Demand for NAND flash could outstrip supply in the third quarter of this year as consumer electronics companies prepare products for the holiday season, leading to price increases and shortages, research firm iSuppli said on Friday.
"When there is a constrained market, average selling prices do go up," said Rick Pierson, senior semiconductor analyst at iSuppli. NAND flash memory is commonly used in electronics like digital cameras, smartphones and video cameras for data storage.
There was an abundant supply of NAND flash in the second quarter which led to prices trending downward, Pierson said. But devices like smartphones are integrating components like video cameras, creating a need for additional storage.
Factory output won't necessarily be constrained because of excess demand, but suppliers will allocate NAND flash shipments to key partners based on contractual obligations and relationships.
The suppliers will also direct NAND flash shipments to markets like video streaming that represent long-term growth opportunities, Pierson said.
"It's also a chance for suppliers to take profit," Pierson said. Companies such as Samsung, Toshiba, Texas Instruments and STMicroelectronics could benefit from the increased selling prices.
A shortage of components like capacitors, which helps NAND flash work on PCs and other devices, could push the price increases.
NAND flash supply and demand will reach an equilibrium in the fourth quarter which could stabilize prices, Pierson said. He couldn't comment on the effect of the increase in NAND flash prices on the end prices of consumer electronics.