Challenges and Recovery in Memory Chip Market

The memory chip market is facing significant challenges due to excess supply, with NAND flash and DRAM being the hardest hit. Despite production cuts, demand has fallen too quickly, leading to a decrease in NAND flash prices by 22.8%. The decrease in prices has negatively affected NAND flash revenue, which dropped by 45% YoY in Q4 2022. However, excess inventory challenges have been successfully mitigated by OEMs, who are now preparing for mid-year sales events to digest the remaining inventory.

Most suppliers are also lowering costs to clear out PCIe Gen 3 SSD inventories, while PCIe Gen 4 SSD prices are on the decline due to low customer orders. Prices for client SSDs are expected to fall by 5%-10% in Q2 2023. While NAND flash wafer prices will remain stable, most memory module houses are purchasing more components to anticipate a recovery in demand for SSDs, memory cards, and other products in the second half of 2023.

TrendForce data predicts that recovery will most likely occur for all in late 2023 after gradual improvement. Micron Technology, Western Digital, SK Hynix, and Samsung Electronics will likely see ASPs on their NAND flash components dropping 10%-15% QoQ after Q1 2023. Despite the challenges, NAND flash manufacturers have limited production and delayed technology transitions to mitigate further excess inventory hurdles. Whether prices will continue to fall through the second half of 2023 will depend on demand recovery, which remains uncertain.