have scaled down their output with an aim to lift the chip prices. Prices were pushed up as much as 40-60% in the short term, and have stabilized. However, demand strength is still needed to sustain price growth and stability, the sources noted.

Kingston Technology also agrees with the observation. The memory module vendor has expressed concern that if demand fails to catch up with supply, there might be another correction of the chip prices in the fourth quarter.

Kingston added that global supply of NAND flash memory is set to rise during the last quarter of 2012 when some firms ramp up production of 19nm chips.

In addition, some upstream chipmakers have paid more attention to orders placed by system OEMs while limiting supplies to second-tier module firms and distributors, industry sources observed. The move is to shift their focus away from flash memory cards and drives that yield lower margins.

For instance, Toshiba's recent product cutback targets mainly production of TLC (triple-level cell) NAND chips used mainly for USB drives and memory cards. The chip vendor has not adjusted its output of high-end products that are supplied to its system clients, the sources indicated.