The global supply of 2D-NAND Flash will remain tight going into the second quarter of 2017, according to the latest analysis from DRAMeXchange, a division of TrendForce.

Also, major smartphone brands will soon begin their first wave of new product release for the year after the Mobile World Congress in Spain. With the NAND Flash supply still under strain, DRAMeXchange forecasts that contract prices of both SSDs and eMMCs will see a more moderate sequential price hike of 5~10% in the second quarter.

The end of 2016 saw the most severe phase of shortage in the NAND Flash market, and since then the market expectation of undersupply has kept prices climbing. For the first quarter of 2017, DRAMeXchange estimates that the average sequential increases in contract prices of eMMCs and SSDs will come to 15~20% and 10~15%, respectively. The sequential contract price increase for SSDs in the first quarter will also be the highest in almost two years.

Apart from the pressure of soaring NAND Flash prices, smartphone and notebook brands are also dealing with sharp price upswings for other key components such as DRAM and LCD panels. In order to keep costs down and maintain healthy margins, device vendors will implement measures that will also lead to slowing growth in the average content per box for eMMCs and SSDs in the near future.

"The accumulated price increase in the NAND Flash market has become so huge that device vendors are currently revising their initial plans to raise the storage specifications of their products," said Sean Yang, research director of DRAMeXchange. "Though the NAND Flash market will remain strong the second quarter of this year, eMMCs and SSDs will see a more moderate hike in their contract prices compared with increases of the previous quarters."

Looking ahead to the rest of 2017, the market for enterprise-grade SSDs constitutes the strongest and most stable source of end demand for NAND Flash compared with other applications. Server vendors are enjoying booming growth of data centers, and this is also driving their use of high-efficiency enterprise-grade SSDs when designing their systems. As for the client-grade SSD market, the growth in the average content per box will slow down this year due to the high NAND Flash prices. Nonetheless, SSDs have become standard in notebooks and their penetration in the notebook market will continue to rise through 2017.