Japan-South Korea trade war may affect memory price fluctuations

Following the Toshiba power outage in mid-June, the Japanese government recently announced that it would begin to control the export of three key materials needed for the production of semiconductors, smartphones and panels to South Korea from July 4, causing downstream module manufacturers in the memory industry to increase their quotations...

DRAMeXchange, a semiconductor research center of TrendForce, pointed out that following the Toshiba power outage in mid-June, the Japanese government recently announced that it would begin to control the export of three key materials required for the production of semiconductors, smartphones and panels to South Korea from July 4, causing downstream module manufacturers in the memory industry to increase their quotations. However, as the current DRAM and NAND Flash inventory levels are still high, and the shipment of raw materials is not completely banned, only the application process is extended, the possibility of a short-term structural supply and demand reversal is low.

The outbreak of the Japan-South Korea trade war has led to rumors in the industry that memory prices will reverse. TrendForce analysis points out that because DRAM prices have experienced a rapid decline for three consecutive quarters, the inventory levels of downstream module manufacturers are generally low. Therefore, it is indeed observed that some module manufacturers are taking advantage of the raw material incident to offer higher prices or indicate that they will stop production.

However, the current spot market accounts for less than 10% of the overall DRAM market, and the mid- to long-term industry supply and demand situation still needs to focus on the contract market, which accounts for more than 90%.

From the demand side, whether it is retail PCs and smartphones, or enterprise servers and data center construction, the overall terminal demand is still very weak.

However, on the supply side, the inventory level of DRAM suppliers is still generally higher than 3 months, which has caused the contract prices of PC, server memory and mobile memory to continue to fall in the early third quarter, and there is no sign of a reversal. TrendForce believes that the possibility of a structural supply and demand reversal in the DRAM market due to this raw material incident is low.

The NAND Flash market is affected by Japan's stricter material export review and the Toshiba power outage. Since the Wafer market price is already low, it is expected that the prices of various suppliers will rise from July. However, since suppliers generally have 2-3 months of inventory, most module manufacturers will not accept the price increase immediately. The subsequent decision on whether the transaction price will rise depends on the market and supply-side inventory conditions.

As for the quotations of various SSD, eMMC/UFS products to OEMs, although some suppliers have suspended shipments, based on the supply and demand situation and considering the inventory levels on the OEM side, TrendForce believes that although NAND Flash prices will rise in the short term, there will still be downward pressure in the long term.