The price of flash memory has risen by nearly 40% in half a year, and the "cabbage price" of large-capacity mobile phones is about to become a thing of the past
Image source: Visual China
In the past 2023, large-capacity mobile phone products have just completed their popularization, and you can buy 1TB storage mobile phones from brands such as Redmi, OnePlus, and realme for about 2000 yuan, which is very good for heavy users of photography and video.
Travel video blogger Huang Wei told Titanium Media App that although she also has more professional camera equipment, she will also use her mobile phone to broadcast live or record some first-person camera shots. Many times when you go out to travel, you have to shoot more than ten hours of material at a time, and the inexpensive 1TB storage mobile phone is very practical for Huang Wei.
But with the price changes in the flash memory market, high-capacity mobile phones, which were once considered the "price of cabbage" in the first half of 2023, may soon become a thing of the past.
Whether the price is raised or not, the upstream has the final say
CFM flash market data
According to the data of the CFM flash memory market, from mid-2023, there will be a significant price increase from flash memory wafers to memory chips of various specifications, with an average price increase of about 30%.
The storage field has always been an industry where leading manufacturers are relatively concentrated, with Samsung, Kioxia, SK hynix, Western Digital, Micron, and Intel accounting for about 98% of the total market share. Manufacturers outside of this are difficult to compete with the head manufacturers in terms of product performance, quality, and supply stability, so they basically have no right to speak.
In the downstream of the storage industry, smartphone and PC manufacturers will purchase different memory chips for their own products. For products of the same manufacturer and model, the larger the capacity, the more expensive the product. Storage space determines how many apps, photos, videos, or music can fit into a smartphone or PC.
For smartphones and consumers, the bigger the storage space, the better: a 1TB smartphone can hold twice as many photos, videos, and music as a 512GB phone, without having to regularly clean up junk files to free up space.
From the perspective of smartphones, PC manufacturers and consumers, they definitely want the price of upstream storage to be as low as possible. Consumer electronics can become more attractive and users have a better experience.
However, for upstream manufacturers, it is already close to monopoly, and if they continue to maintain low prices in the downturn of the consumer electronics market, they can only obtain lower profits, so for Samsung, Kioxia, and SK hynix, it is the most reasonable choice to reduce production and raise prices to ensure profit margins.
At the Q2 2023 earnings conference, Samsung announced that it would continue to reduce the production of memory chips with NAND Flash as the core in the second half of the year. SK hynix announced that it will continue to reduce NAND Flash production by 5-10% in the second half of the year. Micron has increased the number of NAND Flash wafer casters to 30% from a 25% reduction in production. Kioxia has been reducing production by 30% since Q4 2022, and the reduction has been expanded to 50% in 2023.
Zhang Lan, who works in a storage manufacturer, told Titanium Media App that the storage market can basically be understood as a futures market, and the adjustment made by upstream manufacturers will not have an immediate impact, but from the perspective of influence, it is indeed "no turning back from the start". Although downstream manufacturers have stockpiled goods in advance, the result of price increases is inevitable.
Previously, Taiwan's Electronic Times reported that with the market heating driven by the launch of new mobile phone brands, brand inventories entering a low water level, and the effect of upstream original factory production reduction, the strong increase in mobile phone-related memory chips will continue to the first quarter of 2024.
Chen Huimin, chairman of Guangying Dentsu, a memory chip module factory, said that at present, among the three major memory chip applications, only the demand for mobile phones has increased significantly, but the continuation of mobile phone pulling force depends on the support of real market demand, and it is expected that the first quarter of 2024 will be the focus of observation. According to TrendForce's latest research, the rally in NAND Flash in the fourth quarter is expected to continue into the first quarter of next year.
A dilemma, a painful choice
In the past 2023 and the upcoming 2024, the life of smartphone and PC manufacturers, sandwiched between upstream manufacturers and consumers, is not easy. These manufacturers are under pressure in two directions: on the one hand, they need to coordinate with upstream manufacturers to obtain high-quality parts and resources, and on the other hand, they need to meet the needs of consumers and launch products that are in line with market trends.
On the smartphone side, according to Canalys data, for the whole year of 2023, the total global smartphone shipments will be 1.1 billion units, a year-on-year decrease of 4%. On the PC side, Canalys data shows that global PC shipments have dropped to 247 million units in 2023, down 13% from 2022.
Although in terms of quarterly performance, both smartphones and PCs ended their declines in the fourth quarter of 2023 and turned to positive growth, the pressure to be at a low point during the economic downturn is self-evident.
On the one hand, it is the price increase of upstream manufacturers, and on the other hand, it is the needs of users, and the terminal manufacturers sandwiched in the middle seem to be a little difficult. During this period, these vendors need to be flexible to respond to various challenges, including market changes, technology updates, and competitive pressures. Therefore, in the coming days, these manufacturers need to adopt effective strategies to meet these challenges in order to ensure their survival and development.
The new mainstream brand 1TB capacity mobile phone has reached the price range of 2000 yuan
Chen Lei, who works in a smartphone manufacturer, told Titanium Media App that large capacity is a function on smartphones that is truly "once you use it, you can't go back", and consumers will always have more and more space to change their mobile phones.
"From the earliest 64GB to 128GB, then to 256GB, to 512GB and 1TB, the average user's photos and videos are less motivated to delete or back up to the computer, which creates demand, so there are cheap high-capacity mobile phones. Chen Lei said.
On the one hand, the actual demand of consumers, on the other hand, the upstream price pressure, sluggish sales and high-intensity competition are real difficulties, and smartphone and PC manufacturers have to think carefully.
Li Shu, a media person who has worked in the consumer electronics industry for many years, told Titanium Media App that a closer look at many products of mobile phone manufacturers this year can be found that some are in a small price increase, compared with the previous generation of products, adding 100-200 yuan is not eye-catching;
Regarding the question of whether to stay with large-capacity products, Li Shu believes that some manufacturers may be more realistic and directly do not provide large-capacity versions, such as the just-released OPPO Find X7 Pro, which does not provide a 1TB version. Although there are rumors that the satellite version of the Oppo Find X7 Pro will be offered as a 1TB version, this does not seem to be a reason why the regular version of the Oppo Find X7 Pro does not come with 1TB of storage as a camera-focused imaging flagship phone.
In addition, there is also a possibility that although manufacturers provide large-capacity versions, they only release small quantities, so as to give consumers a reason to "can't buy" and "settle for second", which may be more effective for some low-end products. (This article was first published on the Titanium Media App Author/Wu Honglei Editor/Zhong Yi, Huang Wei, Zhang Lan, Chen Lei, and Li Shu are pseudonyms in the article)