TAIPEI – Contract prices of NAND flash products are expected to undergo a marginal drop of 0-5% sequentially in the fourth quarter as demand slows, according to TrendForce. The current cyclical upturn in NAND flash prices will have lasted only two consecutive quarters.
NAND flash suppliers’ capacity expansion plans will be affected by the outlook on future trends and the supply of other non-memory components. At the same time, attention will have to be paid to the demand projection. At the moment, NAND flash suppliers appear likely to downsize their capacity expansion activities for 2022, resulting in a 31.8% year-over-year increase in NAND flash bit supply next year.
Annual bit demand, on the other hand, is projected to increase 30.8% year-over-year. With demand being outpaced by supply, and competition intensifying among suppliers for higher-layer products, the NAND flash market will likely experience a cyclical downturn in prices in 2022.
With demand surging for a significant part of this year, customers have accelerated their adoption of higher-layer NAND technologies. Suppliers have also revised their production plans several times to raise output, reaching year-over-year growth of nearly 40% in total NAND flash bit supply in 2021. In light of the somewhat high base for comparison and the relatively weak demand outlook next year, TrendForce expects annual NAND flash bit supply to increase about 31.8% year-over-year in 2022.
The analysis of the demand side of the NAND flash market finds the shipment volumes of smartphones, notebook computers, and servers have been undergoing robust growth in 2021, resulting in a relatively high base period for comparison against next year’s figures. Hence, substantial year-over-year increases in device production or shipments in 2022 will be difficult, says the firm. In addition, the procurement side still suffers from mismatched availability of components. With NAND flash supply being relatively healthy, and device manufacturers carrying a growing NAND flash inventory, NAND flash procurement for the upcoming period will likely be limited. TrendForce expects NAND flash bit demand to increase 30.8% year-over-year in 2022, representing slower growth compared with the increase in NAND flash bit supply.
The persistent shortage of components, including chipsets and driver ICs, is expected to exacerbate the decline in smartphone shipment during the traditional off-season of the first quarter. As for the average storage capacity of handsets, one driver of growth is the iPhone series, which is adopting a 1TB solution for the first time with this year’s line-up (i.e., iPhone 13 Pro/Pro Max). This will encourage brands in the Android camp to follow suit and have a 1TB solution featured in the future flagship models that are released in 2022, thus slightly increasing the shipment share of high-density solutions.
Furthermore, brands in the Android camp will be focusing on pushing models with 256GB or 512GB in response to Apple’s storage upgrade for this year’s iPhone lineup. TrendForce forecasts the NAND flash bit demand related to smartphones will rise around 28.5% year-over-year in 2022, noticeably lower than the growth rates that approached almost 30% for the years prior to 2021.
Orders for notebook computers will enter a period of downward correction in 2022 compared to the peak growth that took place in 2021, as increasingly widespread vaccinations lead to a gradual easing of border restrictions. Although the workforce’s return to physical offices has now generated some upside demand for commercial notebooks, the demand for consumer notebooks and Chromebooks, which are highly contingent on the education sector, will undergo a sharp decline. Taking these factors into account, TrendForce forecasts 23.2% year-over-year growth in client SSD bit demand in 2022, which falls short of the growth in 2021 by a considerable margin.
CSPs’ continued procurement of servers in 2022 is expected to drive up annual server shipment about 4.5% year-over-year. In particular, the average storage capacity of enterprise SSDs is expected to experience a more significant growth next year compared to previous years due to the gradual release of new server CPU platforms with PCIe Gen 4 support, which features more PCIe lanes allocated to SSD data transfer. These new CPUs will also come with substantial upgrades in terms of both core count and processing power. Adoption of large-capacity enterprise SSDs enables servers equipped with such CPUs to achieve improved computing performance and in turn allows CSPs to cut down on the number of server nodes required, thereby optimizing the cost of data center buildout.
In terms of applications, computing demand from AI and big data will continue growing, and this growth will also contribute to the increase in the average storage capacity of enterprise SSDs next year. In addition to the aforementioned developments, the release of Intel’s Sapphire Rapids platform, which supports PCIe Gen 5, will bring about a further bump in enterprise SSD data transfer speed, as well as average storage capacity, which is expected to increase 33.5% in 2022.
NAND flash ASPs have not shown significant downturns for two consecutive years since 2020. At the same time, as the Covid-19 pandemic drives up the demand for electronic products and cloud services, the overall growth in NAND flash bit demand has been remarkable, resulting in annual NAND flash revenue growth of more than 20% year-over-year in both 2020 and 2021.
Looking ahead to 2022, the year-over-year increase in NAND flash bit demand will diminish due to the high base for comparison this year. The NAND flash market is projected to enter a period of price downturn, with an over 18% decline in NAND flash ASP. While such a decline offsets the rise in bit shipment, annual NAND flash revenue will likely increase 7% in 2022, the lowest year-over-year growth in three years.