Because shipments of end products including consumer electronics and servers had been below expectations, the overall NAND ASP fell by 18.3% QoQ. In addition, the general economic outlook remained pessimistic, so enterprises across many sectors have started to scale back their capital expenditure plans and halted the momentum of their procurement activities.
Due to this, the issue of excess inventory has now spread to NAND Flash suppliers. The pressure on suppliers to make sales was ratcheted up dramatically and, according to TrendForce’s investigation, NAND Flash bit shipments fell by 6.7% QoQ for 3Q22, and the overall NAND Flash ASP also kept sliding. On account of the unfavourable market situation, the NAND Flash industry recorded a total revenue of around $13.7bn for 3Q22. The QoQ revenue decline reached as much as 24.3%.
The ranking of NAND Flash suppliers by revenue saw two notable changes for 3Q22. First, SK Group fell to third place as it suffered the largest revenue drop among suppliers. Its revenue slipped by 29.8% QoQ to $2.54bn mainly due to the significant deterioration of the demand for PCs and smartphones. Its subsidiary Solidigm was also affected by the slowdown in server procurements. Previously, servers had a fairly stable demand situation compared with other kinds of end products. However, server demand eventually buckled in 3Q22 as result of enterprises cutting capital expenditure and undergoing a period of inventory correction. Compared with 2Q22, SK Group (that encompasses SK hynix and Solidigm) posted a drop of 11.1% in bit shipments and an even steeper decline of more than 20% in ASP.
The other notable change in the 3Q22 ranking was Kioxia. The supplier returned to second place in terms of revenue and market share because it was able to make a gradual recovery from the material contamination incident that had happened earlier this year.
Even though Kioxia did suffer a significant decline in its ASP due to the slumping demand for consumer electronics, its bit shipments were bolstered by the seasonal stock-up activities of its clients in the smartphone industry and rose by 23.5% QoQ. Taken altogether, Kioxia’s revenue dipped by just 0.1% QoQ to $2.83 billion.
Other NAND Flash suppliers including Samsung, Western Digital and Micron all posted a considerable QoQ decline in revenue for 3Q22 because of a drop in both price and shipment quantity. Again, weakening demand for end products was one of the major reasons behind these suppliers’ poor performances.
TrendForce believes that with the notable exception of Samsung, most suppliers will be more cautious in planning output due to the fall in revenues in the third quarter.
Going forward, it expects the market to look to restore balance to supply-demand dynamics as quickly as possible, suppliers will be taking measures such as cutting wafer input and decelerating the pace of technology migration.
However, this rebalancing will not be helped as the usual demand surge in connection with the year-end holiday sales has failed to materialise, and NAND Flash buyers’ passiveness is causing inventory to further accumulate on the supply side.
As for production cuts, their effect on the market will not be apparent for at least a quarter. Hence, prices of NAND Flash products will still be under significant downward pressure in 4Q22, and TrendForce has widened the projected QoQ decline in contract prices to 20~25% in its latest forecast.
With high inventory and falling prices serving as constraining factors, the NAND Flash industry is also forecasted to post a QoQ decline of almost 20% in its total revenue for 4Q22.
