Oversupply, falling prices hurt memory market conditions

ISuppli noted that the global average selling price (ASP) for 512-Mbit equivalent density NAND flash is expected to decline to US46 cents in Q4, down 24% margin from US60 cents in Q3. Meanwhile, 512-Mbit NAND ASP increased by 8.4% in Q3 and by 6% in Q2.

This statement from iSuppli comes after the firm in September reduced its forecast for global semiconductor revenue growth this year to 3.5%, down from its previous prediction in June of 6% growth, noting first half semiconductor industry weakness in part caused by a decline in memory IC revenue that was spurred by a drop in ASPs, which, in turn, was caused by a glut in the market.

“The major cause of the price decline is a continuing oversupply of parts,” said Nam Hyung Kim, director and chief analyst for memory ICs and storage systems at iSuppli, in the statement. “The oversupply is being caused mainly by the South Korean memory manufacturers shifting production capacity from DRAM to NAND.

“The present weak conditions in the NAND market contrast markedly with the strong performance posted in the third quarter,” Kim added. “Suppliers enjoyed a period of strong pricing in the third quarter. However, prices rose mainly due to reduced supply growth—not because of increased demand. iSuppli foresees no near-term recovery in NAND conditions.”