The global memorychip market is facing a slump earlier than expected, as COVID-19 spreads across the US, Europe and the Middle East, Taipei-based market researcher TrendForce Corp (集邦科技) said in a report yesterday.
While pointing to an apparent slowdown in China of the coronavirus outbreak, which is now considered a pandemic by the WHO, the global economy remains at a great risk, as the disease increasingly multiplies in other parts of the world, it said.
The rapid proliferation of the pandemic is expected to heavily affect economic and social activities, and subsequently hinder consumer purchasing power, casting a pall over market demand, the report said.
Falling demand for consumer and enterprise electronic devices, such as PCs and smartphones, would inevitably be followed by declining demand for DRAM and NAND flash chips, it said.
Smartphone production is expected to be the hardest hit, with the researcher projecting a 3.5 percent to 7.5 percent decline on an annual basis in smartphone production this year.
Demand for other memory applications, such as servers, is expected to remain relatively stable, with production increasing by 3.1 to 5.1 percent year-on-year, as companies and schools shift to activities online through teleworking and distance learning, TrendForce said.
It added that this demand might be offset by an increasingly cautious approach in spending by enterprise clients.
The average selling prices of DRAM and NAND flash products are expected to continue their upward trend next quarter, with sequential increases of 5 to 10 percent as customer inventory levels remain low, the researcher said.
The real challenge is expected to emerge in the third quarter, as waning consumer demand affects electronics device makers’ efforts to reduce inventories, which would in turn stall procurement of memory products, it said.
As a result, any growth in memory product demand would be curbed, even reversed, TrendForce said.
NAND flash prices are expected to nosedive in the second half of the year, TrendForce said, predicting a 5 to 15 percent plunge in the fourth quarter in a bear-case scenario.
The DRAM market, on the other hand, is unlikely to suffer such a sharp decline due to a pre-existing heavy imbalance between supply and demand, it said, adding that prices would remain flat in a worst-case scenario.
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