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Two more nails in the NAND coffin?

As if there wasn't enough bad news circulating around NAND chip pricing, we have the following two items of note:
  • ThinkPanmure analyst Vijay Rakesh released a research note today. He indicates NAND spot pricing for 8Gb and 16Gb chips, among the most common types, are down more than 35% for the quarter so far. He specifically mentions SanDisk (SNDK) and the prospect that the company's margins may be squeezed into negative territory. To add insult to injury, he also points to rising inventory levels at SanDisk and other OEMs.
  • As if there wasn't already a glut of NAND supply available in the market, Hynix Semiconductor just announced the grand opening of its new NAND fab in Korea. Samsung, Toshiba (a SanDisk partner) and the Intel-Micron joint venture have also been ramping up new NAND fabs. Whereas the aforementioned suppliers seem to be showing some restraint in terms of flooding the market with product, it is not known what Hynix plans to do. As the third largest NAND supplier, Hynix has the ability drive prices even lower. Some in the industry fear exactly that and worry that NAND pricing will not see a recovery until the second half of 2009.
In summary, this appears to be a good time to stay away from any stocks whose core business is focused on manufacturing or supplying NAND memory chips. For U.S. investors, that primarily means the downtrodden shares of SanDisk.

Sources:


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