Over the past few quarters, the storage market has experienced roller-coaster-like fluctuations, especially in the post-pandemic era, where user interest in consumer electronics has waned, and the overall market dynamics have shifted, with demand dropping to historical lows.

To address this situation, manufacturers have resorted to price reductions to correct inventory levels. After a series of efforts, the storage market has finally re-entered an upward cycle.

However, the positive momentum in the storage industry did not last long. Recently, some unfavorable news has once again emerged, plunging storage prices into turmoil. This continuous volatility not only causes anxiety among manufacturers but also fills consumers and the entire electronics industry with concern about the future of the storage market.

Price Trend Analysis in the Same Storage Category

In the world of storage products, price fluctuations often reflect market dynamics and industry development trends. The table below shows price data for different product categories over different time periods, reflecting the price trends in the storage market in recent months.

From the chart, it can be seen that the price trends for all product categories, including DDR, SSD, LPDDR, and eMMC, have shown a downward trend during the observation period.

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For DDR products, both DDR4 16Gb 3200 and DDR4 8Gb 3200, prices have continued to decline slowly from July 30th to October 8th. This may be due to the continuous advancement of storage technology, with the introduction of new, higher-performance products, putting competitive pressure on older DDR4 products. At the same time, market demand may not have grown significantly, leading to an oversupply and a gradual decline in prices.

In the SSD products, the prices of OEM SSD 256GB SATA and 512GB SATA are also on a continuous decline. This is mainly because the production costs of SSDs are gradually decreasing, and market competition is fierce. Manufacturers are constantly lowering prices to compete for market share.

At the same time, LPDDR and eMMC products also show a downward price trend. The slowdown in the growth of the mobile device market, such as smartphones, has reduced the demand for LPDDR. Meanwhile, with the emergence of more advanced storage technologies in the market, the demand for eMMC has decreased. As higher-performance storage technologies like UFS become more widespread, the market share of eMMC is gradually being compressed.

Recent Specific Changes in Storage PricesSpecifically, over the past two months (September and October), due to the sluggish demand for PCs and consumer electronics, the contract prices for DRAM and NAND have seen a significant decline.

In September, the product price drop for DRAM and NAND further intensified. According to the statistics from DRAMeXchange, the contract price for DDR4 8Gb 1Gx8 at the end of September fell by 17.07% compared to the end of August, to $1.7. It is reported that since last October, DRAM prices have been steadily rising, but in August they fell by 2.38%, marking the first decline in DRAM quotations.

At the same time, due to weak demand and excess inventory, the price of TLC NAND flash memory wafers also fell, which also led to a decrease in the prices of MLC and SLC wafers. For example, the contract price for 128Gb 16Gx8 MLC (mainly used for flash products such as memory cards and USB drives) fell by 11.44% to $4.34 in September, while NAND prices have remained stable over the past six months.

Trend Force also mentioned that the inventory of DDR4 products is significantly higher than that of the latest DDR5, hence the DDR5 memory prices have not been affected for the time being.

In October, the prices of DRAM and NAND flash memory continued to fluctuate. According to the latest memory spot price trend report from TrendForce, in terms of DRAM, the transaction volume in the spot market continued to decline during the National Day Golden Week, with no signs of rebound before the end of the year; in terms of NAND Flash, buyers' willingness to purchase is not strong, further exacerbating the market supply surplus, as follows:

From October 2nd to October 8th, the transaction volume in the DRAM spot market continued to decline, coupled with some module factories actively reducing inventory, driving the spot price to fall further. The supply and demand pattern in the spot market remains unchanged, with no signs of rebound before the end of the year. The average spot price of mainstream chips (DDR4 1Gx8 2666MT/s) fell from $1.934 the previous week to $1.929 that week, a decrease of 0.26%.

From October 2nd to October 8th, buyers' willingness to stock up on NAND flash memory did not increase. Some suppliers significantly reduced prices for sales that week, but the overall market sales pressure has not been alleviated, and the overall situation has not improved. The weak willingness of buyers to purchase further exacerbated the market supply surplus. The spot price of 512Gb TLC Wafer fell by 0.58% that week, to $2.595.

How should memory manufacturers respond?

NAND manufacturers reduce production and switch to producing HBM

Due to the lower-than-expected demand in the IT industry and the decline in 3D NAND memory prices, major flash memory manufacturers are considering adjusting production and reducing investment in non-volatile memory. On the contrary, they may increase investment in DRAM production, as the demand for HBM memory in the artificial intelligence industry is setting a record.Currently, all major 3D NAND manufacturers (Kioxia, Micron, Samsung, and SK Hynix) are considering reducing the production of non-volatile memory and decreasing investments in expanding additional flash memory capacity. If they proceed with this, it will stabilize the prices of 3D NAND and may potentially lower the prices of DRAM at least in the short and medium term.

Given the current market conditions, companies like Samsung and SK Hynix are focusing on DRAM due to stronger demand in that sector. It is reported that they are exploring the possibility of converting some of their NAND production lines to focus on DRAM and HBM, including Samsung potentially converting its P4 production line and SK Hynix planning to revamp its Cheongju M14, M15X, and M16 factories.

DRAM manufacturers shift capacity to expand DDR5 production

Recently, DRAM manufacturer Nanya Technology indicated that due to a 20% decrease in sales volume in the third quarter, inventory levels did not improve. However, the company will actively shift 15% of its capacity to DDR5 in the fourth quarter. It is expected that starting from December this year, the contribution of DDR5 products will increase month by month.

Nanya Technology explained that the main reason for the quarter-on-quarter decrease in shipments in the third quarter was the decline in regional economies and reduced demand. In markets like the United States and Japan, there was no growth in market demand, but there was still some support; whereas in China and Europe, market demand was noticeably weak. Market demand in the Taiwan region was also affected by the mainland China market, showing a recessionary trend.

Therefore, the most important goal for Nanya Technology's current operations is to bring new processes to the market and actively launch new products with high demand and good growth potential.

SSD manufacturers initiate price reduction strategies

Recently, Kingston, the world's largest storage module manufacturer, has initiated a price reduction strategy, starting to sell off mid-to-low-end products to clear inventory.

Semiconductor analyst Lu Xingzhi pointed out that the inventory of Taiwan's storage module manufacturers is generally as high as 11 months, and once traditional DRAM prices decline, recognizing inventory losses will become the norm.

Lu Xingzhi stated that the current storage market has an excessive amount of inventory, and even the storage module leader Kingston cannot last more than a month, choosing to reduce prices to promote a bunch of unsellable mid-to-low-end consumer storage. He expects that more manufacturers will follow suit, especially keeping an eye on the movements of Adata, Transcend, and Phison.In addition to Kingston, market news indicates that Samsung's mobile solid-state drives (SSDs) have also experienced a significant price drop. It is reported that the Samsung 2TB mobile SSD T9, which previously fluctuated around 1600 yuan, has recently seen its product price drop by about 300 yuan, bringing it close to 1300 yuan. The price of the Samsung 2TB mobile SSD T7 has also declined, with the current price being less than 1000 yuan, whereas at its peak, it had reached as high as 1600 yuan.

The fluctuating prices are mainly influenced by what factors?

The storage industry, as a barometer of the semiconductor sector, is closely related to industry demand. Changes in both the supply and demand sides can affect the market trends of the storage industry. If we delve into the factors influencing storage prices, they can be primarily attributed to these two aspects.

There are mainly two reasons for the noticeable recovery of the storage industry in the first half of the year.

From the demand side, the promotion of artificial intelligence and the slow recovery of consumer electronics will drive the initial warming of the storage market.

For example: The widespread application of technologies such as large language models driven by artificial intelligence requires a substantial amount of data storage and processing; additionally, after a prolonged downturn, the consumer electronics industry has entered a slow recovery this year, stimulating growth in the storage industry and prompting some manufacturers to expedite inventory preparations.

From the supply side, the reduction in production by storage manufacturers and the shift in capacity towards high-value-added products also contribute to a healthy market trend for storage.

For instance: During the previous market downturn, storage chip manufacturers proactively reduced production to adjust the market supply and demand relationship. After a period of reduced production, the market supply gradually decreased, easing the supply-demand contradiction and creating conditions for price recovery and industry recovery. Furthermore, manufacturers have shifted some of their capacity towards high-value-added products, such as high-end DDR5 memory and solid-state drives. These products offer higher performance and profit margins, meeting the market's demand for high-end storage products while also enhancing the manufacturers' profitability.

However, not long after, the industry faced a cold breeze, with the main influencing factors again being supply and demand.

From the demand side, the instability of the global economic situation, technological updates and upgrades, and the actual recovery of the consumer electronics industry falling short of expectations could all disrupt the hard-won stable pattern of the storage market.For instance, economic uncertainties may impact consumer and business confidence and spending, leading to a decline in demand for storage products; uncertainties in technological updates and replacements, if new technology development falls short of expectations or new alternatives emerge, could affect the demand for the storage industry; the actual recovery of the consumer electronics industry not meeting expectations could lead to another chill in the storage market.

From the supply side, rapid capacity recovery and intense industry competition can easily plunge the market back into difficulty.

For example: In the early stages of industry recovery, manufacturers may gradually restore production capacity based on anticipated growth in market demand. However, if the speed of capacity recovery is too fast, exceeding the rate of demand growth, it could lead to oversupply and falling prices in the market once again. Additionally, the high profits in the storage industry attract new competitors to the market, and cutthroat competition such as order grabbing and price cutting among different manufacturers can put pressure on the market share and prices of existing manufacturers.

Forecast for the Future Trend of Storage Prices

In the short term, price pressures in the storage market are expected to continue, with only HBM prices increasing month-on-month in the Q4 DRAM market. TrendForce data indicates that the price of general-purpose DRAM for this year's fourth quarter is expected to rise by 0% to 5% compared to the previous quarter. However, with the increasing share of HBM in the DRAM market, the average price of all DRAM, including HBM, is expected to rise by 8% to 13% compared to the previous quarter.

The growth rate of general-purpose DRAM prices in the third quarter was 8% to 13%, but it is expected to stagnate in the fourth quarter due to economic recession leading to a slowdown in consumer demand, as well as increased supply from Chinese memory manufacturers. The expansion of HBM production by storage manufacturers will lead to a decrease in the supply of general memory, which will be a factor in price increases, but not enough to offset the sluggish demand. TrendForce stated that contract prices for the fourth quarter are expected to decrease by 5% to 10%. In addition, TrendForce also expects the price of LPDDR5X DRAM to remain unchanged due to its relatively appropriate inventory levels.

In the long term, the market size of the data storage industry is continuously expanding, and market demand is also continuously increasing. Thanks to the popularization and application of technologies such as digitalization, cloud computing, big data, and artificial intelligence, overall, the demand for data storage continues to rise. SSDs are gradually replacing traditional hard disk drives (HDDs) to become the mainstream. SSDs have comprehensively surpassed HDDs in terms of performance, efficiency, energy saving, and reliability. In terms of price, it is expected that by around 2026, the price advantage of SSDs will also be greater than that of HDDs. Moreover, the development of new technologies such as all-flash storage, DDR5, DNA storage, and holographic storage will also bring new growth points to the data storage industry.

In summary, although the storage market faces challenges of declining prices and fluctuating demand in the short term, in the long term, technological innovation, continuous growth in market demand, and industry competition will collectively shape a more diversified and rapidly developing market.