Analyst: NAND prices pick up

According to an analyst, average selling prices for NAND flash memory parts have bounced back from a low of about Rs.39.78 (80 cents) per gigabyte in the fourth quarter of 2008 and are currently close to covering cash costs.

Forward Insights analyst Gregory Wong said capital expenditures for NAND flash are expected to fall by 69 per cent in 2009 and is primarily directed at technology migration. Wong noted that NAND vendors have responded to the falloff in consumer demand by phasing out 200mm manufacturing and cutting fab utilisation to an average of 70 per cent in Q1.

But Wong said vendors are unlikely to return to profitability, raising the prospect of further capacity cuts. Capacity cuts will moderate price declines in 2009 and 2010, but could also cap upward price movements if vendors turn on idle capacity to take advantage of price spikes or temporary supply shortages, according to Wong.

Supply side reductions and weak demand combine to result in record low bit growth in 2009, Wong said. He did not provide a detailed projection for bit growth.

Meanwhile, market research firm Gartner Inc. said NAND flash spot prices remained relatively flat last week, with most prices down, except for a late-week jump in the high-range 16Gbit multi-level cell (MLC) pricing.

Buying activity was relatively moderate, as buyers wait for better visibility on end demand, given the uncertainty in the market and weak retail sell-through activity, Gartner said.

On a weighted 1GB average, spot prices were up 1 cent to close at Rs.98.94 ($1.99), which is still more than Rs.49.72 ($1) higher than the historical low of 90 cents that was reached during the week ending Dec. 12, 2008, Gartner said.

The surge in NAND flash spot prices has allowed most vendors to achieve profitability on the mainstream MLC parts, Gartner said, but the spot market represents only about 10 per cent of overall NAND production.

NAND contact prices are starting to catch up to the spot market, an encouraging sign for vendors, Gartner said.

- Dylan McGrath
EE Times