After the wafer market, the flash memory market may rise in price

It is reported that the foundry side of the wafer plans to raise the price comprehensively again in the first quarter of 2022. The increase in the price is between 5% and 10%, slightly lower than the average increase of more than 20% last year. If the price increase is successful and the final increase is close to the upper limit of 10%, it is enough to show that the customer has strong demand for wafers. On the contrary, it can prove that the customer's demand is not strong, so as to adjust the capacity allocation in the future. Since the outbreak of covid-19, the shortage of cores has led to a general rise in the foundry end of wafers. Among them, TSMC, a leading enterprise in the industry that is not easy to raise prices, announced three different price increases in just five days from March 29 to April 3, 2021. In 2022, the price increase is more a phenomenon of testing the price limit of wafer OEM, which is full of Exploratory Significance to the OEM market and self-adjustment of the market. The market price of subsequent wafer OEM will tend to be stable. However, in the flash memory market, which should not rise in price, Samsung seems to want to take the road of "wafer foundry" and support the price of the whole flash memory market on its own. According to media reports, Samsung is considering raising the price of its own brand solid state drive. The report does not provide figures or percentages for the expected price increases, but also points out that Samsung seems to be moving in the opposite direction from other SSD suppliers. After facing lower than expected demand, Samsung's competitors are expected to reduce the overall pricing by 10% in an attempt to increase the attractiveness of their products. Samsung recently cut the production guidance of its two NAND plants in Xi'an, China. These plants are responsible for about 40% of Samsung's global NAND production, and they also account for about 15% of global NAND production. Among them, there are reasons for epidemic prevention and control, as well as reasons for lower market demand than expected. In the face of insufficient market expectations, take the initiative to reduce production and plan to raise prices. There is no problem in cutting production. It is estimated that friends and businessmen are stunned by the planned price increase.

Does "friend business" follow or not?

First of all, it should be asked whether Samsung has the strength to leverage the market. According to the data of NAND flash memory market in the first quarter of 2021, the revenue of Samsung Electronics in NAND flash memory products in the first quarter of 2021 was $4.97 billion, a quarterly increase of 7%. Its share in the global NAND flash memory market was 33.5%, with a quarterly increase of 0.6%, firmly taking the leading position. The other major suppliers are: Kaixia, western data, SK Hynix, micron, Intel, etc., with a market share ranging from 7.5% to 18.7%.

Overall, Samsung accounts for about one third of the NAND flash memory market and has the ability to pry the market price. On the other hand, according to the data of trendforce, a market research organization, the average selling price (ASP) of Samsung's NAND flash memory decreased by 5% only in the first quarter of 2021 due to the oversupply of the market. In other words, Samsung's price has fallen in 2021. The range of Samsung's price increase plan this time is likely to be only a small adjustment, returning to the level before the price reduction in early 2021. This time, instead of raising the price directly, it should be a dialogue with "friends" to show the intention of raising the price. Let's see whether "friends" will reduce production and follow up. After all, after months of price competition, they are exhausted.