Recently, there has been a lot of news about the rise in storage prices, but for many practitioners, there is no longer the excitement at the beginning of the rise, but instead a dilemma due to the lack of support from actual demand in the market.

For upstream manufacturers, the continuous decline in storage prices has caused huge losses to the company's profits, with Samsung alone losing 12.69 trillion won (68.8 billion yuan) in its semiconductor business in the first three quarters of this year, with storage chips accounting for the majority. And the recent financial report of Armor Xia shows that in the second quarter alone, the company suffered a loss of 100.8 billion yen (4.848 billion yuan)!

 

It's not difficult to see that the original factory can no longer afford to lose! This also forces Samsung, which has been pursuing a "countercyclical investment strategy", to join the production reduction camp, and the magnitude is increasing. There are rumors in the market that in the fourth quarter, Samsung NAND's production reduction will expand to 50%, SK Hynix's production reduction will reach 20%, and Meguiar has also stated that the reduction will continue until 2024. Under the production reduction strategy, the inventory cloud that had previously hovered over the original factory gradually dissipated, giving the original factory the confidence to ignore market demand and force an increase. According to institutional forecasts, storage prices will continue to rise in the fourth quarter, with DRAM contract prices expected to increase by 3% to 8% month on month and NAND contract prices expected to increase by 8% to 13% month on month.

 

For the downstream market, it is closer to the end market and cannot ignore actual demand like the original factory. The price increase of the original factory has led to rising costs and the indifference of terminal demand, putting the industry in a dilemma of whether to follow up or wait and see. The good news is that market analysis shows that the demand for terminal electronic products is expected to improve, and data from several major institutions shows that the decline in products such as smartphones and PCs is gradually narrowing, with a trend of warming up; In addition, there is a trend towards high-capacity storage on mobile phones and PCs, which is expected to become an incentive to buy more; On the other hand, DDR5 is expected to quickly replace DDR4 as the mainstream of the market, which is beneficial for manufacturers to adjust their product structure and gross profit margin.

 

This week's spot market: SSD prices continue to rise, although there has been no significant improvement in terminal demand, the industry has basically defaulted to the original factory's production reduction and price control method; The original factory of Flash Wafer continues to increase, and the market quotation for 128GB TLC fixed band wafers has reached around $5, which is close to the target price. However, terminal demand remains sluggish, and the short-term trend is difficult to improve; The memory market prices have slightly rebounded, but demand is also not ideal. Industry insiders have revealed that many buyers are also struggling to accept higher prices.