NAND pricing is expected to spike by 5-10% following Material Contaminations at WDC/KIOXIA Factories

6,500 Million GB of NAND will not reach the market

NAND pricing is expected to spike by 5-10% following Material Contaminations at WDC/KIOXIA Factories

Production issues at Western Digital and KIOXIA could see NAND pricing spike by 5-10%

As we reported yesterday, Western Digital has confirmed that contaminated materials have ruined an estimated 6.5 Exabytes (6,500 million GB) of 3D BICS NAND across two manufacturing sites. Western Digital's Yokkaichi and Western Digital/KIOXIA's Kitakami joint venture sites were impacted.

Trendforce believes that 13% of the group's quarterly NAND output has been impacted, which is around 3% of the group's yearly NAND production. With this drop in production, NAND pricing is expected to increase in Q2 2022, with Trendforce predicting a 5-10% price increase. 

NAND pricing has decreased significantly in recent quarters, with the market being in a state of slight oversupply. The good news is that NAND's expected price increase will simply increase pricing to levels that they were at a few months ago, which means that these price increases should not have a huge impact on SSD prices. 

What follows is Trendforce's Press Release on their NAND pricing predictions for 2022. 

NAND pricing is expected to spike by 5-10% following Material Contaminations at WDC/KIOXIA Factories

Press Release - NAND Flash Pricing Set to Spike 5-10% in Q2 Due to Material Contamination at WDC and Kioxia, Says TrendForce

WDC recently stated that certain materials were contaminated in late January at NAND Flash production lines in Yokkaichi and Kitakami, Japan which are joint ventures with Kioxia, according to TrendForce’s investigations. Before this incident, TrendForce had forecast that the NAND Flash market will see a slight oversupply the entire year and average price from Q1 to Q2 will face downward pressure. However, the impact of WDC’s material contamination issue is significant and Samsung’s experience during the previous lockdown of Xi'an due to the pandemic has also retarded the magnitude of the NAND Flash price slump. Therefore, the Q1 price drop will diminish to 5~10%. In addition, according to TrendForce, the combined WDC/Kioxia NAND Flash market share in the 3Q21 was as high as 32.5%. The consequences of this latest incident may push the price of NAND Flash in Q2 to spike 5~10%.

The contaminated products in this incident are concentrated in 3D NAND (BICS) with an initial estimate of 6.5exabytes (approximately 6,500M GB) affected. According to TrendForce, damaged bits account for 13% of the group's output in 1Q22 and approximately 3% of the total output for the year. The normal production schedule for the entire line has yet to be confirmed. It is worth noting that the damages announced by WDC likely do not account for total losses stemming for this event and the number of damaged Kioxia parts has not been aggregated, so the total number of affected bits may increase further.

Production primarily focused on Client SSD and eMMC, subsequent spot pricing may climb

Currently, WDC and Kioxia are focused on supplying PC client SSD and eMMC products. Since WDC is the number two and number one supplier in the client SSD and eMMC markets, respectively, subsequent supply will inevitably be hampered. Therefore, even if production demand for PC OEM is revised downward in Q2, client SSD prices may remain resistant to decline. In terms of enterprise SSD, Kioxia PCIe 4.0 has been verified by a number of customers and the company's market share in 2022 was originally forecast to increase. However, this incident will impact Kioxia’s ability to ship product and further affect subsequent customer procurement. Therefore, in order for buyers to satisfy their own production requirements, a Q2 decline in enterprise SSD product pricing will be largely restrained.

In addition, as buyers and sellers in the spot market are still clarifying events and incident assessments, they mostly responded by suspending quotations, with no new quotations having been generated. However, TrendForce’s assessment indicates that subsequent events will obviously stimulate spot price appreciation. Judging from contract pricing, any orders negotiated on a whole quarter basis should be unaffected in the near-term but there may be an immediate price increase in wafer quotations this February and March.

You can join the discussion on NAND pricing being expected to rise on the OC3D Forums.

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11-02-2022, 15:42:46

grassman
seems legit!Quote
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