The declining price of NAND flash is expected to normalize in the second half of this year due to the reduction effects of manufacturers and the increasing demand for artificial intelligence (AI) applications.
On the 17th, market research firm TrendForce analyzed that "the NAND flash market is expected to continue price declines due to oversupply in the first quarter of this year; however, the balance of supply and demand in the market is expected to improve significantly in the second half."
The reasons for the improving balance of supply and demand include proactive reductions by manufacturers, a reduction in inventory in the institutional sector of smartphones, and an increase in demand due to AI and deep search applications.
As of last month, TrendForce had predicted that the NAND industry was facing dual pressure from weak demand and oversupply. It also estimated that NAND prices would fall by about 10% to 15%, and the annual growth rate for NAND demand would be revised down from 30% to 10% to 15%.
As NAND prices have steadily declined since the third quarter of 2023, semiconductor manufacturers suffering from reduced revenue are continuing their production cuts. TrendForce previously noted, "Manufacturers like U.S. Micron, Samsung Electronics, SK hynix (including Solidigm), Kioxia, and SanDisk are implementing NAND production cut plans," adding, "They are mainly reducing operating rates and delaying process upgrades as a method of implementing production cuts."
TrendForce predicted that starting as early as the second quarter of this year, supplier reductions and AI demand would drive recovery in NAND prices. Following the subsidy policy implemented in the fourth quarter of last year in China, demand for smartphones has increased, leading to a rapid depletion of NAND inventories. TrendForce's analysis suggests that as the decline in NAND prices slows down, smartphone brands will build up low-cost inventories in the second quarter, further stimulating NAND demand.
It is also positive that NVIDIA may increase shipments of its Blackwell series products in the second half of the year. With the increase in shipments, the demand for enterprise solid-state drives (SSDs), which are high-value NAND products, is expected to rise significantly.
In particular, TrendForce noted that with the emergence of DeepSeek, which reduces the cost of building AI servers, small and medium-sized enterprises related to AI prefer storage devices of 30 terabytes (TB) or more, which may lead to an increase in demand for enterprise SSDs. Additionally, with the expansion of AI adoption in personal computing and smartphones, demand for high-capacity and high-performance PC SSDs and storage devices for mobile devices is also expected to increase.