Demand for NAND Flash products will undergo a noticeable and cyclical downward correction in 1Q22 as major smartphone brands wind down their procurement activities for the peak season and ODMs prepare for the New Year holidays, according to TrendForce’s latest investigations. As such, the NAND Flash market will remain in an oversupply situation, with prices continuing to undergo downward corrections accordingly. However, PC OEMs have been reinstating certain orders for client SSDs since early November in response to improvements in the supply of upstream semiconductor materials. By fulfilling these orders, suppliers are able to keep their inventory level relatively low, meaning they are not under as much pressure as previously expected to reduce inventory by lowering prices. Taking these factors into account, TrendForce expects NAND Flash ASP to undergo a 10-15% QoQ decline in 1Q22, during which NAND Flash prices will experience the most noticeable declines compared to the other quarters in 2022.

Regarding the price trend of NAND Flash products across the whole 2021, TrendForce further indicates that suppliers have actively transitioned their output to higher-layer technologies, resulting in a bit supply growth that noticeably outpaces demand, though the tight supply of components such as controller ICs and PMICs has constrained the production of NAND Flash end-products. Hence, the decline in contract prices of NAND Flash products has not been as severe as previously expected. Moving ahead to 2022, however, the supply of relevant components is expected to gradually improve, so the market for various NAND Flash products will also likely shift towards a noticeable oversupply. As a result, prices of NAND Flash products will steadily decline before the arrival of the peak season in 3Q22.

Client SSD prices will maintain a downward trajectory in 1Q22, by about 5-10% QoQ

While PC OEMs aggressively push out shipments in 4Q21, demand also remains strong for commercial notebooks, in turn propelling the overall volume of notebook production for 4Q21 to 3Q21 levels, surpassing prior expectations. Moving into 1Q22, however, notebook demand from the consumer segment and education segment is expected to moderate, and client SSD buyers’ procurement activities for the quarter will therefore become more conservative. Suppliers, on the other hand, continue to shift the bulk of their client SSD output to 128L and higher layer products as they release the next generation of client SSDs to both capture market share and increase the consumption of these higher-layer products. The average storage capacity of client SSDs will expand to 567GB next year, with WD releasing QLC products alongside existing QLC manufacturers Intel and Micron, in turn intensifying suppliers’ pricing competition. TrendForce therefore expects contract prices of client SSDs to maintain their existing downward trajectory and undergo a 5-10% QoQ decline in 1Q22.

Prices will decrease by about 3-8% QoQ for PCIe enterprise SSDs but hold flat for SATA enterprise SSDs

North American hyperscalers saw their inventory levels rising throughout the fourth quarter as their production capacities for servers were negatively affected by component gaps. In addition, some of these issues are expected to persist in 1Q22, so server shipment for the 4Q21-1Q22 period will experience continued declines, thus putting downward pressure on the growth of enterprise SSD bit demand. As for the supply side, not only has the issue of insufficient PMIC production capacity become gradually alleviated, but hyperscalers have also cut down on their enterprise SSD orders somewhat due to their focus on inventory reduction. Hence, the production capacities for enterprise SSDs with PCIe interface have slowly returned to normal, and room for price negotiations with suppliers is also beginning to surface. Regarding enterprise SSDs with SATA interface, their supply has become relatively tight because manufacturers prioritize the production of high-density PCIe SSDs over SATA SSDs, which feature an older interface and lower density. As such, contract prices of SATA SSDs are unlikely to drop. For 1Q22, TrendForce forecasts an overall 3-8% QoQ decline in enterprise SSD prices, with contract prices of SATA enterprise SSDs mostly holding flat and prices of PCIe products declining by 3-8% QoQ.

eMMC prices will decrease by 5-10% QoQ

TVs, Chromebooks, and other categories of consumer products that carry eMMC solutions have been experiencing sluggish demand in the second half of this year as related subsidies and tenders in the US wind down. The seasonal fluctuations of the demand for consumer products will return to the pre-pandemic pattern next year. Chromebook production is forecasted to show a small rebound in 1Q22 and climb to the year’s peak in 2Q22 in accordance with the traditional seasonal pattern. Even so, the annual total Chromebook production for 2022 will still register a significant decline from the previous year. Turning to TV production, a QoQ decline is projected for 1Q22. Taking account of these demand-related projections, TrendForce expects the demand for eMMC solutions to be fairly weak in 1Q22. The overall production capacity for low-density 2D NAND Flash products has remained relatively constant. Some suppliers continue to scale back 2D NAND Flash production capacity, but they have slowed down the pace of reduction. Regarding the price trend of eMMC solutions, it is now adjusting downward to a stable level after the surge in 2Q21. TrendForce forecasts that contract prices of eMMC solutions will drop again by 5-10% QoQ for 1Q22.

UFS prices will decrease by 8-13% QoQ due to rising supply and falling demand

Component gaps in the upstream sections of the supply chain are still a serious issue affecting smartphone brands’ device production. Despite the contribution from the traditional peak shipment season in the second half of the year, the YoY growth rate of the total smartphone production in 2021 is expected to once again fall short of earlier projections. Looking ahead to 1Q22, Apple is expected to scale back its smartphone-related demand due to seasonality. This, in turn, will negatively affect NAND Flash suppliers’ bit shipments and further weaken mobile storage demand as a whole. The latest examination of product shipments from NAND Flash suppliers indicates that 1XX-L technologies are now mainstream, and 1YY-L technologies will gradually be adopted during 1H22. Micron has skipped 128L in its stacking technology migration and thereby advanced from 96L directly to 176L. To lower production cost and raise bit output, suppliers continue to increase the layer number of their 3D NAND technologies. This means that supply growth will further outstrip demand growth in 1Q22 as the off-season sets in. Hence, TrendForce forecasts that prices of UFS solutions will also register steeper QoQ declines of 8-13% for 1Q22.

NAND Flash wafer prices will decrease by 10-15% QoQ as oversupply becomes more severe

Sales of retail storage products such as UFDs and memory cards have been weak through this entire year. The promotional activities initiated by e-commerce companies for the special events and festivals near the end of the year have generated only a marginal amount of demand. Looking ahead to the early part of 2022, the demand for retail storage products is not expected to gain noticeable momentum before the arrival of Lunar New Year holiday. Additionally, the cryptocurrency market has been energetic, so the demand for graphics cards from cryptocurrency miners has been outpacing supply for the most part. This development has been impacting shipments of DIY PCs and thereby suppressing the demand for retail client SSDs during 2021. In sum, the aforementioned factors have significantly impeded the consumption of NAND Flash wafers. In view of the demand situation in the different application segments, NAND Flash suppliers will likely ramp up wafer shipments to prevent excess inventory. Moving into 1Q22, even if there is sustained demand for storage components in the PC and server segments, smartphone-related demand will shrink further and exacerbate the oversupply situation of the NAND Flash wafer market. TrendForce forecasts that contract prices of 3D NAND Flash wafers will fall by 10-15% QoQ. Among the various NAND Flash products, 3D NAND Flash wafers will suffer the sharpest price drop. It is worth noting that the growing gap between supply and demand is already exerting considerable pressure on some suppliers, so there is a possibility that suppliers could begin dumping products earlier than expected at the end of this year. Such development could help moderate the magnitude of the price downtrend in 1Q22.

For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms. Latte Chung from the Sales Department at lattechung@trendforce.com

The ramp-up of the Intel Ice Lake and AMD Milan processors is expected to not only propel growths in server shipment for two consecutive quarters from 2Q21 to 3Q21, but also drive up the share of high-density products in North American hyperscalers’ enterprise SSD purchases, according to TrendForce’s latest investigations. In China, procurement activities by domestic hyperscalers Alibaba and ByteDance are expected to increase on a quarterly basis as well. With the labor force gradually returning to physical offices, enterprises are now placing an increasing number of IT equipment orders, including servers, compared to 1H21. Hence, global enterprise SSD procurement capacity is expected to increase by 7% QoQ in 3Q21. Ongoing shortages in foundry capacities, however, have led to the supply of SSD components lagging behind demand. At the same time, enterprise SSD suppliers are aggressively raising the share of large-density products in their offerings in an attempt to optimize their product lines’ profitability. Taking account of these factors, TrendForce expects contract prices of enterprise SSDs to undergo a staggering 15% QoQ increase for 3Q21.

Looking ahead to 4Q21, TrendForce expects a decline in server shipment to bring about a corresponding downward correction in enterprise SSD procurement capacity. Meanwhile, clients will continue to validate higher-layer PCIe G4 products from Kixoia and Micron. On the other hand, as the shortage of SSD components becomes alleviated going forward, enterprise SSD suppliers’ production capacities will likely increase as well. As a result, enterprise SSD contract prices for 4Q21 will likely remain relatively unchanged from 3Q21 levels.

Suppliers are making a strong push to develop PCIe G5 and CXL products as these new interfaces become available for server applications next year

Intel and AMD are expected to kick off mass production of Eagle Stream and Genoa CPUs, respectively, in 1H22. In addition to being compatible with PCIe G5, these server processors will also support the CXL (Computer Express Link) interface. TrendForce’s investigations indicate that NAND Flash suppliers have been fast-tracking their production of PCIe G5 SSDs in response to the upcoming mass production of Eagle Stream. As such, these SSDs are likely to see market release between 2Q22 and 3Q22.

Micron, on the other hand, has also announced its development of CXL products. Because CXL enables optimized data transmission between CPU and other components, such as memory, GPU, ASIC, and FPGA, memory solutions with CXL interface are likely to experience rapid growth in the hyperscale market, which is constantly in pursuit of faster data transmission speeds. TrendForce believes that the release of increasingly fast data transmission interfaces will bring about a massive increase in the expenses and technological challenges associated with SSD controller IC development. Enterprise SSD suppliers will subsequently have to jostle for market share by leveraging their respective unique competitive advantages.

For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms. Latte Chung from the Sales Department at lattechung@trendforce.com

The recent wave of COVID-19 outbreaks in India has weakened sales of retail storage products such as memory cards and USB drives, according to TrendForce’s latest investigations. However, demand remains fairly strong in the main application segments due to the arrival of the traditional peak season and the growth in the procurement related to data centers. Hence, the sufficiency ratio of the entire market has declined further. NAND Flash suppliers have kept their inventories at a healthy level thanks to clients’ stock-up activities during the past several quarters. Moreover, the ongoing shortage of NAND Flash controller ICs continues to affect the production of finished storage products. Taking account of these demand-side and supply-side factors, TrendForce forecasts that contract prices of NAND Flash products will rise marginally for 3Q21, with QoQ increases in the range of 5-10%.

NAND Flash suppliers’ push for higher-layered SSD products will likely limit the growth of client SSD contract prices in 3Q21

Several developments are expected to drive up client SSD demand in 3Q21. First of all, high demand for notebook computers at the moment has prompted notebook brands to maximize their production. Furthermore, the release of CPUs based on Intel’s new Ice Lake platform is pushing up the SSD adoption rate. At the same time, the average memory density of SSDs is increasing as NAND Flash suppliers experience tightening supply of SSD controller ICs. On the supply side, as server shipments regain their former momentum and thereby significantly expand enterprise SSD procurement, the supply of NAND Flash will likely further tighten as a result, with NAND Flash suppliers now less willing to lower their prices when negotiating quarterly contracts. On the other hand, NAND Flash suppliers also launched SSDs with higher-layered NAND Flash in 2Q21 in order to capture market share. For instance, their main offerings have rapidly transitioned to 128L NAND Flash. As suppliers raise production capacity for higher-layered products, the downward pressure on contract prices also becomes greater. Hence, TrendForce forecasts that contract prices of client SSDs will rise by around 3-8% QoQ for 3Q21, showing a more moderate increase compared with 2Q21.

Average contract prices of enterprise SSDs are expected to increase by 15% QoQ in view of price hikes across two consecutive quarters

Stock-up activities for enterprise SSDs rebounded in the data center segment in 2Q21 after nearly three quarters of inventory adjustments. The overall server procurement has also been growing over the quarters as government agencies and SMBs release tenders related to digital infrastructure. Moreover, TrendForce has observed that the market release of server CPUs based on Intel’s new Ice Lake platform has led to an increase in the procurement capacity for enterprise SSDs. Quotes for enterprise SSDs are expected to rise again for 3Q21 contracts. NAND Flash suppliers are carrying just around 4-5 weeks of inventory and face short supply for other types of semiconductor components. At the same time, server shipments are climbing. These factors will raise quotes for the second consecutive quarter. It should be noted that, among suppliers, Samsung has more flexibility in supplying SSDs due to having a higher share of in-house components for this category of storage product. Therefore, Samsung will be dominant in influencing price negotiations over enterprise SSD contracts for 3Q21. In particular, the average contract prices of PCIe 4/8TB SSDs are expected to undergo a 15% QoQ increase in 3Q21, representing the largest price hike among all NAND Flash products for the quarter.

Contract prices of eMMC products are projected to rise by a modest 0-5% as low-density eMMC prices remain high

With regards to eMMC products, the demand for consumer products such as TVs and tablets will grow further in 3Q21 because of the effect of the traditional peak season. Additionally, sales of Chromebook devices are still fairly robust. Hence, the demand for eMMC products will remain strong through 3Q21. Nonetheless, the shortage of NAND Flash controller ICs persists as foundries are still operating at a fully-loaded capacity. Furthermore, eMMC production relies on older process technologies. Therefore, low- and medium-density eMMC products are still in limited supply, and contract prices for this category of storage products are expected to keep climbing. It should be pointed out that low-density eMMC products already underwent a considerable price hike that bordered on what the purchasing side considered unacceptable in 2Q21, so the room for further price hikes is limited. TrendForce projects that contract prices of eMMC products will rise by 0-5% QoQ for 3Q21.

Weaker than expected demand for smartphones portends a slight QoQ increase of 0-5% in UFS prices

The recent spread of the COVID-19 pandemic in Southeast Asia has led several smartphone brands (including OPPO, Vivo, and Xiaomi) that manufacture and sell a considerable share of smartphones there to lower their annual production targets. On the other hand, Apple is stocking up on components as it prepares for the release of the next iPhone series. The iPhone-related demand, together with the traditional peak season for retailers in the second half of the year, will sustain the overall smartphone production and the demand for mobile storage, including UFS products. NAND Flash suppliers have shifted their attention to the demand related to data centers and enterprise servers. Their inventories are also at a relatively low level due to the strong growth in the procurement of enterprise SSDs. Additionally, there is the ongoing shortage of controller ICs. Hence, contract prices of UFS products are forecasted to rise again by 0-5% QoQ for 3Q21.

Limited supply will likely lead to an 8-13% QoQ increase in NAND Flash wafer prices

The mining of Chia has been pushing up the demand for high-performance and high-capacity SSDs (i.e., channel-market products) since the second half of April, although the effect of the recent cryptocurrency craze has also been gradually waning. Secondly, the latest wave of COVID-19 outbreaks in India has noticeably impacted domestic sales of memory cards and USB drives. In addition, the demand for channel-market SSDs from the DIY PC market has been constrained as the ongoing shortage of graphics cards affects the production of customized PCs. Finally, memory module houses are unable to increase NAND Flash procurement as well because of the undersupply of controller ICs. The demand for NAND Flash wafers from module houses will become more limited due to the impact of component gaps on the production of finished storage products.

NAND Flash suppliers are giving priority to the demand related to data centers and enterprise servers. Furthermore, NAND Flash bit consumption has increased significantly because the share of 4/8TB products in shipments of enterprise SSDs is growing rapidly. Additionally, NAND Flash suppliers are maintaining a low level of inventory as the demand situation is healthy in the major application segments such as notebooks and smartphones. Owing to these factors, NAND Flash suppliers have no inclination to expand the supply of NAND Flash wafers. Even if demand starts to weaken, suppliers will continue to raise contract prices of NAND Flash wafers on a monthly basis for the sake of extending their gross margins. TrendForce therefore projects that contract prices of NAND Flash wafers will rise by 8-13% QoQ for 3Q21.

For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms. Latte Chung from the Sales Department at lattechung@trendforce.com

Enterprise SSD procurement has been rising on the back of growing server shipments since 2Q21, according to TrendForce’s latest investigations. In particular, the share of 8TB products in shipments of SSDs to data centers has shown the most noticeable growth, which is expected to persist through 3Q21. However, certain SSD components and parts may be in shortage due to insufficient foundry capacity. TrendForce is therefore revising the QoQ hikes in contract prices of enterprise SSDs for 3Q21 to 10-15% from the previous projection of 5-10%.

TrendForce further indicates that the high demand for enterprise SSDs in 3Q21 is attributed to several factors. First, North American cloud service providers (hyperscalers) have pretty much completed their inventory adjustments and now continue to expand their storage capacity. Second, the flow of incoming orders to traditional server brands is getting stronger over the quarters as government agencies and SMBs increase their budgets for IT infrastructure. Third, Intel and AMD are ramping up production for server CPUs based on their respective new processor platforms. Following the adoption of new CPUs, the overall demand for enterprise SSDs has also shifted to higher-density products because clients want to upgrade their computing power and storage capacity. Specifically, demand is mainly trending toward 4/8TB SSDs since raising NAND Flash density can lower the cost of SSD deployment.

Supply leader Samsung will likely gain control over enterprise SSD pricing in the market

Regarding the supply end, Samsung has a higher flexibility in supplying SSDs compared to the other suppliers because it has a higher share of in-house components for its storage products. Therefore, in view of the possible shortage in certain SSD components, Samsung will likely be able to further expand its market share for enterprise SSDs. Furthermore, Samsung’s products are expected to account for more than 50% of enterprise SSDs (in terms of bits) shipped to data centers in North America in 3Q21. This dominance will likely further Samsung’s ability to dictate market prices going forward.

Intel, on the other hand, has been constrained in its ability to manufacture enterprise SSDs due to a shortage of PMICs. In addition, Intel has mostly been fulfilling orders for QLC products. As a result, Intel’s market share may potentially decrease in the TLC-dominant enterprise SSD sector. Regarding other suppliers including Kioxia and SK Hynix, although they have been able to raise their market shares due to gradual adoption of their products by clients, they are unlikely to catch up to Samsung for the time being.

On the PC client SSD front, at the moment, demand for notebook computers has remained strong, while the supply of SSD controller IC is still relatively tight. TrendForce therefore forecasts a slight 3-8% QoQ increase in client SSD contract prices for 3Q21. Regardless, suppliers will not slow down their process migrations. Starting from 3Q21, 176L PC client SSDs will be available on the market, with a corresponding increase in supply bits in the upstream SSD supply chain.

For more information on reports and market data from TrendForce’s Department of Semiconductor Research, please click here, or email Ms. Latte Chung from the Sales Department at lattechung@trendforce.com