The NAND flash market is due to drop in the second part of the year, according to analysts.
DRAMeXchange, part of analyst outfit TrendForce, has suggested that the average selling price of NAND Flash will fall by around 10 per cent in the third and fourth quarters of 2018, despite this usually being the peak season for the sales of consumer electronics.
The analysts say that this fall will be down to weaker than expected demand at a time when the supply of 3D-NAND is expanding.
The forecast, if it proves correct, may indicate a coming downturn in demand for mobile devices, particularly smartphones, despite the apparent popularity of the Apple iPhone X.
Replacement demand for smartphones has been sluggish due to the lack of differentiation
"First, the annual shipments for smartphones this year are expected to be just on par with last year's. The replacement demand for smartphones has been sluggish due to the lack of differentiation among products in terms of hardware specifications," the analysts said.
"Second, notebook shipments were very strong in [the first half of this year], so the seasonal shipment growth for notebooks in [the second half] will be lacklustre compared with the growth in the year's first half as the base period."
The company also noted a third reason. That competition is intensifying in the server SSD market.
There is an oversupply of server SSDs because too many suppliers are engaging in this profitable segment
"Although demand for server systems is growing steadily, there is an oversupply of server SSDs because too many suppliers are engaging in this profitable segment," it added.
NAND flash suppliers have also increased their output forecasts as they have expanded their production capacity and improved the yield rates of their 64/72-layer 3D-NAND production.
Given that these various factors have led to an oversupply, DRAMeXchange believes that the contract prices of various NAND flash products will remain weak through the second half of 2018.
And, since the market outlook for the second half of this year has become more certain, DRAMeXchange anticipates continuing price declines during the traditional slow season of the first half of next year, too.
"Because of the seasonal headwinds, shipment forecasts for smartphones, notebooks and tablets are fairly conservative for the first half of next year," the company said.
Just a year ago, shortages drove up prices to record levels and many device makers struggled to secure the supply they needed, pushing up prices. Now, though, this commodity market has become more of a buyer's market, once again.
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