Industry leader warns against surge in NAND prices, could negatively affect demand

Readjusting production is the most viable approach

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Published onMarch 13, 2024

published onMarch 13, 2024

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The last few months helped NAND manufacturers recover from the losses accrued in the post-pandemic phase when they couldn’t anticipate the market sentiments. Now, as perDigitimes, Phison CEOK. S. Puawarns that any price fluctuations at this point could potentially disrupt the market and lead to a fall in demand.

In the post-pandemic years, i.e., 2022-23, the NAND and SSD manufacturers were reeling under heavy losses. Massive price cuts were announced, which helped stabilize the weakened demand. But, after several months of favourable market conditions, manufacturers are contemplating a price rise.

Analysts atTrend Forcesuggest that this hike could be in the40-50%range and will be enforced sooner than expected. A40%rise in prices will allow companies to break even, and anything higher will deliver profits.

Phison CEOPuabelieves this won’t go down well and could put a halt to the increase in demand. The reason, there’s only a certain amount consumers are willing to pay. Anything beyond that, and they will simply look for cheaper alternatives or drop the plan altogether.

Pua’s solution to the problem is rather simple. Manufacturers should meet the current demand by optimally adjusting production and not relying on price control mechanisms. This would ensure a sustainable relationship between demand and supply and, in turn, boost profits.

Again, there are risks to the approach. What if the demand falls again when the production or supply is expanded? This would lead to further losses for companies and force them to again lower the price, basically repeating the post-pandemic scenario. But this time around, recovery may take longer!

Experts predict thatPC prices will rise in 2024, primarily due to two reasons: increased cost of components and the revived user interest due to modern technologies like AI. Consumers are willing to pay more. Subsequently, PC shipments are expected to increase by8%.

Minor fluctuations in NAND prices shouldn’t have too much of an impact on the demand. But if it’s near the predicted40-50%range, SSDs may not remain a viable storage option for many, at least as a secondary drive. So, manufacturers should pay heed to Phison CEOK. S. Pua’sadvice.

What’s your take on the NAND and SSD prices and how much of an increase won’t falter the demand? Share with our readers in the comments section.

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Industry leader warns against surge in NAND prices, could negatively affect demand