Effect of Japan-South Korea trade war: Phison: NAND prices are expected to rise by another 30%

NAND Flash has been in a hot market recently, and the Japan-South Korea trade war has made NAND Flash prices more bullish. Pan Jiancheng, chairman of Phison, a NAND Flash controller chip and module manufacturer, said that since July, spot prices have risen by more than 10%. From a rational point of view, there is still room for an increase of 20% to 30% in the future; if panic demand occurs in the market, even a further increase of 50% would not be excessive.

NAND Flash prices have recently turned upward. Pan Jiancheng said that this trend has actually been brewing for one or two months. The previous decline in NAND Flash prices was mainly due to the pressure brought by high inventory levels in the market, but the traditional demand for goods in the third quarter, coupled with the effect of production cuts in the first quarter, gradually began to ferment in the second and third quarters. Recently, there have been incidents such as power outages at Toshiba Memory's plant and trade tensions between Japan and South Korea. Pan Jiancheng believes that the NAND Flash market conditions in the third quarter are not bad.

However, Pan Jiancheng also mentioned that the shortage is caused by the sudden change in demand. After the previous price decline, downstream inventory is at a low level. Now that the market news has come out, everyone is considering stocking up more goods.

In July, the quotations of upstream NAND Flash manufacturers have increased by about 10%, and further price increases cannot be ruled out. Module manufacturers are expected to increase their quotations to downstream customers as market conditions develop.

Toshiba is Phison's major shareholder and an important upstream supplier. However, it is understood that Phison also purchased a lot of goods from manufacturers including Micron, Intel, SK Hynix, etc. in the second quarter. Currently, Phison's NAND Flash inventory level has exceeded NT$10 billion (New Taiwan dollars, the same below). Goods ordered at the price at the end of June will be delivered in July and August. With low-priced inventory, when market prices rise, Phison's performance and profits are expected to be boosted.

At the same time, it was reported recently that Phison stopped quoting to downstream companies. Pan Jiancheng pointed out that if there is no supply, it will hurt customers greatly, so they will continue to supply high-quality customers, but the price may rise. The market is currently tight, but Phison has sufficient supply, "there is low-priced inventory, and we will also support good customers."

Phison's share price retreated yesterday (12), falling NT$7.5 to close at NT$327.5. However, an investment trust bought its shares for the sixth time in a row, while another memory module manufacturer ADATA rose NT$1.1 to close at NT$52.7, and proprietary traders bought its shares for the third time in a row.