In a development set to impact the electronics industry significantly, ADATA’s chairman, Simon Chen, recently announced a forecast of soaring memory chip prices and a looming shortage. Chen predicts a tight supply of memory chips that could last up to two years, stemming from major NAND Flash manufacturers slashing production by 40% to 60%. This reduction is expected to deplete the market’s accumulated inventory by early next year, leading to an inevitable price surge.
Chen highlighted the rapid rise in DDR5 prices, which have already increased by over 50%, and anticipates an even more significant scarcity and price hike for DDR4 due to manufacturers shifting focus to the more profitable DDR5. This shift is expected to exacerbate the shortage of DDR4, with larger price increases predicted for the first half of the next year. The constrained production capacity, as Chen pointed out, isn’t merely due to production cuts but also because chip manufacturers are financially strained and unable to expand their production capacity in the short term.
In parallel, Western Digital has signaled a substantial increase in the prices of NAND Flash and HDD products. The company has informed distributors and certain customers of these impending changes, citing a cumulative growth rate for NAND Flash that could reach a staggering 55% in the future. Western Digital is adjusting its production capacity in line with market supply and demand, which has made it challenging to meet unplanned demands and orders. As a result, HDD product prices will undergo weekly reviews, with expected increases in the first half of the next year. Similarly, NAND Flash product prices are set to rise over the next few quarters.
These developments come at a time when Simon Chen anticipates a recovery in the consumer market and predicts the onset of a bull market for memory chips. This situation presents a challenging scenario for the electronics industry, as it braces for a period marked by tight supply, rising costs, and shifting production priorities.
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