Flash Memory Production Costs Are Higher Than Its Price

Flash memory prices have once again reached levels below manufacturers’ manufacturing costs. According to the boss of the controller manufacturer Phison, this indicates that the bottom of the market is not far away.

According to the Taiwan industry publication DigiTimes, Phison CEO KS Pua recently announced that the cost of manufacturing NAND flash modules is now below the prices that manufacturers can achieve from selling them. So the prices in the badly battered market can no longer fall much lower.

According to Pua, it is therefore foreseeable that the bottom in the price development for NAND flash memory will soon be reached, so things can only go up from there. At the same time, however, this also means that demand has fallen sharply again recently, which is causing difficulties for manufacturers. They can now either sell their products at junk prices to cover at least part of their costs or accept losses through lost sales.

Production cuts failed to halt price erosion

The chip manufacturers have already significantly reduced their production capacities in recent weeks and months in order to prevent a further fall in prices. Behind the falling prices is of course the fact that demand has already fallen in many countries after the end of most anti-corona measures, but a bigger problem is of course the war waged by Russia against Ukraine, which has caused massive losses in purchasing power for companies and private customers all over the world has taken care of.

If the Phison boss has his way, the situation in the storage market should recover soon, because in his opinion the worst effects of inflation and other macroeconomic problems will be over in the foreseeable future. For us customers, however, the bleak situation for flash memory manufacturers bodes well.

Anyone who can still afford a new smartphone, a new PC, or other electronic devices with such memory modules will soon be able to get more memory because the prices for finished SSDs are falling and the device manufacturers can at least try to convince customers to buy their products with more memory.