Cost of NAND flash expected to rise 10% following Western Digital plant contamination

The price of NAND flash storage devices may increase by 5-10% following a contamination at two of Western Digital’s manufacturing units in Japan.

The company revealed yesterday that certain materials at two of its manufacturing units, operated by its joint-venture partner Kioxia, were contaminated. It said this had affected production operations at both its Yokkaichi and Kitakami flash fabrication facilities, although the precise nature of the contimation has not been detailed.

Western Digital estimated this could lead to a shortage of at least 6.5 exabytes in flash storage availability, where one exabyte is equal to one billion gigabytes. It said it’s working closely with Kioxia to implement necessary measures to restore the facilities to normal operational status as quickly as possible.

Analysts at TrendForce have predicted that the consequences of this incident could push the NAND flash price in Q2 to spike by 5-10%.

Before this incident, analysts were predicting that the market would see a slight oversupply, with the average price from Q1 to Q2 decreasing. However, TrendForce described the effect of the contamination as significant, especially as Samsung’s experience during the previous lockdown of Xi’an, China has slowed down the price slump of flash storage. Samsung had warned that the lockdown could affect their chip manufacturing bases in the area.

The contaminated products in the incident are concentrated in 3D NAND. The damaged parts account for 13% of the group's output in Q1 22 and around 3% of the total output for the year, estimate the analysts.

“It is worth noting that the damages announced by WDC [Western Digital] likely do not account for total losses stemming for this event and the number of damaged Kioxia parts has not been aggregated, so the total number of affected bits may increase further,” wrote the analysts.

Trendforce added that any orders negotiated on a whole quarter basis should probably be unaffected in the near-term, but there may be an immediate price increase in wafer quotations this February and March.