DRAM to NAND: Surging Storage Prices

In the wake of production constraints and a resurgence in demand, the escalating trend in storage prices, commencing with DRAM memory, has now permeated the NAND flash sector. The anticipated improvement in financial performance for industry leaders such as Samsung Electronics and SK Hynix is expected to gain momentum.

As of November 9th, TrendForce, a reputable market research company, has forecasted a 10% to 15% upswing in NAND prices for Samsung Electronics in the fourth quarter of the current year. This trajectory is projected to further expand by 10% to 20% in the first half of the subsequent year.

The tangible upturn in NAND prices is already underway, with data from the esteemed market research firm, DRAMeXchange, indicating a 1.59% surge in the price of the ubiquitous 128Gb NAND used in storage cards and USB devices as of October—marking the initial rebound since July 2021.

Despite the gradual rebound in demand, production cutbacks have been instrumental in propelling the price surge. Suppliers, unable to sustain unprofitable transactions, have extended production reductions to levels below cost. Notably, Samsung Electronics is reportedly planning to amplify the reduction in NAND production by 40% to 50% in the first half of the upcoming year.

Furthermore, promising indications are emerging in the shipment volumes of smartphones and personal computers. KB Securities projects a 5% growth in smartphone and PC shipments for the next year compared to the preceding year, reaching 1.2 billion units and 260 million units, respectively.

For smartphones, the anticipated accumulation of replacement demand coupled with the recovery in the Chinese smartphone market is expected to drive this growth. Conversely, the PC market is poised for increased demand due to the impending cessation of support for "Windows 10" by 2025.

In tandem with the surge in DRAM and NAND prices, the financial performance of industry leaders such as Samsung Electronics and SK Hynix is primed for an expedited recovery.