Affected by the Western Digital and Armored Man material contamination incidents, NAND flash memory prices will soar in the second quarter

Previously, market research agency TrendForce said that after entering the fourth quarter of 2021, the impact of the continued accessory shortage has expanded to the NAND flash memory market due to the unresolved capacity tightening problem. At the same time, market demand began to weaken, and the overall inventory level gap continued to widen in the past few months, eventually causing the relevant NAND flash memory companies to reduce orders to reduce inventory. As a result, NAND flash prices will start to fall, ending months of strong revenue growth.

Perhaps TrendForce did not expect that after entering 2022, Samsung closed its factory due to the new crown epidemic, and the recent Western Digital and Kioxia (Kioxia) encountered a production material pollution incident. According to the announcement of Western Digital and Jiaoxia, Components containing impurities may be used in the specific production process of BiCS Flash, which will affect the 3D NAND flash memory production line of the factory located in Yokkaichi and Kita market in Japan, and at least 6.5 exabytes of flash memory is contaminated.

TrendForce said the affected 3D NAND flash production accounted for 13 percent of Western Digital and Armored Man's first-quarter production and about 3 percent of total full-year production. As the line recovery time is yet to be determined and the exact number of losses has yet to be summarized, the scope of the eventual impact may be greater. TrendForce expects the decline in NAND flash prices in the first quarter to narrow to 5 to 10 percent, lower than previously expected.

At present, Western Digital and Jiaoxia mainly provide client SSD and eMMC products, the former is the second largest client SSD and the first largest client eMMC supplier, and subsequent supply will inevitably be affected. Even if overall PC demand declines in the second quarter of this year, the price of client SSDs is likely to remain firm. In addition, Armor's enterprise PCIe 4.0 SSD has recently passed multiple customer verifications, and the market share in the second quarter should have increased, but this incident may affect subsequent customer purchases.

It is rumored that Western Digital and Jiaoxia have suspended spot market quotations and are waiting for relevant assessments, which may stimulate spot prices to rise in the future. TrendForce believes that quarterly-based orders will not be affected in the short term, but the price of NAND flash memory in the second quarter is likely to turn from falling to rising, and is expected to soar by 5% to 10%.