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NAND flash recovery fading fast

23 May 2008 | By Mark Osborne | Editor's Blog

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According to Toshiba’s Senior Vice President Shozo Saito, the NAND flash producer is anticipating price erosion of 50 percent in 2008. Is that being optimistic? It seems to be so when you consider that ASPs fell by 36 percent in 1Q08, according to iSuppli Corp. 

At a Reuters event earlier this week, Saito said something else that could potentially contradict that optimistic view. He was noted as saying that Toshiba expects prices for NAND flash to trend up slightly or remain flat in the peak purchasing quarter of the year, Q3.

Q3 is the only quarter where demand seems to outstrip supply of NAND, but what Toshiba’s executive is saying is that oversupply is still dogging the sector and the best quarter of the year won’t see much impact on prices rising.

Granted, sales will be up and revenues will be boosted, but will that be enough to hold ASP declines to 50 percent?

Considering we have had ASP declines of approximately 60 percent for the last two years, as well as continued capacity additions in 2008, it does not bode well on that front.

Another snippet that suggests to me that NAND over-capacity looks set to continue is the fact that IMFT is pushing its new Singapore fab production schedules back to the second quarter of 2009. IMFT obviously sees little point in adding more capacity in the second half of 2008 as this would just add to the over-supply.

It should also be pointed out that Toshiba is being very aggressive with its ramp of Fab 4, thus adding to the over-capacity problem.

Saito was also reported to have said that should prices fall rather than remain flat to slightly up, then they would consider ‘curbing’ further production ramps.

The translation in my mind is that Toshiba simply ‘hopes’ NAND flash prices don’t fall more than 50 percent as they hope to reduce production costs by more than that amount in 2008. The fact that Q3 is looking worse than expected for price rises highlights that the hope of a recovery in prices is actually fading fast.

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