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NAND Tightness Continues

We have all now heard about, and some have experienced, the effects of the NAND shortage over the past few months. These shortages are now being quantified as CQ3 ‘16 SSD shipments are being reported. Early indications point to the channel seeing lower shipment volumes than what was previously forecasted. A couple variables, in addition to what was previously communicated may, or may not, have a positive effect on freeing up some NAND – depending on what market segment you are talking about.

First, CQ1 ‘17 will soon be upon us. In the past, Q1 has been a down quarter for smart phone sales. If this trend occurs again this year, then some NAND should free up for other applications. As you know, smart phone capacities that are being offered have doubled with the latest offerings. If a down quarter is upon us, more NAND could be freed up for other applications (including SSDs).

Second, the (delayed) ramp for 3D NAND continues to show its effects in the industry. With most NAND vendors still holding to CQ2 ‘17, or into the second half of next year for a significant transition to 3D, we can assume the tightness for NAND, from a supply base, will continue perhaps well into the back half of 2017.

Lastly, SSD attach rates in notebook PCs continue to climb, with most major notebook OEM SSD NAND bit consumption outpacing what was previously forecasted. As most NAND vendors will want to take care of these major customers versus the smaller spot market business, overall NAND supply in the channel will continue to see tightness throughout the rest of this year and well into 2017.

So, the tug-of-war for NAND supply continues. If there is a positive in this current situation (for the suppliers, at least), the drastic price declines that we have seen over the past couple years for SSDs have now leveled off, and in some cases increased. SSD and NAND companies are seen their margins improve. Only time will tell how long this trend can continue.

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