Flash Memory Market 2024: Navigating the Rollercoaster
29/01/2024 by Martin Schreiber
As we step into 2024, the semiconductor market continues to mirror the dynamics of a rollercoaster, characterized by its cyclical nature. This year, we're witnessing significant shifts in production and demand in the flash memory sector, with implications that are both challenging and opportunity-laden. Let me dive into some details:
Production: A Catch-Up in Sight?
The top NAND flash manufacturers have accumulated hefty losses over late 2022 and 2023 – not well received by their shareholders, which means reducing those losses and driving into black numbers again are their top priorities currently. After a period of significant capex reductions and production cuts in 2023, NAND flash manufacturers are starting to ramp up production again. However, this process is expected to be gradual, with a full catch-up only anticipated towards the end of 2024. This supply-side constraint is expected to exacerbate the existing imbalances between production and demand.
Demand: A Mixed Bag of Sectoral Trends
The demand dynamics for flash memory are not uniform across all sectors. On the one hand, the demand from AI, data centers, and communication applications is on the rise. The same is true for the mobile and client markets which are experiencing a strong revival after several lackluster quarters in 2022 and 2023.
On the other hand, the automotive and industrial sectors are still experiencing slower growth due to factors such as the slowdown in EV adoption and inventory overhang. However, there are strong indications that the demand side will improve over the next 2-3 quarters with high risk of shake up the supply/demand equilibrium.
Consequences: A Higher Risk of Shortages
The combination of production constraints and mixed growing demand trends is raising the risk of shortages and price spikes in the flash memory market. Swiss Market research forecasts expect price increases of up to 50-70% throughout 2024, with an acceleration in the second half of the year. The main trigger for that could be even the smallest signs of positive signals on the macroeconomic climate. Besides price increases lead times are also expected to lengthen further. Since the NAND market is very efficient these dynamics can very quickly turn into a shortage situation similar to what has been seen in the 2020/2021 timeframe.
Swissbit's Recommendations: Act Now to Secure Supply
Swissbit maintains long-lasting and excellent business relationships and forecast planning with key NAND suppliers, which allows our customers to benefit from supply chain security. Given the current market conditions and outlook, Swissbit however strongly encourages proactive measures to secure flash memory supply. We recommend booking orders for 2024 and preparing demand forecasts for the first half of 2025. These proactive steps significantly minimize the impact of a potential supply disruption in the course of 2024 and ensure access to essential memory solutions.
Conclusion: Prepare for a Bumpy Ride
The flash memory market is undoubtedly facing a challenging period. However, by understanding the current market trends and taking proactive steps to secure supply, end customers can navigate these challenges effectively. Swissbit stands ready to support customers with its deep expertise and comprehensive flash memory solutions.