Total NAND Flash revenue for 1Q21 increased by 5.1% QoQ to US$14.82 billion, according to TrendForce reports. In particular, bit shipments rose by 11% QoQ, while the overall ASP dropped by 5% QoQ; hence, bit shipment growth offset the decline in the overall ASP. Although NAND Flash’s demand from the notebook computers and smartphone manufacturers remained high, clients from the data center segment exhibited relatively weak demand, since this segment had yet to leave the state of NAND Flash’s oversupply. Contract prices for this quarter therefore still mostly showed a considerable QoQ drop. On the other hand, OEMs/ODMs of end products began to increase procurement of NAND Flash products from the second half of January onward because they noticed that the shortage of NAND Flash controller ICs was affecting the production of medium- and low-density storage products. Besides avoiding a possible supply crunch in the future, OEMs/ODMs were placing additional orders because they were preparing for a push to expand their market share. On account of these developments, the overall NAND Flash demand exceeded expectations in 1Q21.
Turning to 2Q21, factors on the supply and demand sides have turned oversupply into a shortage and propelled quotes upward for the mainstream categories of NAND Flash products. On the supply side, the shortage of NAND Flash controller ICs have worsened and resulted in a wider impact on the production of finished storage products. On the demand side, clients in the data center segment and OEMs of enterprise servers are ramping up component procurement. With prices rising and bit shipments growing, the quarterly total revenue is projected to register a QoQ increase for 2Q21. However, in the long term, the continuation of the shortage of controller ICs may cause prices of NAND Flash wafers to drop first and eventually constrain further revenue growth.
