Buyers should keep an eye on NAND Flash supply

Stamford, Conn. — Despite relatively stable pricing for NAND Flash in April, strong OEM demand particularly in the embedded handset market may result in allocations during the third quarter, reports Gartner.

Meanwhile, DRAM pricing continues to increase, while pricing for NOR Flash remains mixed. Gartner analysts expect limited price declines in the second quarter due to low inventory levels at suppliers.

DRAM prices increase in April

Contract pricing for mainstream 1-Gb DDR2 increased by 5.3 percent to $2.45, while 1-Gb DDR3 1,066 MHz rose by 5.7 percent to $2.68, according to Gartner’s latest pricing report.

Gartner analysts reiterate that increased prices for both DDR2 and DDR3 have put pressure on PC OEM margins with April marking a turning point for several large vendors that are looking to reduce DRAM content for specific PC platforms. More information can be found in Gartner’s report, “Semiconductor DQ Monday Report, Issue 14” (G00175969).

Still, Gartner does not expect a sudden change in the DRAM supply-and-demand
environment, as demand remains strong in all application areas. But it does mean that vendors are likely to be more profitable due to the higher pricing.


Spot pricing remains higher for DRAMs. As examples, spot pricing for 1-Gb DDR3 is about 10 to 15 percent above contract pricing, and 1-Gb DDR2 spot pricing is about 15 percent higher than contract pricing, said Gartner analysts. Average spot pricing across all densities and technologies was down 2.2 percent compared with the previous week, setting at $2.96 on a 1-Gb equivalent basis.

Mixed pricing for NOR Flash

Gartner reports mixed pricing for NOR flash in April with pricing of high-density parts increasing from 0.1 percent to 19.3 percent, while pricing for low-density NOR
flash decreased slightly. Lead times have also increased from about 9 to 11 weeks to 13 weeks. Demand for these devices — widely used in TVs, networking devices and PCs — is growing as the economy recovers, said analysts.

ProMOS is selling its 12-inch fab in Hsinchu, Taiwan, to Macronix, the No. 4 NOR flash vendor worldwide, which will add to the company’s capacity, increasing the total supply in the NOR market, said Gartner. Analysts expect that average selling prices (ASPs) will decrease again after the conversion to NOR flash is completed.

Gartner’s forecast calls for ASPs to increase during the first half of 2010, and soften after.

Stable pricing for NAND Flash

NAND contract pricing remained stable in April with prices of mainstream multilevel cell (MLC) 8-Gb and 16-Gb NAND parts both down, by 3.1 percent and 0.7 percent, respectively, according to Gartner. Pricing for single-level cell (SLC) products increased slightly, which Gartner attributes to strong demand from embedded handset OEMs.

Gartner previously forecast price declines of about 15 percent in the quarter but with recent channel checks indicating low NAND supplier inventory levels and “buy-ahead behavior” it could result in more conservative price erosion.

Similarly, NAND spot prices dropped slightly across nearly all device types, despite reports from SanDisk and Hynix that the supply environment remains relatively tight, said Gartner. The lower pricing trend was led by the 8-Gb and 16-Gb MLC parts that pulled prices down 4 cents.

Analysts are concerned that there could be severe allocation in the third quarter, which could limit an OEM’s ability to deliver on year-end product plans.

Gartner caveat: NAND vendors have been focusing on the most-profitable products, and in a shortage situation, these vendors have been selling more wafers at the expense of finished flash cards, such as microSD. Gartner warns that NAND buyers need to evaluate their supplier relationships not only for wafers but also for microSD cards.