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Flash memory prices rebound as makers introduce larger-capacity chips

Xiaomi CEO Lei Jun announces a new smartphone model in Beijing. Smartphone makers are introducing models with larger memory capacity, boosting demand for flash memories.

TOKYO -- Buoyed by a significant demand increase as Chinese and Taiwanese smartphone makers introduce products with larger memory capacity, prices of NAND flash memory chips have rebounded significantly.

The benchmark bulk sales price of NAND flash memory products rose a significant 22% in June compared to a month ago.

Prices of 64 gigabit, multi-level cell-type NAND chips rose in June to about $2.75 per unit, the first rebound in two years and nine months. Such units are sometimes traded at over $3.

Prices of triple-level cell chips, which have higher data capacity, have risen to around $2 and are continuing to rise in July.

The significant spike in NAND flash memory prices is attributed to increased demand from some Chinese and Taiwanese smartphone makers, which are introducing products with more memory capacity.

Vivo Communication Technology and Xiaomi, both Chinese smartphone makers, for example, recently introduced handsets whose internal storage is more than double that of their respective previous products. Such moves have boosted demand to levels exceeding memory manufacturers' expectations.

British market research firm Technavio expects the world's total NAND flash memory shipments to grow 30% in 2016 from a year ago to over 10 billion units.

The market is rising due also to declining supply, caused by a suspension of operations at a Chinese semiconductor plant of South Korea's Samsung Electronics following an explosion at a power substation in Xian, China, in mid-June.

The spike in demand for flash memory chips used in smartphones is also beginning to affect DRAMs used in PCs. Some memory makers including Micron Technology of the U.S. have switched their PC-use chip production lines to production of smartphone chips from April to June, straining supply of PC-use DRAMs, industry sources said.

As a result, prices of 4-gigabit DDR3 units are currently centered around $1.78 per unit, up about 11% from levels in May. Prices of next-generation DDR4 units also rose about 10% to around $1.8.

Another factor contributing to increased demand for memory chips is the increasing number of cyberattacks on corporate servers, which have resulted in a number of high-profile cases of customer information leaks in recent years. Forced to introduce additional security measures, which tend to weigh on computer performance, more companies are increasing the number of DRAMs in their systems to alleviate performance slowdown, another industry source said.

(Nikkei)

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